Tajon Pty Ltd v Arvanitis
[2017] VSC 130
•23 March 2017
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
PROPERTY LIST
S CI 2016 05291
| TAJON PTY LTD (ACN 009 223 714) | Plaintiff |
| v | |
| JOHN ARVANITIS | First Defendant |
| XENOFON (FONDA) ARVANITIS | Second Defendant |
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JUDGE: | Derham AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 16 March 2017 |
DATE OF JUDGMENT: | 23 March 2017 |
CASE MAY BE CITED AS: | Tajon Pty Ltd v Arvanitis and Anor |
MEDIUM NEUTRAL CITATION: | [2017] VSC 130 |
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LAND – Recovery of possession – Mortgagee seeking to recover possession of mortgaged land from persons in occupation as beneficiaries under a discretionary investment trust – Mortgagor company is trustee, purportedly pursuant to a tenancy agreement or licence – Mortgagor company in liquidation – Whether basis for the recognition of a tenancy – Whether defendants and other occupiers are mere licensees – Cowell v Rosehill Racecourse Co Ltd (1937) 56 CLR 605; Galloway v National Australia Bank Limited [2016] VSCA 330; Balanced Securities Limited v Bianco & Ors [2010] VSC 162.
PRACTICE AND PROCEDURE – Application for summary recovery of possession of land – Alternatively, recovery of possession under the Transfer of Land Act 1958 or at common law – Whether summary procedure to recover possession of the land available to mortgagee against third parties to the mortgage – Whether originating motion procedure appropriate to an action for the recovery of possession of land – Recovery of possession pursuant to Order 53 of the Rules available to the plaintiff in this case – Alternatively, originating motion procedure available in any event – Supreme Court (General Civil Procedure) Rules 2015, Order 53 – Framlingham Aboriginal Trust v McGuiness and Chatfield [2014] VSC 241, affirmed in Framlingham Aboriginal Trust v McGuiness and Chatfield [2014] VSC 354; Pappas v Bowmark Pty Ltd [1998] VSCA 120; Byrne v Ritchie [2009] VSC 114.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr J D McKay | Mills Oakley |
| For the Defendants | Mr T Kaine | Kainelaw Australian Lawyers |
HIS HONOUR:
Introduction
The plaintiff applies by amended originating motion in Form 5E:
(a) pursuant to order 53 of the Supreme Court (General Civil Procedure) Rules 2015 (‘Rules’) for the recovery of the land situated at 323-33 Point Nepean Road, Dromana, Victoria and 3-5 Heales Street, Dromana, Victoria (‘the Property’);[1]
(b) alternatively, possession of the Property at common law or pursuant to the Transfer of Land Act 1958 (Vic) (‘TLA’).[2]
[1]The land more particularly described in Certificates of Title Volume 2411 Folio 008, Volume 4034 Folio 739, Volume 8177 Folio 586, Volume 8531 Folio 974 and Volume 10662 Folio 275.
[2]The originating motion as issued made application only pursuant to order 53. By amendment made with leave on 23 February 2017, the further basis of recovery of possession was added.
Background
The Mortgages
Pearl Beach Property Administration Pty Ltd (‘PBPA’) is the registered proprietor of the Property. The plaintiff holds a first mortgage over the Property dated 5 April 2011. It was transferred to the plaintiff by Wisewoulds Nominees Limited on 30 October 2011. The plaintiff also holds a second mortgage over the Property dated 27 September 2011.
The first mortgage secures moneys advanced to PBPA by the plaintiff under a Deed of Loan dated 18 March 2011 and a Deed of Assignment dated 13 October 2014. The second mortgage secures moneys advanced to PBPA by the plaintiff under a Deed of Loan dated 29 August 2011, a Deed of Variation dated 8 March 2012, a Deed of Variation dated 24 April 2012 and a Deed of Acknowledgment of Further Debt dated 24 April 2012.[3]
[3]Affidavit of Menasche Stul affirmed 21 December 2016; Affidavit of Michael Tandora affirmed 17 January 2017, [5]-[7].
Default and Notices under the Transfer of Land Act
On 7 September 2015, the plaintiff gave PBPA two notices under s 76 of the TLA. The notices required PBPA to pay the total arrears arising under the first and second mortgages together with interest within seven days after service of the notice, and further gave notice that upon a failure to pay the arrears and interest within that time, the total amount owing under the mortgages would be immediately due and payable and the mortgagee may proceed to take possession of the Property and exercise its power of sale under the mortgage and at law.
On 26 November 2015, the plaintiff issued to PBPA a statutory demand pursuant to the Corporations Act 2001 (Cth) (‘the Corps Act’) for payment of the amount outstanding under the first mortgage. After an unsuccessful application to set aside the statutory demand and some adjournments, on 9 November 2016, PBPA was ordered to be wound up and Joseph Loebenstein was appointed liquidator.
