Rimmer v Bourke

[2003] NSWSC 200

CITATION:	Rimmer v Bourke [2003] NSWSC 200
HEARING DATE(S):	4 March 2003
JUDGMENT DATE:	26 March 2003
JURISDICTION:	Common Law Division
JUDGMENT OF:	Master Malpass
DECISION:	I dismiss the Notice of Motion and return the proceedings to the Possession List. In the particular circumstances of this case, I consider that justice is best served if costs of the application be costs in the cause and I so order. Exhibits may be returned.
CATCHWORDS:	Summary Judgment - claim for possession - mortgage does not fix date for repayment of principal sum - was it repayable upon demand - default - operation of statutory provision.
LEGISLATION CITED:	Conveyancing Act 1919, s 92 (1).
CASES CITED:	NZI Capital Corporation Pty Ltd v Child (1991) 23 NSWLR 481. R v New Queensland Copper Co Ltd (1917) 23 CLR 495.
PARTIES :	Patricia Ouida Rimmer (Plaintiff) v John Giles Bourke (Defendant)
FILE NUMBER(S):	SC 11829 of 2002
COUNSEL:	Mr Paul Bingham (Plaintiff) Mr S Bell (Defendant)
SOLICITORS:	Starnet Legal Pty Ltd (Plaintiff) Webster O'Halloran & Associates (Defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

Master Malpass

Wednesday 26 March 2003

11829 of 2002 Patricia Ouida Rimmer v John Giles Bourke

JUDGMENT

1 MASTER MALPASS: These proceedings were commenced by Statement of Claim filed on 3 July 2002. The defendant is the registered proprietor of land at Binnaway known as “Killara” (the Land). The plaintiff loaned the defendant the sum of $100,000 on 13 December 1991. This loan was secured by a registered mortgage over the land.

2 The plaintiff and the defendant had been friends. There were other business dealings between them. The mortgage was in a form that did not specify any date for repayment of the principal sum. There was a falling out between the parties.

3 The plaintiff now contends that the principal sum was repayable on demand (the relevant term and condition of the mortgage is pleaded somewhat differently). The defendant admits that a demand for the payment of both principal and interest was made on 22 April 2002 (presumably, this is referable to a letter dated 19 April 2002). The demand called for payment within 28 days. A subsequent letter dated 2 May 2002, acknowledged a debt of $100,000. It disputed any indebtedness for interest. The plaintiff alleges that at the time of commencement of proceedings the amount owing for principal and interest was $238,833.60.

4 A Defence was filed on 23 July 2002. It inter alia denies the indebtedness and puts in issue the question of whether or not the plaintiff was then entitled to bring the proceedings in respect of the principal sum.

5 On 10 September 2002, the plaintiff filed a Notice of Motion seeking a judgment in possession by way of summary relief. This application was heard on 4 March 2003.

6 The plaintiff has sworn two affidavits. She gave supplementary oral evidence and was cross-examined. The plaintiff’s former solicitor (Mr Booth) has also sworn an affidavit. He was not cross-examined.

7 The defendant has sworn an affidavit. He gave some supplementary oral evidence. He was not cross-examined.

8 Broadly speaking there were three principal issues. The first is whether or not the principal sum is repayable on demand. Secondly, there is the question of whether or not s 92 (1) of the Conveyancing Act 1919 has application. Thirdly, there is a question of whether or not there was default in payment of interest.

9 The court has a discretionary power to grant summary relief. The discretion is exercised having regard to the relevant circumstances of the particular case before the court and so that justice is best served. The authorities make it clear that the power should only be exercised in what has been described as clear cases. The onus rests with the plaintiff.

10 Before proceeding further, I should mention some of the evidence given by the defendant.

11 He has no records preceding July 1995. He has produced material which purports to deal with a period thereafter which ends in June 2002. He gave supplementary oral evidence as to payment of interest since the swearing of his affidavit (20 September 2002). He says that an arrangement was made whereby interest payments were to be made to the plaintiff’s company (K J Rimmer Pty Limited).

12 He has deposed to paying all of the interest payments due under the mortgage. He says that the interest payments have been made from various sources. One of these was a company in which he had an interest, Windbid Pty Limited (Windbid). The plaintiff’s company made an investment in Windbid. It saw a further loan being made to that company. Disputes concerning that matter led to proceedings being brought in the Equity Division of this Court.

13 The defendant says that payments were made by Windbid to the plaintiff’s company in the sum of $800 per week and that a part thereof ($250) was paid in respect of interest due under the personal mortgage.

14 There has been an offer to pay the principal sum. There has been some action directed to a redemption of the mortgage. The principal sum remains unpaid.

15 The first question to deal with is when is the principal sum repayable? The schedule to the mortgage contains the following;-

“Firstly – The mortgagor will pay to the mortgagee the principal sum, or so much thereof as shall remain unpaid, on the day of ”.

