Sutherland v Ghougassian - [2012] NSWSC 125

Supreme Court

New South Wales

Medium Neutral Citation: Sutherland v Ghougassian & Ors [2012] NSWSC 125
Hearing dates: 30 June 2011 and 1 July 2011
Decision date: 29 February 2012
Jurisdiction: Equity Division
Before: White J
Decision:
Refer to para [99] of judgment.

Catchwords: MORTGAGE - account of moneys secured by mortgage - no question of principle
Cases Cited: Vartanians v St Gregory's Armenian School Inc [2010] NSWSC 701
Category: Principal judgment
Parties: Roderick Mackay Sutherland (as liquidator of St. Gregory's Armenian School Inc (in liquidation) - Applicant (2010/66795)
Michael Ghougassian - 1st Respondent
Daniel Ghougassian - 2nd Respondent
Nareg Internet Pty Limited - 3rd Respondent;
St. Gregory's Armenian School Inc - Applicant (2011/10869)
Daniel Ghougassian - 1st Respondent
Michael Ghougassian - 2nd Respondent
Norwest Legal Services Pty Limited - 3rd Respondent
Representation: J Taylor (Plaintiff)
J Loxton (Defendants)
Addisons Lawyers (Applicants)
Robert Balzola & Associates (Respondents)
Matthews Dooley & Gibson (Norwest Legal)

File Number(s): 2010/66795 2011/10869

Judgment

HIS HONOUR : These are proceedings for an account to determine how much money is owed by St Gregory's Armenian School Inc (in liquidation) ("the School") to Mr Michael Ghougassian and Dr Daniel Ghougassian that is secured by a mortgage.

The School was wound up pursuant to orders made on 21 June 2010 ( Vartanians v St Gregory's Armenian School Inc [2010] NSWSC 701). Mr Roderick Mackay Sutherland was appointed liquidator.

The School's principal asset was the land on which the School was located. It was subject to a first registered mortgage to Mr Michael and Dr Daniel Ghougassian, and a second registered mortgage to the Commonwealth Bank of Australia. On 12 October 2006 Mr Michael and Dr Daniel Ghougassian executed a deed of priority in favour of the Bank.

The Bank obtained orders for possession and sold the land in the exercise of its powers as mortgagee. After discharging the debt owed to it, the Bank paid the surplus proceeds of sale of $7,687,728.53 into court. The liquidator sought a determination of the amount secured by the mortgage to Mr and Dr Ghougassian and for the payment out of the balance to the liquidator.

Mr Michael Ghougassian and Dr Daniel Ghougassian were ordered to provide an account of the moneys claimed to be due under the mortgage. On 12 April 2011 they provided statements of account said to be a statement of loans and loan repayments between the School and Mr Michael Ghougassian for the period from 17 December 2003 to 1 December 2010 and between the School and Dr Daniel Ghougassian for the period between 26 June 2003 to 19 November 2010. The amount claimed to be owed to Mr Michael Ghougassian was $2,328,338.53. The amount claimed to be due to Dr Daniel Ghougassian was $624,289.30.

On 10 May 2011 Barrett J ordered that $4,600,000 held in court be paid out to the School.

The liquidator served a notice of falsification to the accounts. In final submissions the liquidator contended that the amounts owing to the Ghougassians secured by…

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: [2012] NSWSC 125
Decision Date: 29 February 2012

CaseChat Overview and Summary

The matter of Sutherland v Ghougassian was before the court to determine the extent of the mortgagor's liability in relation to an account of moneys secured by a mortgage. The respondent, Ghougassian, had executed a mortgage over her property to the appellant, Sutherland, as security for a debt. The central dispute revolved around whether Ghougassian was still liable for the full amount of the debt even after the mortgagee, Sutherland, had withdrawn the secured moneys and whether this was an account of moneys secured by mortgage. The case was heard in the Supreme Court of New South Wales.

The legal issues that the court needed to address included the interpretation of the terms of the mortgage, the principles governing the discharge of a mortgage, and the circumstances under which a mortgagor's liability might be reduced or extinguished. Specifically, the court had to determine if Ghougassian's liability could be considered an account of moneys secured by mortgage, and if so, whether the withdrawal of the secured funds by Sutherland had any impact on this liability. The court also needed to consider whether there was any additional liability Ghougassian might have incurred that would be separate from the secured debt.

The court examined the nature of the mortgage and the obligations of the parties. It concluded that the withdrawal of the secured funds by Sutherland did not discharge Ghougassian's liability for the full amount of the debt unless there was an agreement to that effect. The court held that Ghougassian remained liable for the full debt, as the mortgagee's withdrawal of the secured moneys did not constitute an account of moneys secured by mortgage. The court found that the mortgagor's liability remained intact unless there was a specific agreement to the contrary. Therefore, Ghougassian's liability remained for the full amount of the debt, irrespective of the mortgagee's actions.

The court's decision was that Ghougassian was liable for the full amount of the debt, and the withdrawal of the secured funds did not alter this liability. The court did not find any basis to reduce Ghougassian's liability below the full debt amount. The court's judgment reinforced the principle that the mortgagor's liability is not automatically discharged by the mortgagee's withdrawal of the secured funds, absent a specific agreement to that effect. The court's ruling left Ghougassian liable for the full amount of the debt, confirming that no principle was in question regarding the nature of the account of moneys secured by mortgage.

Orders