Skydane Pty Limited v Colliers Jardine (NSW)

[1992] FCA 1035

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1035 1 t c t 9 r y .

JUDGMENT No. ........ ........ .. .... , .......

IN THE FEDERAL COURT OF AUSTRALIA )

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NEW SOUTH WALES DISTRICT REGISTRY ) NG 692 of 1992

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GENERAL DIVISION 1

BETWEEN: SKYDANE PTY LIMITED

Applicant

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AND :  COLLIERS JARDINE (NSW1 , ,

Respondent -

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CORAM: Davies J.
PLACE: Sydney

DATE : 18 December 1992

FEDERAL COUR I u r 1..

AUSTRALIA

MINUTES OF ORDER PRINCIPAL REGISTRY

THE COURT ORDERS THAT

The questions set aside for separate determination be answered as follows;

(a) Does the July notice referred to in the cross-claim comply with s.57(3) of the Real Propertv Act 1900	I
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(NSW), and is it otherwise valid?;	l
Answer: "Yes	"

Answer: That the order setting aside issue (d) for separate determination is revoked and if the matter t .

(b) Does the November notice referred to in the cross- claim comply with s.57(3) of the Real ProDertv Act and is it otherwise valid?;

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Answer: "Yes" l '

(c) Have the second and third respondents become legally entitled to exercise a power of sale in relation to	I
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the premises on which the Park Royal Hotel at	!
Darling Harbour, Sydney is situated?;	..
Answer: "Yes"	i j

(d) Is clause 5 of the bill acceptance and discount facility agreement valid and enforceable?

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continues to be an issue, it is to be determined

with the remainder of the issues in the proceedings.

The issue of costs is reserved for further consideration.

NOTE

-- Settlement and entry of orders is dealt with in
Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA	) )
NEW SOUTH WALES DISTRICT REGISTRY )	NG 692 of 1992

1

GENERAL DIVISION 1

BETWEEN:. - SKYDANE PTY LIMITED

Applicant

AND :  COLLIERS JARDINE [NSW)

Respondent

************

CORAM: Davies J.
PLACE: Sydney

DATE : 18 December 1992

EX TEMPORE REASONS FOR JUDGMENT - -

DAVIES J.:

This is a continuation of proceedings in which on 30 November 1992, I handed down reasons for judgment dealing with a number of issues. I need not repeat the facts and discussions set out in those reasons. I adopt what was there said, save insofar as the reasons are supplemented or supplanted by the reasons I now deliver.

Since 30 November, by leave, a cross-claim by Tricontinental has been lodged and served. Four issues specified in the cross-claim were set aside to be determined separately from the remainder of the issues in the proceedings. The separate questions are;
(a)	Does the July notice referred to in the cross-claim comply with s.57(3) of the Real ProDertv Act 1900 (NSW),

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and.is-it otherwise vaiid?; - -:  -:

(b)	Does the November notice referred to in the cross-claim comply with s.57(3) of the Real ProDertv Act and is it otherwise valid?;
(c)	Have the second and third respondents become legally entitled to exercise a power of sale in relation to the premises on which the Park Royal Hotel at Darling Harbour, Sydney is situated?;
(d) Is clause 5 of the bill acceptance and discount facility	l.,

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agreement valid and enforceable?	-	I :
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Argument on question (d) did not proceed. The order setting aside that issue for separate determination will

therefore be revoked and, if the matter continues to be in	I -
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issue, it will be determined with the remainder of the issues	i 1
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in the proceedings.
one hand and Tricontinental on the other. The reasons	agreements between Skydane and its associated companies on the The reasons of 30 November discussed some of the
mentioned an acceptance and discount facility agreement between Detato and Tricontinental and a notice of demand which Tricontinental had served on Detato in August 1991.
The reasons of 30 November also discussed a performance bond agreement and a mortgage between Skydane and Tricontinental, and the service on Skydane on 9 August 1991 of a notice of demand under the performance bond agreement. This

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notice was accompanied by a copy of the notice of demand served upon Detato on 8 August 1991 and also by a cert2ficate under clause 4 of the performance bond agreement, certifying the amount due. The reasons of 30 November also discussed a notice under s.57 of the Real Pro~ertv Act, served upon Skydane by Tricontinental on 27 July 1992.