On 25 November 2016, the plaintiff (by its solicitors in this proceeding) issued to PBPA two notices pursuant to s 76 of the TLA, and under clause 15(3) of the Memorandum of Common Provisions (‘MCP’) applicable to the first and second mortgages, of its intention to take possession of the Property after 2 December 2016.[4] They were served at the registered office of PBPA.
[4]Affidavit of Menasche Stul, 21 December 2016, [14], exhibits ‘MS-9’ and ‘MS-10’.
The first defendant is the sole director and shareholder of PBPA and the second defendant is his son. The defendants are in occupation of the Property with other members of their family.[5] On 7 December 2016, the plaintiff, by its solicitors, wrote to Mr Nick Agetzis of Noble House Lawyers (‘Noble’), the solicitors who had acted for PBPA in the plaintiff’s application to have it wound up. With that letter, the plaintiff’s solicitors enclosed a notice to vacate the Property.[6]
[5]Ibid [15]; Affidavit of Michael Tandora affirmed 17 January 2017, [4], exhibit MT-2; Affidavits of Helen Margaret Steele sworn 16 February 2017; affidavit of Jean (John) Arvanitis sworn 1 March 2017.
[6]Ibid [16] and exhibit ‘MS-11’.
On 7 December 2016, the plaintiff also entered into a contract to sell the Property as mortgagee in possession to a company named Dromana Beach Pty Ltd (‘Dromana Beach’).
Service of the notice to vacate and of the originating motion and supporting affidavits in this application were effected on Noble, the solicitors previously acting for PBPS. The plaintiff’s solicitor had reason to believe that Noble acted for the defendants and despite the absence of personal service on the defendants, the plaintiff’s solicitors began communicating with Noble. The communications make it clear beyond a doubt that Noble acted for the Defendants, and had brought the notice to vacate and the proceeding to their notice.
After purporting to serve the originating process and supporting materials on Noble, the plaintiff’s lawyers received a letter from Noble dated 13 January 2017 which stated (relevantly) that: [7]
As discussed we have today received instructions to act on behalf of Mr John and Mr Xenofon Arvanitis in relation to this matter.
We are in the process of obtaining more detailed instructions and in the interim are instructed to request an adjournment of the first mention of the matter on 17 January 2017.’
Our client has instructed us to seek an adjournment in circumstances where a) our client was not made aware of your client’s process until this week given that our client has been ill and given that it was the Christmas period and b) this is a complex matter and our client wishes to brief competent counsel which may take further time and c) in order to avoid wasting the valuable time of the court.
[7]Exhibit MT-12 of the Affidavit of Michael Tandora affirmed 20 February 2017.
On 16 January 2017, Noble wrote again to the same effect:
‘We are instructed to request an adjournment until 7 February 2017. We expect to file and serve Notice of Appearance by no later than Monday (16 January 2017) and proposed consent orders for your client’s consideration.’[8]
[8]Exhibit MT-16 to the affidavit of Michael Tandora affirmed 20 February 2017.
The plaintiff’s solicitors agreed to the adjournment. On 16 January 2017, Noble emailed Justice Riordan’s chambers stating that they acted for the defendants,[9] and attached signed consent minutes adjourning the application to 22 February 2017. Orders were made by Justice Riordan accordingly.
[9]Exhibit MT-13 to the affidavit of Michael Tandora affirmed 20 February 2017.
Noble failed to file an appearance on behalf of the defendants, despite letters from the plaintiff’s solicitors on 31 January 2017 and 14 February 2017 requesting that an appearance be filed.[10]
[10]Exhibit MT-16 and MT-17 the affidavit of Michael Tandora affirmed 20 February 2017.
Justice Riordan referred the matter to me. On 22 February 2017, the second defendant appeared and informed the Court that the defendants had engaged new solicitors. A little later, the defendants’ solicitor, Mr Kaine, attended Court. He applied for an adjournment, having been instructed late in the evening of 21 February 2017. I gave him an opportunity to obtain instructions as to the reason for the lack of action by the defendants’ former solicitors, Noble, so as to provide some proper basis for an adjournment, and stood the matter over to 2.15pm that day.
When the matter was later mentioned, it appeared that there were reasons for the defendants’ lack of preparation, namely, that first defendant had been hospitalised, and that there were arguments of substance that they wished to advance in opposition to the application for summary recovery of possession of the Property. In the first instance, Mr Kaine submitted that the application was an abuse of the process of the Court as the proper mode of the plaintiff obtaining possession of the Property was for it to proceed by writ against the mortgagor. Mr Kaine conceded that the defendants are in residence at the Property. He stated that there may be a residential tenancy agreement in place between PBPA and the defendants and sought further time to obtain instructions. He was unable to provide any other material to explain why Noble had done nothing, despite the defendants having long notice of the application and having sought and obtained an adjournment of the application from 17 January to 22 February 2017.
