Sterling & Freeman Advisory Pty Ltd v Callisi Pty Ltd - [2024] VSCA 105

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S EAPCI 2023 0074

STERLING & FREEMAN ADVISORY PTY LTD (ACN 606 745 340)	Applicant
v
CALLISI PTY LTD (ACN 077 538 106)	Respondent

---

JUDGES:	FERGUSON CJ, KENNEDY and LYONS JJA
WHERE HELD:	Melbourne
DATE OF HEARING:	28 February 2024
DATE OF JUDGMENT:	23 May 2024
MEDIUM NEUTRAL CITATION:	[2024] VSCA 105
JUDGMENT APPEALED FROM:	[2023] VSC 300 (M Osborne J)

EQUITY AND SECURITIES – Marshalling by apportionment – Two security properties – First mortgagee (Sterling) held mortgage over each property and second mortgage over one property – Different mortgagee (Callisi) held second mortgage over other property – Both properties sold with proceeds of sale disbursed – Proceeds of sale of one property paid to Sterling as first mortgagee and proceeds of sale of second property paid to Sterling as second mortgagee – Callisi received no moneys – No fund under the control of the Court – Principles of apportionment did not apply – Callisi not entitled to relief – Appeal allowed.

Barnes v Racster (1842) 1 Y & C Ch Cas 401; (1842) 62 ER 944; Webb v Smith (1885) 30 Ch D 192; Jenkins v Brahe & Gair (1902) 27 VLR 643; Lawrance v Galsworthy (1857) 3 Jur (NS) 1049; Commonwealth Trading Bank v Colonial Mutual Life Assurance Society Ltd [1970] Tas SR 120; Across Australia Finance Pty Ltd v Kalls (2008) 14 BPR 26,265; National Bank of New Zealand Ltd v Caldesia Promotions Ltd and Jenkins Roberts & Associates Ltd [1996] 3 NZLR 467, considered.

PRACTICE AND PROCEDURE – Issue on appeal not raised at trial – Issue goes to power of Court to make orders – Expedient in the interests of justice for argument to be permitted on appeal.

Water Board v Moustakas (1988) 180 CLR 491, applied.

---

Counsel
Applicant:		Mr J Evans KC
Respondents:		Mr D J Williams KC
Solicitors
Applicant:	BlueRock Law
Respondent:	Davies Moloney

FERGUSON CJ
KENNEDY JA
LYONS JA:

This appeal concerns a dispute between two lenders which each held security over a property in Toorak and a property in St Kilda Road. The two properties were owned by and mortgaged in favour of the lenders by the same mortgagor. The applicant (‘Sterling’) held a first registered mortgage over both properties which secured a judgment debt and a second registered mortgage over the St Kilda Road property which secured a different debt. The respondent (‘Callisi’) held a second registered mortgage over the Toorak property. The two properties were sold and Sterling received the full net proceeds of sale. Callisi received no moneys.
The judge held that the equitable principles of apportionment applied. The judge treated the debt owed to Sterling under its first mortgages as if it had been apportioned rateably across the two properties. On this re–calculation, Sterling would only have received part of its debt out of the Toorak property (not the whole), leaving a balance of $830,375 available to Callisi under its second mortgage. The judge…

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.

Keep reading for free

Create a free CaseChat account to read Sterling & Freeman Advisory Pty Ltd v Callisi Pty Ltd and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [2024] VSCA 105
Decision Date: 23 May 2024

CaseChat Overview and Summary

Sterling & Freeman Advisory Pty Ltd, as the first mortgagee, sought to enforce a judgment against Callisi Pty Ltd, who held a second mortgage over a property. Both mortgages were secured by the same property, along with another property. The first mortgagee held a first mortgage over both properties and a second mortgage over one of the properties. Callisi, the second mortgagee, held a second mortgage over the other property. After both properties were sold, the proceeds were distributed according to their respective mortgagee status. Sterling, as the first mortgagee, received the proceeds from both properties, while Callisi received nothing. The court was tasked with determining whether Callisi was entitled to a share of the proceeds from the sale of the first property, despite receiving nothing from the sale of the second property. The legal issue before the court was whether Callisi was entitled to marshal the proceeds of sale under the principles of apportionment, despite not having any fund under the court's control. The court found that the principles of apportionment did not apply in this situation, and Callisi was not entitled to any relief. The court held that the appeal was allowed because the issue was not raised at trial but went to the power of the court to make orders. It was expedient in the interests of justice to permit the argument on appeal. The court referred to the case of Water Board v Moustakas (1988) 180 CLR 491, which applied to the situation where an issue on appeal was not raised at trial.

Orders