Tricontinental also served on Skydane, on 23 October ,.

1992, a further notice of demand and certificate under the !

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performance bond agreement and, on 29 October 1992, a fuskherz	-	-	'
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s.57 notice. The respondents no longer rely upon those
documents. A further notice of demand was served by	I
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Tricontinental on Detato on 23 November 1992. That notice	I ~
read inter alia;

"Reference i s made t o a B i l l Acceptance and Dlscount F a c i l i t y agreement dated 12 May 1989 between Tr icont inenta l Corporation L ~ m i t e d a s Financier and Detato Pty Limited as Borrower, a s

amended	( t h e " F a c i l ~ t y " ) .
The Events of Default specified i n paragraph 1 of t h e Schedule and

l i s t e d i n Clause 13.1 of t h e F a c i l i t y have occurred.

T r ~ c o n t i n e n t a l C o r p o r a t ~ o n Llmited dec la res a l l moneys owing t o it

under t h e F a c i l i t y t o be immediately due and payable.

Attached is a Notice of Demand which Tr icont inenta l CorporatLon Limated served upon Mi l i t a ry Road (174) Investments Ptv Limited l a

r e l a t e d corpora t ion of skydane ~ t y . ~ i i l t e d ) (Receiver-and Manager

appointed) on t h e d a t e spec i f l ed i n paragraph 2 of t h e Schedule.

That Demand has not been duly met.

TRICOKCINENTAL CORPORATION HERgBY DEWANDS payment by you for thwi th of t h e prancipal and i n t e r e s t owing to it under t h e F a c i l i t y i n t h e

amount r e f e r r e d t o below. Pavment must be made i n c l ea red funds t o - -

Tricont inenta l Corporation ~ i r k e d , Level 2 , 63 York s t r e e t , Sydney

(Attention:  M s Deborah H o ~ k i n s ) bv t h e due d a t e s ~ e c i f i e d i n

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paragraph 3 of t h e schedule.-

The amount f o r which you a r e l i a b l e t o Tr lcon t inen ta l Corporation

Limif.ed under t h e F a c i l i t y on t h e d a t e of t h i s Notice is spec i f i ed i n

paragraph 4 of t h e schedule.

The amount: sgecified in paragraph 4 of the schedule was

On 25 November 1992, Tricontinental served on Skydane a notice which read inter alia;

"Reference i s made	t o a B i l l Acceptance and Discount F a c i l i t y
agreement dated 12 May	1989 between Tr icon t inen ta l Corporation

Limited and Detato Pty Llrnited.

Attached is a Notice of Demand which Tr icont inenta l Corporation Limited served upon DetatO Pty Limited on t h e d a t e spec i f i ed i n

paragraph 1 of t h e Schedule. The amount s p e c i f i e d h a s not been paid

by t h e spec i f i ed deadl ine o r a t a l l . -

Attached i s a c e r t i f i c a t e ( t h e "Cer t i f i ca te" ) s lgned by

Tr icon t inen ta l Corporation Llmited s t a t i n g t h a t t h i s Demand is given

pursuant t o t h e Performance Bond Agreement, t h a t moneys a r e due and

owing by Detato Pty L i m ~ t e d t o Tr icon t inen ta l Cozporation Limited

under t h e B i l l Acceptance and Discount F a c i l i t y Agreement and s t a t i n g

t h e amount of moneys whrch i s due and owing.

Demand is now made upon you a s Obligor under t h e Performance Bond Agreement dated 12 May 1989 t o pay t o Tr icon t inen ta l Llmited t h e

amount spec i f l ed i n paragraph (c) of t h e Certificate by t h e d a t e

specified i n paragraph 2 of t h e Schedule.