Mr Kaine then applied for an adjournment on the basis that further instructions are required to put affidavit material before the Court and to advance legal arguments to resist the plaintiff’s application for possession.
In addition, there was another proceeding, an application by the plaintiff to remove a caveat lodged on the title to the Property by the purchaser under an earlier contract of sale entered into by PBPA and, allegedly, terminated. This matter had been referred to me by Justice Riordan.[11] Mr Kaine submitted that the presence of that proceeding and the fact that it had been adjourned[12] meant that there would be no prejudice to the plaintiff by the adjournment as the removal of the caveat had to be dealt with to enable the sale of the Property by the plaintiff to be completed.
[11]In that case pursuant to r 77.05 of the Rules.
[12]It was adjourned to enable the caveator to adduce evidence and advance legal arguments in support of the contention that the defendant’s caveatable interest arising under the contract of sale of the land should entitle it to maintain its caveat. Later it was discontinued by consent, presumably because the caveat had been agreed to be removed.
After argument, an adjournment was granted and directions made for the filing of an amended originating motion by the plaintiff and for the filing of affidavits and outlines of submission.
The right of the plaintiff to possession
Although the disputes raised by the defendants are not about the entitlement of the plaintiff to enforce its mortgages, and whether it has established its right to possession of the Property as against the mortgagee, the plaintiff has put forward its proofs and supporting submissions so as to show that its claim for possession pursuant to the mortgages is ‘irrefutable’.[13] In summary, the plaintiff submits that:
[13]Plaintiff’s Outline of Submissions 22 February 2017, [7].
(a) the plaintiff holds the first and second mortgages, which are the ranking security interests over the Property. Those registered mortgages enjoy the protections of indefeasibility conferred by the TLA;[14]
[14]See ss 40 to 44 of the TLA.
(b) the mortgages incorporate the MCP. The MCP contains an expansive definition of the ‘moneys hereby secured’ under the mortgages, which extends to ‘the principal monies secured’ and also to ‘each and all sums of money in which the Mortgagor may now or hereafter be indebted or liable or contingently indebted or liable to the Mortgagee’;[15]
[15]MCP’s clause 31.
(c) the MCP applicable to each of the first and second mortgages includes as part of clause 15 the following:
(2)(a) The period for which the default specified in Section 76 of the Act must continue before service of the notice referred to in that section is seven days.
(b)The period for which default must continue after service of the notice before the power of sale given by Section 77 of the Act can be exercised is seven days.
(3)Upon giving seven days’ notice (which may be contained in the same notice referred to in sub-clause (2)(a)) of its intention to exercise the power given by this sub-clause the Mortgagee may at any time after the expiration of the period referred to in sub-clause (2)(b) enter upon and take possession of the land or any part thereof and exercise and do all or any of the acts powers and authorities vested in or given to mortgagees by the Act [the TLA] or the Property Law Act 1958 or vested in landlords pursuant to the provisions of the Landlord and Tenant Act 1958 or the Residential Tenancies Act 1980 or the Retail Tenancies Act or by any other statutory provision or at common law or in equity and in addition thereto the Mortgagee may if it thinks fit…
[and then there are set out a range of powers not presently relevant].
(d) the loans secured by the mortgages have been properly proven and evidenced in the plaintiff’s supporting affidavits. They constitute ‘principal monies secured’ under the mortgages and the mortgages are enforceable; and
(e) notices were served on PBPA under both mortgages for the purposes of s 76 of the TLA. The 7 days required under clause 15.2(b) of the MCP subsequently lapsed. The notices of possession required by clause 15.3 of the MCP were then served, and then the required 7 day period was afforded in those notices. The right of possession conferred under clause 15.3 of the MCP has arisen. That right derives from the registered mortgages, and is therefore a right in rem that is good against the defendants and any other occupiers of the Property notwithstanding any lack of privity of contract.
Thus, by virtue of the combined operation of s 76 of the TLA and clause 15(3) of the MCP, and the service of the notices of default and of its intention to take possession of the Property, the plaintiff became entitled to possession of the Property on 3 December 2016. The service of the notice to vacate on Noble clearly identified that the defendants and others are in occupation of the Property and that they do not have the plaintiff’s permission to remain and that they must vacate the Property immediately.[16]
[16]Exhibit MS-11 the affidavit of Menasche Stul of 21 December 2016.
