St George Bank Limited v McCormack - [2008] SASC 8

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
ST GEORGE BANK LIMITED v MCCORMACK
[2008] SASC 8
Reasons of Judge Lunn a Master of the Supreme Court
21 January 2008
REAL PROPERTY
Mortgagees claiming possession of mortgaged property under Part 17 of the Real Property Act - whether entitlement barred by having claimed an excessive amount for enforcement expenses in the s 55A notice - Court summarily considering whether such amount excessive - whether Court should do so where the point is not taken by the defendants - whether possible for mortgagees to assess properly the amount of enforcement expenses when preparing a s 55A notice - consideration of costs and disbursements properly allowable for various items of work involved in preparing and serving a s 55A notice - in some actions held amounts claimed were excessive and in others held question not able to be determined summarily.

ST GEORGE BANK LIMITED v MCCORMACK
[2008] SASC 8

JUDGE LUNN: On 3 August 2007 the plaintiff issued this action under Part XVII of the Real Property Act seeking an order for possession of the property at 1 Solandra Crescent, Modbury North of which the defendant is the registered proprietor. The summons was supported by an affidavit of a New South Wales collections officer of the plaintiff who deposed that on 14 January 2003 the defendant had executed a mortgage over the property to secure borrowings from the plaintiff. The mortgage and the plaintiff’s standard conditions of mortgage were exhibited to the affidavit. It is alleged that as at 23 July 2007 the defendant was in arrears in the sum of $5,746.09 in his monthly payments and that the balance of the loan, including the arrears, was $145,746.09.
The affidavits filed by the plaintiff established, and it has not been disputed, that on 18 May 2007 a default notice under s 55A of the South Australian Law of Property Act 1936 (“s 55A”) dated 9 May 2007 was duly served on the defendant by being affixed to the front door of the mortgaged property. The plaintiff concedes that s 55A applies to this mortgage. The contents of the notice were as follow:
DEFAULT NOTICE
FROM ST GEORGE BANK LIMITED ACN 055 513 070 AS SUCCESSOR IN LAW TO THE BANK OF SOUTH AUSTRALIA (“THE LENDER”)
To:` Mark McCormack
TAKE NOTICE THAT:
APursuant to a credit contract between the Lender and you (“the Credit Contract”), the Lender advanced monies to you.
BAs security for the advances, you gave a mortgage over 1 Solandra Crescent MODBURY NORTH SA 5092 (“the Property”) in favour of the Lender (“the Mortgage”).
CThis is a notice pursuant to section 55A of the Law of Property Act 1936 (SA) and section 132 of the Real Property Act 1886 (SA), the Credit Contract and the Mortgage.
DThere has been a default under the terms of the Credit Contract and the Mortgage because instalments of principal, interest and fees in the sum of $2,861.33 as at 10 May 2007…

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: [2008] SASC 8
Decision Date: 21 January 2008

CaseChat Overview and Summary

The matter of St George Bank Limited v McCormack came before the court, where the dispute centred around the enforcement expenses claimed in a s 55A notice. The bank sought to recover these costs from the defendants, who contested the amounts claimed. The court was tasked with determining the legitimacy of these enforcement expenses.

The court examined the affidavit provided by Mr Graham on 16 October 2007, which detailed legal costs and disbursements totalling $584.37. This amount was claimed as enforcement expenses in the s 55A notice, which itself claimed $524.04, exceeding the amount by $60.33. The court needed to decide whether these expenses were properly claimable and if any portion of them should be disallowed. The items of work claimed were largely similar to those in a previous case involving McCormack, leading to similar findings about the overstatement of costs.

Upon reviewing the evidence, the court determined that at least $100 of the claimed $584.37 must be disallowed. This resulted in the enforcement expenses claimed in the s 55A notice exceeding what was properly claimable by at least $40. The court's decision followed a similar reasoning to that applied in the McCormack case, resulting in a disallowance of a portion of the claimed enforcement expenses.

The court adjourned the hearing to allow the parties to consider any further applications in light of these findings. The defendants were given the opportunity to request a formal adjudication of the enforcement expenses claimed if they believed the court's summary determination was unjust. However, if they failed to prove that the claimed enforcement expenses were excessive, they risked incurring additional costs associated with a formal adjudication.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

In this matter Mr Graham has given in his affidavit of 16 October 2007 details of legal costs and disbursements totalling $584.37 in justification of a claim for enforcement expenses in the s 55A notice of $524.04 (ie $60.33 in excess of the amount claimed). The items of work claimed in paragraphs 3.1-3.9 of the affidavit do not materially differ from those in the equivalent paragraphs 3.1-3.9 in his affidavit in the McCormack matter. For similar reasons to those given in the McCormack matter I summarily determine that at least $100 must be disallowed from the claim of $584.37, which means that the enforcement expenses claimed in the s 55A notice exceeded what was properly claimable by at least $40. Accordingly, a similar result follows in this matter to that set out above for the McCormack matter.Action 946/07 – Pepper Finance Corporation Ltd v Rodney William Raines and Lolita Silagno Raines. In this matter Mr Graham has given in his affidavit of 16 October 2007 details of legal costs and disbursements totalling $746.57 in justification of a claim for enforcement expenses in the s 55A notice of $567.99 (ie $178.58 in excess of the amount claimed). Most of the legal work claimed is similar to that claimed in the matter of McCormack which for similar reasons is over-stated by at least about $100. The crucial item here is the claim for service fees of $258.50. Two service fees of $115 are claimed for the separate service of each defendant. Under s 112(3) of the Law of Property Act both defendants could have been served at the same time merely by leaving the notices for them at the property. However, Mr Graham has deposed in his second affidavit that when the process server served the 2nd defendant on 23 April 2007 she told him that the 1st defendant would be available at 4 pm on the following day at that address for the process server then to serve him. However, when the process server returned at 4 pm on the following day the 1st defendant was not present and he then left the notice for him at the property. In view of what the 2nd defendant said to the process server I am not prepared summarily to conclude that it was necessarily unreasonable to act on what the 2nd defendant said and to have served the notice on the 1st defendant non-personally on the first visit. It is for the defendants to take the point if they so wish by requesting a formal adjudication of the enforcement expenses claimed. If a request for such a formal adjudication is made, the Court will then determine the amount of enforcement expenses properly claimable after hearing whatever evidence and arguments are put forward on the hearing of the adjudication. However, if the defendants fail to establish that the enforcement expenses claimed in the s 55A notice were excessive, they are likely to be required to pay the significant additional costs of a formal adjudication on the issue. I will adjourn the hearing in this matter to a further date to consider any applications which are made by the parties in the light of these reasons.Action 1137/07 – JP Morgan Trust Australia Ltd v Tracy and Stuart McMillan.