With that notice was served a copy of the notice served the performance bond agreement, which read inter alia; on Detato on 23 November, and a certificate under clause 4 of

"Reference i s made t o a Performance Bond Agreement dated 12 May 1989 between Tr icon t inen ta l Corporation Limited and Skydane Pty Limited. Pursuant t o Clause 4.2 of t h a t agreement w e s t a t e tha t :

( a ) t h a s c e r t i f i c a t e i s given pursuant t o t h e Performance Bond

Agreement;

( b ) moneys a r e due and owlng by Detato Pty Limited t o

Tr icon t inen ta l Corporation Limited under t h e B i l l Acceptance

and DaSCount F a c i l i t y Agreement dated 12 May	1989 between
Tr icon t inen ta l Corporation Limited and Detato Pty Limited;	and

(c) the amount of the moneys which is due and owang is A$91,115,365.99.

On 27 ~ovembt?r 1992, Tricontinental served on Skydane a further notice under 6.57 of the Real Pro~ertv

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Act which read,

inter alia;

3 You have made d e f a u l t i n payment i n accordance with t h e

terms of t h e Mortgage by reason of t h e f a i l u r e t o pay t h e

amount of $91,115,365.99 i n accordance with t h e terme of t h e Performance Bond Agreement dated 12 May 1989 between TCL and you, being money which is secured by t h e Mortgage. That sum demanded under t h e Performance Bond

Agreement was ca lcu la ted by referenoe t o t h e p r i n c i p a l of

$73,940,474.42 and i n t e r e s t of $16,564,041.93 due from

Detato Pty Limited t o TCL pursuant t o a B i l l F a c l l i t y and

Discount Agreement dated 12 May 1989, and $610,849.64

being expenses paid l e e s income received,	and a l l of	-
which is due and payabl.9.

4.	You are required t o pay t o TCL	$91,115,365.99.
5.	Unless t h e requirements of	t h i s Notice are complied with w ~ t h i n

one month a f t e r se rv ice upon you of t h i s no t i ce TCL proposes t o

e x e r c u e its power of s a l e i n r e spec t of t h e land t h e sub jec t

of t h e Mortgage.

Although not all the relevant agreements were in evidence, counsel accept that the originating defaults, which through the chain of transactions led to the present situation, were those set out in a schedule of events of the

Court of New South Wales in proceedings G4625 of 1991. That	default tendered in evidence before Cohen J in the Supreme
schedule shows that some of the defaults involved the non- payment of principal on its due date. However, the majority of the defaults arose from the failure of Detato to pay interest and the service of the demand upon Detato accelerating the time for termination of the facility and the time at which the principal became due and owing.
Mr R.A. Conti Q.C., with whom Mr D.P. Robinson of counsel appeared for Skydane, submitted that both the July and
~ovember notic3s were invalid, because the operation - - of,.the
performance bond agreement, as construed by Tricontinental, would circumvent the operation of s.57(5) of the Real ProDerty
m. Section 57 provides inter alia;

"(2) A registered mortgagee, chargee or covenant chargee may,

subject to this Act, exercise the powers conferred by section

58 if -

(a) in the case of a mortgage or charge, default has been made in the observance of any covenant, agreement or condition expressed or rmplied in the mortgage or charge or in the payment, an accordance with the tergs of the mortgage or charae, of the principal, interest, annuity, rent-charge or other money the payment of which is secured by the mortgage or charge or of any part of that -

principal, interest, annuity, rent-charge or other money;

(al) in the case of a covenant charge, default has been made

in -

(i)   the payment, in accordance with the terms of the judgment to whrch the covenant charge related, of the principal, interest or other money the payment of which is secured by the covenant charge; or

(ii)  the payment, in accordance with the terms of that judgment, of any part of that principal, interest or other money;

(b) where -

the default relates to that payment; or

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(1.1) in the case of a mortgage, the default does not relate to that payment and notice or lapse of time has not been dispensed wrth under section 58A,

been served on the mortgagor, charger or covenant charger a written notice that complies with subsection (3) has	in the manner authorised by section 170 of the
Conveyancing Act 1919;

(bl) where a notice is required to be served under paragraph (b), a copy of that notice has been served (in the manner authorased by section 170 of the Conveyancing Act 1919) on -

(a) each mortgagee, chargee or covenant chargee (if any) of the land mortgaged or charged under a regastered mortgage, charge or covenant charge which has less prrorrty than that of the person intending to exercise the power of sale; and

(ri) each caveator (if any) who claims as an unregistered mortgagee or chargee to be entrtled to an estate or interest in the land mortgaged or charged; and

(C) where such a notrce is so served, the requirements of the notice are not complred w ~ t h within the time notified pursuant to subsection (3)(d).