Defendants’ Evidence
The first defendant filed an affidavit sworn 1 March 2017 deposing that:
(a) he is the sole director of PBPA and that PBPA is the trustee of the Arvanitis Investment Trust ‘which is the owner of the property’. He and his wife, Irene, are the primary beneficiaries of that Trust;
(b) in 2015, he entered into an agreement with PBPA to reside in the house on the Property until it was ready to be demolished for the purposes of development;
(c) since 2015, he and Irene had been residing at the Property pursuant to that agreement;
(d) PBPA entered into a similar agreement with his brother, Stavros Arvanitis, and the second defendant. They too have been residing at the Property since 2015;
(e) until the commencement of this proceeding, the solicitor for the plaintiff, PBPA, the first and second defendant was Graeme Efron. Mr Efron was aware of the tenancy agreements and had recommended that they reside at the Property. The plaintiff has also been aware that they were residing at the Property as tenants; and
(f) since the appointment of the liquidator to PBPA, the liquidator has not served any notices upon the defendants terminating the tenancy agreements and the defendants, Stavros and Irene continue to reside at the premises as tenants. They did not take possession of the Property unlawfully and are not trespassers or squatters.
The first defendant swore a second affidavit on 14 March 2017 providing additional evidence that:
(a) PBPA became the registered proprietor of the Property on 5 April 2011;
(b) PBPA has been in possession and occupation of the Property since that date and continues to do so as the trustee of the Trust together with the defendants, Irene and Stavros;
(c) he produces a copy of the Trust Deed;
(d) no application has been made to the Court by the plaintiff for possession or recovery of the Property from PBPA or the Trust, and no attempt has been made by the liquidator to take possession of the Property nor has the liquidator made application for or obtained an order vesting the Property in him. The Property continues to belong to PBPA as trustee of the Trust; and
(e) on Friday, 10 March 2017, he was informed by Chris Young, one of the directors of Dromana Property Ownership Pty Ltd, that the liquidator of PBPA had agreed to resign as liquidator and an application was to be made to have him removed and another liquidator appointed in his stead pursuant to s 473 of the Corps Act.
Further Evidence from the Plaintiff
On 9 March 2017, Mr Michael Tandora, the solicitor for the plaintiff, affirmed a further affidavit in support of the application, exhibiting an email exchange between Mr Graeme Efron and the liquidator of PBPA. In that exchange, Mr Efron requested that the liquidator confirm that there is no current or expired lease in respect of the Property in PBPA’s records (to the extent that they are in the liquidator’s custody), that PBPA’s financial statements do not suggest that it ever received any rent for the Property and whether or not the liquidator had consented to the defendants, or anyone else, occupying the Property. It was also asked whether the liquidator contested the plaintiff’s claim for possession of the Property.
The liquidator responded that he did not have any of the records of PBPA and was unable to say whether there was any current or expired lease or whether any rent had ever been received in respect of the Property. He confirmed that the liquidator had not consented to the defendants, nor anyone else, occupying the Property and that on the information currently available to him, he did not intend to contest the plaintiff’s claim for possession.[17]
[17]There was no objection to the hearsay evidence in this affidavit of Mr Tandora (affirmed on 9 March 2017). Even if there were such an objection, the ‘previous representations’ in the emails may well be admissible under s 69 of the Evidence Act 2008: see Smith v Gould (Ruling No 1) [2012] VSC 210.
Then on 15 March 2017, Mr Tandora affirmed a further affidavit exhibiting emails passing between Mr Efron and Mr Ozzie Kheia of Dromana Beach, (the purchaser under the contract of sale entered into by the plaintiff pursuant to its power of sale). In this affidavit, Mr Tandora confirmed the earlier evidence given by Mr Stul that on 7 December 2016, the plaintiff entered into a contract to sell the Property as mortgagee in possession to Dromana Beach and that settlement has been agreed to take place on 31 March 2017. He also gives evidence about attempts by a soil testing consultant to gain access to the Property and, in effect, foreshadow an application for an order restraining the defendants and any other occupants of the Property from interfering with reasonable access to the Property by the purchaser under the contract of sale, its agents and contractors, until the defendants and any other occupants of the Property vacate it.
Objection was taken to the hearsay evidence in this affidavit. To the extent that it relies upon the hearsay evidence in an email exhibited to the affidavit, it is not admissible on this application and I will have no regard to it.[18]
Applicable law[19]
[18]This is not an interlocutory application to which s 75 of the Evidence Act 2008 applies. It is the final hearing, or trial, of an application for possession of the Property. No argument was put that s 69 of the Evidence Act applied.
[19]This summary of the law is taken from the decision in Framlingham Aboriginal Trust v McGuiness and Chatfield [2014] VSC 241 which was affirmed in Framlingham Aboriginal Trust v McGuiness and Chatfield [2014] VSC 354.
Order 53 is headed ‘Summary Proceeding for Recovery of Land’. Rule 53.01 of the Rules provides:
(1)Subject to paragraph (2), this Order applies where the plaintiff claims the recovery of land which is occupied solely by a person or persons who entered into occupation or, having been a licensee or licensees, remained in occupation without the plaintiff’s licence or consent or that of any predecessor in title of the plaintiff.
