Secure Loan Solutions Pty Ltd v Derick Aubrey Smith - [2018] VSCA 71

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S APCI 2017 0086

SECURE LOAN SOLUTIONS PTY LTD	Applicant
v
DERICK AUBREY SMITH	Respondent

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JUDGES:	NIALL and HARGRAVE JJA and McDONALD AJA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	14 March 2018
DATE OF JUDGMENT:	26 March 2018
MEDIUM NEUTRAL CITATION:	[2018] VSCA 71
JUDGMENT APPEALED FROM:	[2017] VSC 217 (Bell J)

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MORTGAGES – Entitlement to surplus proceeds from mortgagee sale of land – Where respondent was registered proprietor and applicant was second mortgagee – Where respondent owed debt to applicant – Where affidavit evidence only – Whether judge correct to find on evidence that respondent had established that debt had been discharged – Leave to appeal refused.

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APPEARANCES:	Counsel	Solicitors
For the Applicant	Mr M I Ravech	Boris Pogoriller
For the Respondent	Mr J Gray	Just Law

NIALL JA:
HARGRAVE JA:
McDONALD AJA:

Overview

On or about 9 May 2016, the National Australia Bank paid $40,543 into Court (‘the money’) representing the residue from a mortgagee sale of land of 8 Dallas Court, Hallam in the State of Victoria (‘the property’).

The applicant and respondent each claimed an entitlement to the money: the applicant on the basis that it held a second mortgage over the property and was owed monies that were due and payable to it by the respondent, as guarantor of a loan made to companies associated with him; and the respondent on the basis that he was the registered proprietor of the property and that the debt to the applicant had been discharged.

Both Ierodiaconou AsJ and, on appeal from her Honour, the judge held that the respondent was entitled to the money. Ierodiaconou AsJ found for the respondent on the basis that the applicant had not proved the debt.[1] On appeal, Bell J held that the applicant had proved the loan, the guarantee and the ‘shortfall’ outstanding, but the respondent had established on the evidence that the shortfall had been discharged.[2]
[1]Secure Loan Solutions Pty Ltd v Smith [2016] VSC 794 (‘associate justice’s reasons’).
[2]Secure Loan Solutions Pty Ltd v Smith [2017] VSC 217 (‘judge’s reasons’).

The primary issue on the application for leave to appeal is whether the judge was correct to conclude that, as a matter of fact, the respondent had established that the loan had been repaid by the means his Honour had identified, namely through the applicant taking possession of and selling items of earth moving equipment that had been provided as security for the loan.

In summary, grounds 1 and 2 of the applicant’s proposed appeal seek to challenge the judge’s reasons for concluding that the director of the applicant, David Graer, had not denied that the applicant was in possession and control of all the equipment — in circumstances where that fact had been distinctly alleged in the respondent’s affidavit — and the resulting finding that the applicant had been in possession of the equipment. That finding was the platform for the further finding — which is…

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: [2018] VSCA 71
Decision Date: 26 March 2018

CaseChat Overview and Summary

Secure Loan Solutions Pty Ltd sought to recover the surplus proceeds from the sale of property held by Derick Aubrey Smith, who was both the registered proprietor of the property and a debtor to Secure Loan Solutions, being the second mortgagee. The matter was heard in the Supreme Court of New South Wales. The central legal issue was whether the respondent had discharged the debt owed to the applicant, which would entitle him to any surplus proceeds from the sale of the property.

The court considered whether the judge was correct in finding, based on the affidavit evidence presented, that the respondent had discharged the debt. The court held that the judge's decision was correct, as the evidence provided by the respondent was sufficient to establish that the debt had been discharged. The court emphasised the importance of the respondent’s burden to prove the discharge of the debt and found that the evidence presented met this standard.

The Supreme Court of New South Wales refused Secure Loan Solutions leave to appeal the decision. The court determined that the judge had properly exercised their discretion in evaluating the evidence and that the findings were supported by the material before the court. The court did not identify any error in the judge's approach or reasoning that warranted an appeal.

Orders