Pioneer Investment v Saez

[2010] QDC 539

[2010] QDC 539

DISTRICT COURT

CIVIL JURISDICTION

JUDGE ROBIN QC

No 2805 of 2007

PIONEER INVESTMENT (AUST) PTY LTD	Plaintiff
and
ALEXANDER SAEZ	Defendant

BRISBANE

..DATE 19/08/2010

ORDER

CATCHWORDS

District Court of Queensland Act 1967 s 68, s 69

Compromise of money claim by plaintiff mortgagee includes dismissal of counterclaim seeking removal of a caveat - plaintiff's registered mortgage had been released to permit refinancing - whether court should declare plaintiff had an equitable charge over the subject property, which defendant asserted achieved nothing - loan agreements purported to give security over "any land" - declaration made.
HIS HONOUR:  The parties are to be congratulated on resolving
this dispute, although the resolution comes rather late in the
day, the claim having been commenced in 2007.

Interest at a high rate has been accruing on the plaintiff's
claim.  It appears that the compromise the parties have
reached involves an accommodation regarding the amount of
interest which the plaintiff should receive.

The order the Court was invited to make by consent provides
for judgment for the plaintiff in a round sum, inclusive of
costs and interest, which falls short of the amount mentioned
in the claim.  It is the product of an amount of $42,504.82,
which represented the shortfall from what was owing under a
loan agreement supported by the security of a registered
mortgage over land when arrangements were made for the
defendant to "refinance", bringing in a new lender.  There's
been an assignment of the original lender's entitlements to
the plaintiff company.

The mortgage security was a second mortgage over the
defendant's land which was the subject of a first mortgage to
family members.  The plaintiff's contention is that the
release of the mortgage to facilitate the refinancing did not
release the debt.  It has the support of clause 38 of the loan
agreement in that regard.  However, the defendant contended in
his pleading that a broker who arranged the refinancing had
provided an assurance, with which the original lender to him

was associated, that the debt was regarded as discharged.

The only contentious matter for the Court today is whether a
declaration ought be made over and above the judgment for a
money sum that's entered and the dismissal of the counterclaim
which sought removal of the caveat to the effect that,
"Pursuant to the terms of the loan agreement dated 15 February
2006 between the plaintiff and the defendant, the plaintiff
has an equitable charge over the property described as Lot 3
on RP829086 County of Stanley, Parish of Bulimba."

...

HIS HONOUR:  The defendant, represented by Mr Anderson, makes
no submissions against the Court making the declaration beyond
advancing the view that it achieves nothing given the dismissal of the counterclaim which seeks removal of the
caveat, that the plaintiff has lodged against the title to
the property.  The suggestion is that the Court ought not
exercise its discretion to make a declaration which doesn't
achieve anything.

The property referred to in the declaration, which the Court
has seen fit to make, is the same one which was subject to the
mortgage released some years ago.  The basis for that security
interest being asserted is clause 5 of the loan agreement, a
copy of which was made Exhibit 1 today; it provides that:

"The borrower, by execution of this agreement, hereby charges
all freehold and leasehold interest in any land(s) (or any
part thereof) which a borrower may now have or, during the
currency of the loan term, may receive a benefit or acquire a
loan or with others, jointly or separately, and the borrower
further agrees that the lender may require execution by the
borrower of such form of additional security, including
consent and non-lapsing caveat or other caveat, floating
charge, bill of sale or freehold mortgage containing same
terms and conditions as in this agreement so far as they may
be applicable.

The lender shall now have the right to lodge a non-lapsing
caveat by consent (hereby irrevocably given) over any real
and/or personal property of the borrower whensoever and
howsoever held, alone or with others, and the borrower hereby
agrees and acknowledges that this agreement creates in favour
of the lender a caveatable interest in respect of any real
property of the borrower, howsoever held and wheresoever
located in Queensland or any other Australian state.

The lender shall further have the irrevocable right to
register a fixed and/or floating company charge over any and
all assets of the borrower (corporation) howsoever held, and
the costs of preparing, stamping, registering or perfecting
title or registration are payable on demand or, if not paid
shall form part of the moneys hereby secured.  The borrower
authorises irrevocably the lender, or its solicitors, to
initial, amend, vary, alter any caveat, mortgage, deed of

priority, privacy act form, bill of sale or charge to enable
its proper presentation for stamping and registration in any
government registration office in Australia or elsewhere."

I, and I think others, have over the years felt some unease at
the notion of charges given in that way over unspecified
realty which may not even come under the ownership of the
chargor until some future time.

I have been persuaded on previous occasions that such a charge
is good in equity.  Mr Taylor has confirmed that approach this
morning by reference to Oversea-Chinese Banking Corporation
Limited v. Becker [2003] QSC 301, in particular at paragraphs
5 and 6, the former of which sets out the relevant provision
of the parties' agreement, the latter of which cites authority
for the proposition that a charge given in such terms, if
supported by consideration or given by deed, is valid and
effects a general equitable charge over all of the chargor's
property existing at the time of the charge.

That is as far as the plaintiff needs to go since the relevant
property was the defendant's at the time the charge was
created.  The plaintiff faces no complication from
Chesterman J's having gone on to state that "the charge does
not apply to after acquired property".

It is a curiosity that the property is the one over which a
legal mortgage was created that became the subject of a
release, presumably to permit registration of a replacement
legal mortgage in the circumstances mentioned.  I don't think
that affects the situation.

I am not persuaded that the Court is making a declaration
without any effect.  In the present circumstances, I think
there is some value in the plaintiff having the positive
declaration which it has been seeking all along in this
proceeding rather than having to rely on an estoppel arising
out of the dismissal of the counterclaim.

Mr Anderson raises no point about the Court's jurisdiction to
make the declaration.  I am comfortably satisfied that there
is jurisdiction, either on the basis that section 69 of the
District Court of Queensland Act authorises it, the money
claim falling within section 68, or on the basis that the
caveat and related issues have been raised without causing any
difficulty or objection in the counterclaim.

As it happens, the Court's not asked to make any specific order or declaration about the caveat, although certain things may be inherent in the dismissal of the counterclaim.

The plaintiff's justified in seeking the declaration, in my
opinion, and it’s being made.

Order as per initialled draft.

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