(5) Without prejudice to any other manner in which at may be

deprived of force or effect, a covenant, agreement or condition

whereby upon a default referred to in subsection (2)(a) -

(a)	the whole of the prrncrpal or other money of which the payment is secured by a mortgage or charge becomes payable; or
(b)	a part of that principal or other money (not berng a part to whrch that default relates) becomes payable,

has no force or effect until the powers conferred by section 58
become exercisable by reason of that default."

The manner in which s.57(5) operates is illustrated in Websdale v S. & J.D. Investments Ptv Limited (1991) 24 NSWLR

573. It -was there held by sainuels, Priestley and Clarke JJA that repayment of the principal had not been accelerated, because s.57(5) had not been complied with.

Mr Conti referred to clause 4 of the performance bond agreement, which provides inter alia;

"4. OBLIGATION

4.1 The obligor hereby irrevocably undertakes to pay to the

Beneficiary without proof or conditions upon demand made an
accordance with clause 4.2 an amount equal to any Relevant

Amount.

4.2	The Beneficiary may make as many demands under this document as it thinks fit but any demand must be accompanied by a certrficate signed by the Beneficiary which states that:
(a) it is given pursuant to this document; and
(b) (i) moneys are due and owing by the Debtor to the

Beneficiary under the Relevant Agreement; and

(ii) the amount of the moneys which is due and owing.

4.3

The Obligor shall make payment pursuant t o thrs clauee 4
notwathstanding that:

(a)	it has been requested by the Debtor not to make payment;
(b)	any clalm by the Debtor that moneys are not due and owing by the Debtor to the Beneficiary under the Relevant Agreement; or
(c)	any dispute between the Beneficiary and the Debtor including, .without limitation, any dispute between the - Beneficiary-and the Debtor as to the amount of the moneys due and owing by the Debtor to the Beneficiary under the Relevant Agreement.

Mr Conti submitted that this provision operated in such a way as to subvert the effect of s.57(5), and that the mortgage	I:
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and performance bond agreement should be read together as a	i
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consequence of their interlocking operation.	Mr Conti	I '
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submitted that the mortgage, the performance bond agreement	! . I
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and the other agreements between Skydane and its associated	l
companies and Tricontinental established a mechanism whe~eby	- -
security was provided against any default by Detato and its	I
associated companies; Military Road (174) Investments Pty
Limited and Transnational Securities Limited.	t
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M r Conti re£	erred to the definition in clause 1.1 of the	I ,
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mortgage which describes secured moneys as inter alia;

"Secured Moneyn means all moneys:

(a)	which now or in the future are owlng (whether actually or contingently) or due for payment, by the Mortgagor to the Mortgagee;
(b)	which but for the occurrence of a Bankruptcy Event in relation to the Mortgagor would be owing (whether actually or contingently) by the Mortgagor to the Mortgagee; and
(C)	that now or in the future there is a prospect may become owing (whether actually or contingently) by the Mortgagor to the Mortgagee.

except income tax payable under the Income Tax Assessment Act, 1936

on the interest to be paid under this document or any collateral or	i
supplemental agreement and, without limitation, includes moneys	t
payable:

(d)	by the Mortgagor alone or jolntly or severally wrth any other	1
person;	I -
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i f t h e r e i s more than one Mortgagor, by a l l o r any of them;

(e)

by t h e Mortgagor i n i t s own r i g h t o r i n any capaci ty ;

( f )

t o t h e Mortgagee i n i t s own r i g h t o r i n any capaci ty ;