(2)This Order does not apply where the land is occupied by a mortgagor or successor in title and the claim is made by the mortgagee or successor in title.
Rule 53.02 of the Rules authorises a plaintiff to make a claim in a proceeding in accordance with the Order, and provides that the proceeding shall be commenced by originating motion and be in Form 5E. Rule 53.03 provides that each person in occupation of the land whose name the plaintiff knows shall be a defendant and if the name of any person in occupation is not known, the proceeding may be commenced without naming any person as defendant.
By r 53.04 of the Rules, it is provided that:
At the time the proceeding is commenced an affidavit shall be filed stating that:
(a) The interests of the plaintiff in the land;
(b)The circumstances in which the land is being occupied without licence or consent and in which the claim for recovery of the land arises; and
(c)That the plaintiff does not know the name of any person occupying the land who is not a defendant.
Provision is also made for service of the originating motion and affidavit in support (together with exhibits). Service on a defendant must be personal,[20] and service on any person occupying the land who is not a defendant is to be effected by affixing a copy of the originating motion and a copy of the affidavit to some conspicuous part of the land, and, if practicable, leaving a copy of the same documents in a sealed envelope addressed to ‘The Occupiers’ in a letterbox or other receptacle for mail.[21]
[20]Rule 53.05(2).
[21]Rule 53.05(3).
Order 53 creates a special procedure for the summary recovery of land in certain restricted circumstances. The order is based upon what was order 113 in the English High Court Rules introduced in 1970, the background to the introduction of that order was explained by Lord Denning MR in McPhail v Persons Unknown,[22] in the following terms:
…When some squatters entered on vacant land belonging to the Manchester Corporation, this court granted an injunction against them, but held that it could not make an order for recovery of possession except in a final judgment: …
… And when some squatters occupied houses in Brighton, Stamp J. held that no proceedings could be taken for recovery of possession unless they were named as defendants: see In Re. Wykeham Terrace, Brighton, Sussex, Ex parte Territorial Auxiliary and Volunteer Reserve Association for the South East [1971] Ch. 204. The result was that if the squatters did not give their names, or if one squatter followed another in quick succession, no order for possession could be made. I must confess that I doubt the correctness of that decision. But it does not matter. The position was soon put right by new rules of court. R.S.C., Ord. 113, of the High Court and Ord. 26 in the county court are quite clear. A summons can be issued for possession against squatters even though they cannot be identified by name and even though, as one squatter goes, another comes in. Judgment can be obtained summarily. It is an order that the plaintiffs “do recover” possession. That order can be enforced by a writ of possession immediately…
[22][1973] 1 CH 447, 458.
The words of r 53.01(1) of the Rules make it plain that the pre-requisites to the application of O 53 are that the person or persons in occupation of the land:
(a) entered into occupation without the plaintiff’s licence or consent or that of any predecessor in title of the plaintiff; or
(b) are a person or persons who, having been a licensee or licensees, remained in occupation without the plaintiff’s licence or consent or that of any predecessor in title of the plaintiff.[23]
[23]See Pappas v Bowmark Pty Ltd [1998] VSCA 120 [13].
Thus, a tenant holding over after the termination of the tenancy is not within either category and the service of a notice on the tenant purporting to determine the holding over does not alter that position. That is because the tenant to whom such a notice is given entered into occupation by licence or consent, and so is not within paragraph (a), and paragraph (b) does not apply because the tenant is not a person who was once a licensee.[24]
[24]Pappas v Bowmark Pty Ltd [1998] VSCA 120 [13]; Williams, Civil Procedure Victoria, [53.01.0].
The authorities establish the following matters in relation to the operation of O 53:
(a) it is intended to enable a speedy resolution in favour of the proprietor of land of a dispute whereby trespassers are keeping the proprietor out;[25]
[25]Pappas v Bowmark Pty Ltd [1998] VSCA 120 [13].
(b) it is intended to apply only in clear cases where there is no question to try;[26]
[26]Palazzo v Pullen (unreported, Supreme Court of Victoria, Brooking J, 24 July 1992, BC9200663).
(c) the existence of a factual dispute does not deny the applicability of O 53 where it is possible to resolve the dispute readily and fairly.[27]
[27]Pappas v Bowmark Pty Ltd [1998] VSCA 120 [13]; Melbourne Anglican Trust Corporation v Greentree (Unreported, Supreme Court of Victoria, Vincent J, 29 May 1997); Tolhurst Druce & Emerson v Maryvell Investments Pty Ltd [2007] VSC 271, [193]–[195]; Byrne v Ritchie [2009] VSC 114 [17] (Unreported, Supreme Court of Victoria, Kyrou J, 3 April 2009).