The covenant to repay has not been deleted from the mortgage. It has been left incomplete. The covenant for the payment of interest has been similarly left incomplete.

16 It could have been expected that the parties would have adduced material to address the question of time for repayment. Largely, this has not been done.

17 The plaintiff seeks to treat the mortgage as one in which no date for repayment has been fixed. The evidence does not directly deal with the question of how the covenant came to be left in such an incomplete form.

18 There is disputed evidence to the effect that the plaintiff said that she would leave the money on mortgage for as long as the defendant wanted it.

19 The authorities suggest that a covenant for repayment is not an essential part of a mortgage. There is an implication of a general obligation to repay the loan (see inter alia R v New Queensland Copper Co Ltd (1917) 23 CLR 495). There is authority to support the view that a deliberate deletion of the covenant to repay may oust the implied obligation (NZI Capital Corporation Pty Ltd v Child (1991) 23 NSWLR 481).

20 In this case, there is nothing in the evidence to suggest that the implication should be ousted. The incomplete covenant supports the view that a repayment was intended by the parties.

21 In oral submissions, the plaintiff relied on a bald sentence in Tyler, Young and Croft, Fisher & Lightwood’s Law of Mortgage, Australian Ed. Butterworths, 1995 p.80 as authority for the proposition that in the absence of a fixed date for repayment, the mortgage is repayable on demand. The defendant contends that a reasonable time provision should be imported into the mortgage. No authority was advanced to support that submission.

22 At the request of counsel, I allowed both parties time to make written submissions on the question.

23 Both counsel have made written submissions. I have given careful consideration to that material.

24 In his submissions, counsel for the plaintiff has referred to principles that may be extracted from certain authorities. In a general sense, this material may be said to support his client’s contention. Counsel for the defendant has still not been able to refer me to any authority on the point.

25 My concern is with the application of the principles advanced on behalf of the plaintiff to the particular circumstances of this case. It is my view, that this question has not been satisfactorily addressed. Accordingly, I am left in doubt as to the correctness of the plaintiff’s contention.

26 There is a further problem for the plaintiff. The case, as pleaded, is not one of the principal sum being repayable on demand per se. It is one of it becoming due, immediately, in the event of default in payment of interest with both principal and interest then becoming payable on demand. These were allegations admitted by the defendant.

27 For present purposes, I put to one side the question of whether or not these allegations conform with a proper construction of the mortgage provisions.

28 The case as pleaded requires a finding of default in payment of interest. I shall return to this matter shortly.

29 The next question is the s 92 defence. This section operates when there has been default in payment of the principal sum at the expiry of the term of the mortgage and the mortgagee has accepted interest on the said sum for any period (not being less than 3 months after default has been so made).

30 In such circumstances, then, so long as the mortgagor performs and observes all covenants expressed or implied in the mortgage (other than the covenant for payment of the principal sum) the mortgagee shall not be entitled to take proceedings to compel payment of the said sum, or for foreclosure, or to enter into possession, or to exercise any power of sale, without giving the mortgagor three month’s notice of his or her intention so to do. The notice must identify the action intended to be taken by the mortgagee.

31 In this case, even assuming a default in payment of the principal sum at the expiry of the term of the mortgage, the section has no application. The defendant has not continued to perform and observe the covenant to pay interest. The plaintiff’s action is that of taking proceedings to obtain a judgment in possession.

32 There is conflicting evidence concerning the payment of interest. The plaintiff strongly criticizes both the defendant’s affidavit evidence and the other material relied on by him to support that evidence. There is inconsistency in the material. The plaintiff has submitted that the defendant’s evidence is inherently improbable. Clearly, credibility is a crucial matter in the determination of these questions.

33 On the evidence before me, the view could be taken that the defendant may have difficulties at a trial on this question. However, he has not been cross-examined and I do not consider that this is a question which can be determined in this case on a summary judgment application. The evidence throws up questions of fact (involving credibility) that should be left for determination at a trial.

34 The defendant did give evidence that in respect of more recent alleged payments of interest that on his solicitor’s advice he was paying only the sum of $183.16 per week. A payment of such a sum may bring about default under the mortgage. However, it appears that these payments were made subsequent to the commencement of these proceedings.

35 The plaintiff is not seeking a monetary judgment. The claim is for possession only. It suffices for the plaintiff to demonstrate default (in respect of either of the principal sum or interest). If that is done, the plaintiff is entitled to summary relief by way of a judgment in possession. However, in my view, the plaintiff has failed to demonstrate a clear case of any default prior to the commencement of the proceedings.

36 In these circumstances, the application for summary relief must fail. I dismiss the Notice of Motion and return the proceedings to the Possession List.

37 Because of the importance of matters of credibility, the result in this application may be a product of evidence that may not be accepted at a trial. In the particular circumstances of this case, I consider that justice is best served if costs of the application be costs in the cause and I so order.

38 Exhibits may be returned.

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Last Modified: 04/01/2003