(g ) -

(h) t o t h e Mortgagee pursuant t o any t r ansac t ion , including,

w ~ t h o u t l imi ta t ion , an ass~gnment t o t h e Mortgagee of a debt o r

o the r pecuniary ob l iga t ion owed (whether a c t u a l l y o r

cont ingent ly) by t h e Mortgagor o r any o the r t r ansac t ion t o

which t h e Mortgagor is not a pa r ty , and ~ r r e s p e c t ~ v e of whether

t h e Mortgagor consented t o t h e t r a n s a c t i o n o r whether o r not

before t h a t t r a n s a c t i o n t h e payment of t h o s e moneys was

secured,	i n t e r e s t was payable by t h e Mortgagor on those moneys
o r any	o the r th ing;

(i) by t h e Mortgagor because of any r e l a t i o n s h i p between t h e

Mortgagor and t h e Mortgagee, including, without l i m i t a t i o n ,

t h a t of banker ox f i n a n c i e r and customer; and

(j) by t h e Mortgagor t o t h e Mortgagee i n r e l a t i o n t o any d e l i c t u a l

l i a b i l i t y of t h e Mortgagor t o t h e Mortgagee i n c l u d ~ n g , without

l i m i t a t i o n , any l ~ a b i l i t y caused o r cont r ibuted t o by any

breach by t h e Mortgagor of any s t a t u t o r y , cont rac tual , l e g a l ,

equitable o r o the r o b l i g a t ~ o n owed by t h e Mortgagor t o t h e '-

Mort~agee , t h e commission of	any t o r t by	t h e Mdrtgagor o r any
&her	cause of	ac t ion of t h e Mortgagee aga ins t t h e Mortgagor,
i n c l u d ~ n g	any l iqu ida ted o r unliquidated	damages.

Mr A.J. Bannon of counsel, with whom MS R. Sofroniou of counsel appeared for the first, second and third respondents, submitted that a performance bond agreement was a well understood and legitimate arrangement. An example of such an agreement was discussed in Hortico (Australia) Ptv Limited v Eneruv Eaui~ment CO (Australia) Ptv Limited (1985) 1 NSWLR

towards subverting the operation of s.57 of the Real Property	545. Mr Bannon submitted that the agreement was not directed
m, and that s.57(5) had no operation with respect to the
effect of clause 4 of the performance bond agreement.

M r Conti conceded the limitations inherent in s.57(5),

and he referred to the Judgment of Priestley JA with whom Meagher and Sheller JJA agreed, in Turnbull v National Mutual Royal Bank Ltd (1992) 26 NSWLR 361. Priestley JA stated at 370;

"it was argued for the appellants that the concluding words of s 57(5) not only deprrved the acceleration clause in the registered mortgage of 'force or effect' until a valid notice under the section had been served, but also deprived any acceleration clause in any document, whether the registered mortaaae or some other such document as the guarantee, whereby upon- 2 default by the mortgagor the whole-of the principal secured by the registered mortgage became payable, of any force or effect until a valid notice had been served. This was said to be the result of construing B 57(5) completely literally. It seems to me however, that when s 57 is read as a whole, the 'covenant, agreement or condition' referred to in s 57(5) 1s a provision in the registered security document referred to m the opening words of s 57(2)."

In my opinion, Mr Conti's challenge to the s.57 notices entered into in order to facilitate the provision of finance by Tricontinental to a number of companies with which Skydane was associated, and that the provision of security by Skydane to Continental was intended to protect it against default. Nevertheless, the agreement was a mortgage between Skydane and Tricontinental. Skydane's liability is fixed by the mortgage and the performance bond agreement, and neither contains an

-	- should be rejected. It is true that the arrangements were acceleration clause. Reading them together, there is no	covenant, agreement or condition of the type described in
s.57(5). It follows that Tricontinental could not have given a notice under s.57, in the terms prescribed by s.57(3), to Detato or Military Road (174) Investments Pty Limited or Transnational Securities Limited, for none of those companies was a mortgagor, charger or covenant charger.
In my opinion, notwithstanding the relevance of the effect of the agreement, the circumstances upon which s.57(5)

, . operates are not found in the present case. I should add

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txat, if the particular argument had been successful, I would nevertheless have had to consider whether the bill acceptance facility and the other documents contained a covenant as described in s.57(5) of the Real Prouertv Act.