(d) while an order for possession may be made notwithstanding that there is a factual dispute between the parties, such an order will only be appropriate if the Court is able to satisfy itself as to the material facts that bring the case within O 53;[28]
[28]Byrne v Ritchie [2009] VSC 114 [17] (Unreported, Supreme Court of Victoria, Kyrou J, 3 April 2009).
(e) the jurisdiction should be exercised with great care;[29]
(f) where an issue does emerge, the judge has discretion to dismiss the proceeding or to determine the issue or cause the issue to be subsequently tried. This includes giving directions as to the further conduct of the proceeding or ordering the proceeding continue as if begun by writ pursuant to r 4.07 of the Rules;[30] and
(g) where the Court gives judgment for possession under order 53, it may grant a stay of execution.[31]
[29]Melbourne Anglican Trust Corporation v Greentree (Unreported, Supreme Court of Victoria, Vincent J, 29 May 1997); Max Moar & Queenbridge Pty Ltd v Shazia Duman [2007] VSC 266 [2], (Unreported, Supreme Court of Victoria, Pagone J, 23 July 2007).
[30]Palazzo v Pullen (Unreported, Supreme Court of Victoria, Brooking J, 24 July 1992, BC9200663).
[31]See Parker v Mielicki [2003] VSC 263 and r 66.16 of the Rules.
Plaintiff’s Primary Submissions
The plaintiff submitted that the summary procedure for obtaining possession of land established by O 53 of the Rules requires the plaintiff to establish a case for recovering possession of the Property that is sufficiently clear and appropriate for summary determination. This was confirmed in Byrne v Ritchie[32] where Kyrou J[33] said:
The procedure in Order 53 is appropriate where it is readily apparent that the defendant does not have a current right to remain on the relevant land, including where any dispute as to the existence of such a right can be promptly and fairly determined summarily. While such an order may be made notwithstanding that there is a factual dispute between the parties, such an order will only be appropriate if the Court is able to satisfy itself as to the material facts that bring the case within Order 53.
[32][2009] VSC 114 [17].
[33]As he then was.
The specific jurisdictional or procedural requirements that must be satisfied under O 53 have been satisfied, namely:
(a) the originating motion has been served personally on each defendant pursuant to r 6.11 of the Rules,[34] and has been served on any person who is not a defendant by affixing a copy of the originating motion and a copy of the affidavit to some conspicuous part of the land, and left in the letter box, both in a sealed envelope addressed to ‘The Occupiers’;[35]
[34]Rule 6.11 of the Rules provides ‘Where for any reason a document has not been served in the manner required by these Rules, but the document has come to the notice of the person to be served, the document shall be taken to have been served on the day it came to the person’s notice.’
[35]Order 53.05; affidavits of Helen Margaret Steele of 9 January 2017.
(b) the relevant land is occupied solely by a person or persons who entered into occupation or, having been a licensee or licensees, remained in occupation without the plaintiff’s licence or consent or that of any predecessor in title of the plaintiff.[36] The first defendant is the sole director of PBPA, and the second defendant is his son. There is a strong inference that they (and the other people residing at the Property) entered into possession with the permission of PBPA. The proper analysis is that PBPA has, through its director the first defendant, given a licence to the defendants and other occupants to reside at the Property. The notices of default and intention to take possession given by the plaintiff[37] demonstrate that those occupants remain in possession without the plaintiff’s consent;
[36]Order 53.01(1).
[37]Exhibits MS-9 to MS-11 to the Stul affidavit.
(c) this is not a case where the land is occupied by a mortgagor or successor in title and the claim is made by the mortgagee or successor in title.[38] Although the plaintiff is a ‘mortgagee’ within the meaning of r 53.01(2) of the Rules, the Property is not occupied by the ‘mortgagor’ of the Property within the meaning of that provision. The sole ‘mortgagor’ named in the mortgages are PBPA. Since its liquidation, PBPA’s director (the first defendant) has lost any ability to exercise the rights and powers of the company, including the right to take and hold possession of the Property on behalf of the company.[39] PBPA’s liquidator has acquired those powers. The liquidator plainly has not recovered possession of the Property from the present occupiers, and is not in physical possession on behalf of PBPA. Further, the liquidator (and PBPA) is not entitled to possession of the Property as against the plaintiff as mortgagee. The notices of possession served by the plaintiff under clause 15.3 of the MCP have been served on the liquidator, and are effective to deprive PBPA of the right of possession that would otherwise flow from its proprietorship of the Property, it being registered proprietor in fee simple. The defendants and their fellow occupants are in possession, and the plaintiff is entitled to recover possession from them. As such, r 53.01(2) is not engaged, and the summary procedure has been properly invoked;
(d) each person in occupation of the land whose name the plaintiff knows is a defendant;[40] and
(e) the supporting affidavit states the interest of the plaintiff in the land; the circumstances in which the land has been occupied without licence or consent and in which the claim for recovery of the land arises; and that the plaintiff does not know the name of any person occupying the land who is not a defendant.[41]
[38]Order 53.01(2).
