St George Bank Limited v KHAIRULZAMAN
[2001] WASC 323
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: ST GEORGE BANK LIMITED -v- KHAIRULZAMAN & ANOR [2001] WASC 323
CORAM: MASTER BREDMEYER
HEARD: 9 NOVEMBER 2001
DELIVERED : 26 NOVEMBER 2001
FILE NO/S: CIV 1983 of 2001
BETWEEN: ST GEORGE BANK LIMITED (ACN 92 055 513 070)
Plaintiff
AND
ABDUL LATIF KHAIRULZAMAN
ZAITON ABDUL LATIF
Defendants
Catchwords:
Summary judgment - Mortgage - Adequacy of default notice
Legislation:
Consumer Credit (Western Australia) Act 1996
Result:
Preliminary point decided
Category: B
Representation:
Counsel:
Plaintiff: Mr T I Masson
Defendants: Mr J Eastoe
Solicitors:
Plaintiff: CBA Legal
Defendants: Mr J Eastoe
Case(s) referred to in judgment(s):
Donnelly & Anor v National Australia Bank, unreported; FCt SCt of WA; Library No 920283; 19 May 1992
Case(s) also cited:
Nil
MASTER BREDMEYER: This is an application by the plaintiff for summary judgment against the defendants. I am asked to rule on a preliminary point concerning the validity of the default notice.
The default notice is dated 5 February 2001 and in its heading refers to the Consumer Credit (Western Australia) Act 1996. Par 1 states that the notice is given on behalf of the plaintiff bank as credit provider under the facility and as mortgagee under the mortgage. Par 2 and par 3 state:
“2.The Overdue Amount has not been paid and an event of default has therefore occurred under the Facility and the Mortgage.
3.The Overdue Amount must be paid to St. George no later than 31 days from the date of this default notice. Interest, fees and charges will continue to accrue on this amount until paid in accordance with the terms and conditions of the Facility.”
Paragraph 8 in summary provides that if the Overdue Amount is not paid as required by the notice then the whole of the balance outstanding under the facility (Account Balance) will become immediately due and payable, St George may start proceedings in a Court to recover any payment due to St George under the Facility and the Mortgage, and St George will exercise its power of sale in relation to the Security Property and sell the Security Property.
The Overdue Amount is stated in the notice to be $2,577 and the Account Balance is stated to be $169,650.29 as at 2 February 2001.
The defendants have not yet filed an affidavit setting up a defence on the merits. However, their counsel has a legal point to argue and I agreed to hear and determine this at the outset. If this point goes against the defendants, an affidavit on the merits will need to be filed.
The legal point asserted by the defendants is that the default notice is defective because it alleges that the “Overdue Amount” has not been paid. Mr Eastoe says the mortgage contained a covenant to pay various instalments on certain days. The failure to pay an undefined amount is not an event of default under the mortgage.
The mortgage itself is of three pages. It does not specify an amount of principal or any repayment instalments. It does not refer to any rate of interest. However, it incorporates by reference the Memorandum of Provisions registered with the Registrar of Titles. Clause 1.3 of the Memorandum of Provisions provides:
“1.3You must ensure that you are not in default under this mortgage. You must also carry out on time all your obligations under every agreement covered by this mortgage including the obligation to pay any of the amount owing. These obligations and your other obligations under the mortgage (such as under “Costs, indemnities and interest” or “Enforcement expenses”) continue even if we release the property from this mortgage.”
Clause 19 is under the heading “What can happen if you are in default?” and the sub‑heading “When are you in default?” Paragraph 19(a) states:
“19.You are in default if:
(a)You do not pay the amount owing on time or
(b)You do something you agree not to do, or you don't do something you agree to do, under this mortgage or an agreement covered by this mortgage;"
Paragraph 36 is a definition section and includes this definition:
“amount owing” means, at any time, all money which one or more of you owe us, or will or may owe us in the future, including under this mortgage or an agreement covered by this mortgage….”
The Memorandum of Provisions does not refer to any instalments of principal and interest, or to any interest rate, or to the dates when instalments are due. I consider that the reference in cl 19(b) to "an agreement covered by this mortgage" is a reference to the Loan Agreement found at “AM 3” of Ms Magalas’s affidavit. There I am told the loan amount is $168,300, and the interest rate and the repayments due.
By cl 19(a) of the mortgage, it is an act of default not to pay "the amount owing". By cl 19(b) the mortgage incorporates the loan agreement. The default notice does not use the words "amount owing" but I consider the words used "Overdue Amount" are equivalent. Thus I consider the default notice is not wrong. It is an act of default under the mortgage not to pay the amount owing.
It is necessary, and certainly desirable, that a default notice tell the defendants with some particularity what is owing, so that they know what has to be done to remedy the default. A default notice which called up "the whole of the principal, interest and other monies owing under the mortgage" was held bad by the Full Court in Donnelly & Anor v National Australia Bank, unreported; FCt SCt of WA; Library No 920283; 19 May 1992. The notice in that case did not specify the amount owing or how the amount was calculated. It did not say, for example, how much was owing for interest, legal costs or unpaid rates etc.
The present notice is better than the notice in Donnelly in that it specifies the amount owing namely, $2,577. It would have been better if it had particularised the breakdown of the amount due, eg:
November 2000 instalment principal and interest $1,144.00
December 2000 instalment principal and interest 1,144.00
Legal costs of preparing default notice 289.00
TOTAL$2,577.00
(These are made up figures). Nevertheless, I regard the default notice as legally adequate. It does specify the amount. Moreover, these defendants are not guarantors, as were the defendants in Donnelly (supra). This notice gives the defendants 31 days to remedy the default. If they had no idea as to why the sum of $2,577 was said to be overdue, they could have made enquiries. It is highly likely that they were in default of one or more of their monthly instalments of principal and interest. They would probably know that as they were responsible for paying those instalments.
For these reasons I propose to decide this preliminary point in favour of the plaintiff.
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