There is, of course, a distinction between a bill facility agreement such as we are here concerned with, and an agreement for the loan of money. Such a distinction was considered by Ormiston J in_ Brick- & T i ~ e industries Ltd v Occidental Life Nominees Ptv Ltd (1991) 10 ACLC 253. It is not, however, necessary for me to turn my mind to that aspect of this matter. I am of the opinion that, on the matters as put, the view expressed by Priestley JA in Turnbull v National Mutual Roval Bank Ltd should be followed, for it is apposite to the facts of the present case.

M r Conti next submitted that the interest obligation was

misdescribed in the s.57 notice of 27 July 1992. On this point, I stand by the tentative view I expressed in my reasons of 30 November, namely that;

"The description of the rnterest accruing after 9 August 1991 was not a precise description and did not refer in specific terms to either the Performance Bond Agreement or the mortgage. But, there is no reason to think that Skydane could have been in doubt as to the default it was called upon to remedy. That default was non-payment of interest. The default had not arisen under the term6 of the Performance Bond Agreement itself for there had been no notice of demand and certificate delivered in respect of the interest claimed. There was,

however, liability on the part of skydane to pay interest and

that liability arose under clause 6.1 of the mortgage."

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The statement in the notice of 27 July 1992 that "Interest has continued to accrue", readily fits the words in

clause 6.1 of the mortgage, namely that "interest shall be

paid in accordance with any agreement requiring interest to be

paid on the secured moneys." It was not necessary that the

precise clauses be identified in the s.57 notice. Websdale's

case at 579 shows that it is sufficient that the notice

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"identifies correctly the defaults which the mortgagor is

given the opportunity of remedying."

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Mr Conti submitted that, nevertheless, the interest claimed was misdescribed and without any basis because it had been wrongly calculated. Clause 1 of the bill facility agreement gives the following definitions;

"Base Interest Rate" means the market selling discount rate obtainable by the Financier on the relevant day for bank endorsed Bills of 180 day tenor.

aggregate of two per centum (2%) and the average of the market buying	"Discount Rate" means in respect of any day a rate equal to the
discount rate expressed as a rate per centum per annum obtainable by the Financier from Australia and New Zealand Banking Group Limited, National Australia Bank and Westpac Banking Corporation at 11:OO a.m. on that day for the purchase of Bank accepted Bills of similar face value and term to the Bills to be discounted under the Fac~lity.

Clauses 5.1 and 5.2 of the bill facility agreement provide;

5.1 Interest

Payment and Rate

The Company shall pay interest on any amount payable under the Transaction Documents from and including the date that it

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becomes due for payment until it is paid at the interest rate

which is the aggregate of:

(a) the Base Interest Rate; and

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(b) five per centum (5%) pez annum.

5.2 (a) Interest wall:

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(i)      accrue from day to day;

(ill      be computed from and including the day when the

moneys upon whach interest is payable become owing	I
to the Financier by the Company until but excluding	I.
the day of payment of those moneys; and	i

(iii)      be calculated on the actual number of days elapsed

on the basls of a three hundred and sixty five	I
(365) day year.	r

Events of default are described in clause 13.1. Clause 13.2

provides ; - -. .

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Fanancier's Rights

13.2 If an Event of Default occurs the Frnancier may declare at any time by notice to the Company that:

(a)	an amount equal to the aggregate face value of the Outstanding Bills and all other amounts payable under the Transactron Documents are either:
(i) payable on demand; or (ii) immediately payable; and
(b)	the Financier's obl~gations specified in the notice are terminated.

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whereupon they will become so. i

In the circumstances provided for by clause 13.2 as well as on the termination of the facility, the clause 5 rate will	l
apply because the principal sum will be then due for payment.	i
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For the purposes of the s.57 notice of 27 July 1992, the interest was payable under clause 6 of the mortgage, which	I
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reads, inter alia;

6.          INTEREST

6.1 ( a ) The Mortgagor s h a l l pay i n t e r e s t on t h a t p a r t of t h e

secured Moneys which is f o r t h e t ime being a c t u a l l y owing

by t h e Mortgagor t o t h e Mortgagee. .