[39]Corporations Act 2001 (Cth), s 471A. That section provides by sub-section (1), ‘While a company is being wound up in insolvency or by the Court, a person cannot perform or exercise, and must not purport to perform or exercise, a function or power as an officer of the company’. Sub-section (3) provides that ‘This section does not remove an officer of a company from office’. A director is an officer of a company: see definition of officer of a corporation in s 9.
[40]Order 53.03.
[41]Order 53.04.
Defendants’ Submissions and Plaintiff’s Response
The defendants’ submitted that an application under O 53 is not the appropriate procedure for a mortgagee to seek an order for recovery of land from the mortgagor or tenants of the mortgagor or its agents, and that is the situation in this case.
Order 53.01(2) expressly states that ‘This order does not apply where the land is occupied by a mortgagor… and the claim is made by the mortgagee’. The mortgagor is PBPA (in liq) as trustee of the Arvanitis Investment Trust. The first defendant and Irene are the primary beneficiaries of the Trust and are in possession pursuant to a residential tenancy agreement or licence. The second defendant is the first defendant’s son and he and Stavros are in occupation pursuant to a residential tenancy agreement or alternatively, a licence which has not been revoked by the registered proprietor or liquidator.
The plaintiff submitted in response, that no valid and enforceable tenancy agreement had been established. It is not alleged by the defendants that any rent or other consideration was in fact agreed or paid to PBPA by the defendants, or by Irene or Stavros. Rent or other consideration is one of the fundamental attributes that must be proven in order to establish the existence of a lease or tenancy agreement.[42] In the absence of any agreement to pay rent or some other consideration, the alleged tenancy agreements are void for want of consideration.
[42]AJ Bradbrook, CE Croft and RS Hay, Commercial Tenancy Law, 3rd Ed., 3rd Ed p19.
Further, the alleged tenancies are uncertain. The term of the tenancy agreements has not been defined with any precision to allow the duration of the alleged tenancy to be identified. An agreement that is to last ‘until the house was ready to be demolished for the purposes of development’, is vague and uncertain. The person who is to determine when that event arises is not identified. The duration depends upon a subjective evaluation or opinion as to when a particular development is ready to proceed.
The plaintiff contended that:
(a) these factors are fatal to the existence of any enforceable tenancy agreement. In Prudential Assurance Co Ltd v London Residuary Body[43] it is said:
[43][1992] 2 AC 386; see also Anthony v Stanton [1943] VLR 179 and Morison v Edmonston [1907] VLR 191.
The certainty of the lease as to its continuance must be ascertainable either by the express limitation of the parties at the time the lease is made, or by reference to some collateral act which may, with equal certainty, measure the continuance of it, otherwise it is void.
(b) neither the second defendant, nor Irene or Stavros, have made any affidavits deposing to the existence of any tenancy. No subpoena has been issued or served upon Mr Efron to compel him to give evidence of his supposed knowledge of the tenancy. The failure of the liquidator to serve any notice of eviction is irrelevant. It is the plaintiff as mortgagee who is entitled to possession against both the mortgagor and any person in occupation; and
(c) it follows that the defendants have not established the existence of any tenancy. The inference is that they occupy the Property as bare licensees whose licences have been revoked by the plaintiff by the giving of the notices to vacate and by the commencement and service of this proceeding.
The defendants also submitted that the liquidator of PBPA had agreed to resign and an application would be made to replace him. Then, it was said by Mr Kaine, that an application would be made to set aside the contract of sale entered into by the plaintiff by reason of the sale being at an undervalue, relying on a breach of the duties imposed by s 420A of the Corps Act. The response from the plaintiff was, understandably, that this is interesting but irrelevant to the current applications and, in any event, the price under the subsisting contract of sale is greater than the previous contract entered into by PBPA prior to the commencement of the winding up.
The defendants also relied upon the provisions of the Residential Tenancies Act1997 (Vic) (‘RTA’). It was contended that in the absence of a notice to vacate under s 268 of the RTA, the plaintiff is not entitled to recover possession of the Property.
The plaintiff, in response, relied upon its submissions that there was no tenancy that had been proven so that the requirements of s 268 were not applicable. If, on the other hand, it was considered that there was an arguable case that a tenancy had been established, the plaintiff maintained that a tenancy cannot stand against the plaintiff’s entitlement under its registered mortgage and pointed to the Court of Appeal decision in Galloway v National Australia Bank Limited,[44] the decision of J Forrest J in Balanced Securities Limited v Bianco & Ors,[45] and the decisions in Independent Order of Oddfellows Victoria Friendly Society v Telford[46] and Commonwealth Bank of Australia v Baranyay.[47]
[44][2016] VSCA 330 (‘Galloway’).