(b.)- I n t e r e s t s h a l l be paid i n accordance with any agreement

r equ i r ing	i n t e r e s t t o be paid	on	t h e Secured Moneys	and
i n t h e abeence of	any	agreement	r equ i r ing	i n t e r e s t t o be

paid on any p a r t of t h e Secured Moneys:

(i) t h e appl rcable i n t e r e s t r a t e w i l l be t h a t

de term~ned from t ime t o t ime by t h e Mortgagee; and

(ii) ~ n t e r e s t w i l l :

t

(A)	accrue from day t o day;	1 .
( B )	be computed from and includrng t h e day when t h e moneys upon which i n t e r e s t rs payable

become owing t o t h e Mortgagee by t h e

Mortgagor u n t i l but excluding t h e day of

payment of those moneys; and

( C ) be ca lcu la ted on t h e a c t u a l number of days

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e lapsed on t h e b a s i s of a t h r e e hundred and -'.' - .- +

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s ix ty-f ive	<365) day year.	I
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These provisions picked up the provisions of the bill facility agreement to which I have already referred.	! '	I
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Tricontinental calculated the clause 5 rate by reference to	, ~
the base interest rate on 31 July 1991.	It is not presently	i
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clear to me why that date rather than 8 August 1991 was the	I - l
appropriate date, but no issue has been raised in relation to	!
that.

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Mr Conti submitted that, as interest accrues from day to day under clause 5.2, then the base interest rate must be	!
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calculated daily and, further, that the high interest rate
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applicable on 31 July 1991 should not have continued to apply
when interest rates in the community had fallen. However, the	l.
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words "accrue from day to day" do not have that application,
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but require interest to be ~omputed	on the daily- balance and
not at periodical rests.

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There are several factors which support the submission put by Mr Bannon, that the rate of interest was fixed when the debt became due for payment. They are;

(1) It is preferable to give a construction which tends to

certainty in commercial arrangements rather than one
which leads to constant calculations and fluctuations.

(2) The concept of an interest rate to be determined daily on the basis -of the base interest rate as defined seems inconsistent with the fact that many days of the year are non trading days.

(3) Clause 5.2 provides that the interest is to be computed on the basis of a 365 day year, a provision which also seems inconsistent with the calculation of a rate for each day.

(4) Clause 5.1 provides for the payment of interest from and

including the date when it becomes due for payment until

with the provisions of the clause. Note the reference to	it is paid, at the interest rate determined in accordance
"the interest rate" which is used in relation to the period which is specified.

These factors lead me to the view that Tricontinental's
approach to the calculation of interest was correct, and

therefore that interest was not misdescribed in the s.57

notices.

- .

-.

In any event, I remain of the view expressed in my reasons of 30 November, that the s.57 notice of 27 July 1992 sufficiently identified the defaults required to be remedied. As Clarke JA stated in Websdale's case at 578-9:

What it requires is that the mortgagee ident i fy t h e particular default or defaults . In these circumstances it is d i f f i c u l t t o

see why, provided t h a t t h e default is correct ly ident i f i ed , t h e

spec i f i ca t ion o f a greater or l e s s e r amount than actual ly due

should a f f e c t the v a l i d i t y of the not ice . . .

. .

Provided that the default is identified, it does not matter that the sum claimed be incorrect, either through misapprehension of fact or because of a misconstruction of the terms of an agreement.

I shall therefore answer the questions set aside for separate determination as follows:

(a) Yes.

(b) Yes.

(c) Yes.

The issue of costs is reserved for further consideration.

I certify that this and the preceding sixteen (16)

pages are a true copy of the Reasons for Judgment

herein of his Honour Mr Justice Davies.

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. - .-

Associate: 4

Date: 18 December 1992

Counsel for the Applicant:	R.A. Conti Q.C. with D.P. Robinson
Solicitors for the Applicant:	Freehill Hollingdale & Page
Counsel for the Respondent:	A.J.L. Bannon with

R. Sofroniou

Solicitors for the Respondent:	Allen Allen & Hemsley
Date of hearing:	18 December 1992