[45][2010] VSC 162 (‘Balanced Securities’).
[46](1991) V Conv R 54-419.
[47][1993] Vic Rep 43; (1993) 1 VR 589.
The defendants contended that:
(a) the usual procedure for recovery of land by a mortgagee is to make an application by way of writ for possession. It would then be open to the plaintiff to make an application for summary judgment, under s 61 of the Civil Procedure Act 2010 (Vic) (‘CPA’), if it considered that the defendant had no real prospect of success in defending the claim; and
(b) the plaintiff in this proceeding has not given any explanation as to why that procedure was not followed in this case. It can only be inferred that it did not consider that it was likely to succeed with the an application for summary judgment.
In response, the plaintiff contended that the speed with which the originating motion procedure could be used is the obvious reason why it was resorted to in this case. The contract of sale entered into on 7 December 2016 is due for completion at the end of March 2017, and the commencement of a writ proceeding is likely to take at least 70 days before judgment could be obtained summarily. That period would not allow sufficient room for any adjournments or other delays that commonly occur in these kinds of application, as has occurred in this case.
The defendant then submitted that if the plaintiff is making a case for summary judgment under s 61 of the CPA, such an application is completely different to an application pursuant to O 53. Further, by seeking relief in its amended originating motion for possession at common law or pursuant to the TLA, it is seeking to do by the back door what it cannot do by the front door. There is no proper basis for the plaintiff to seek relief in this originating motion for possession at common law or pursuant to the TLA. If such alternative relief was permitted to be sought then the essence of the operation of O 53 would be destroyed.[48]
[48]Framlingham Aboriginal Trust v McGuiness and Chatfield [2014] VSC 241, [38]-[42].
It was contended that the defendants and the other members of their family have been in lawful possession/occupation of the Property since 2015 pursuant to residential tenancy agreements, or alternatively, licenses with PBPA and the Trust. Their tenancy of the Property has not been revoked or withdrawn by PBPA or its liquidator.
The plaintiff responded that there was no abuse of process in the circumstances of this case. In particular, it was pointed out that:
(a) neither the liquidator of PBPA, nor PBPA in liquidation, is in possession of the Property;
(b) as the sole director of PBPA, the first defendant might have licenced himself and his family, including the second defendant, to occupy the Property;
(c) under s 471A of the Corps Act, the first defendant as the sole director of PBPA cannot, and must not, purport to perform or exercise any of the powers of the office of director while the company is being wound up by the Court;
(d) after the order for the winding up of PBPA on 9 November 2016, there could be no further licence granted by the first defendant on behalf of PBPA without the liquidator’s involvement;
(e) the notice to vacate given by the plaintiff to Noble as the defendants’ solicitor on 7 December 2016[49] had the effect of terminating any licence the defendants had to occupy the Property by giving specific notice to the defendants, by name, that they did not have the plaintiff’s permission (as mortgagee in possession pursuant to the rights arising from the notices of default) to remain in occupation of the Property and that they must vacate immediately. Any right the defendants had to occupy the Property was thereby terminated; and
(f) rule 53.01(2) of the Rules is not applicable as the Property is not occupied by the mortgagor nor any successor in title of the mortgagor.
[49]Exhibit MS-11 to the affidavit of Menasche Stul affirmed 21 December 2016.
Analysis
The evidence of a tenancy is cursory and unconvincing. Even if accepted at face value, it does not establish an enforceable tenancy agreement. The terms are vague and uncertain, for the reasons given by the plaintiff. There is no discernible consideration. An agreement for lease, or a tenancy agreement, are subject to the rules governing contracts generally.[50] An agreement is not a binding contract unless the parties have agreed on such terms as are in the circumstances legally necessary to constitute a contract. Otherwise, the supposed contract is bad for uncertainty.[51] The elements for establishing an enforceable tenancy agreement or lease are lacking.[52]
[50]See AJ Bradbrook, CE Croft and RS Hay, Commercial Tenancy Law, 3rd ed, paragraph 4.2.
[51]Per Brooking J in Toyota Motor Corp Australia Ltd v Ken Morgan Motors Pty Ltd [1994] 2 VR 106 at 130.
[52]See AJ Bradbrook, CE Croft and RS Hay, Commercial Tenancy Law, 3rd Ed. [1.5], [4.2].
At best, the evidence establishes that if there is a licence, it was to continue until the house on the Property was ‘ready to be demolished for the purposes of the development of the property’.[53] That also is vague and as an agreement, is uncertain and unenforceable. It also lacks any discernible consideration passing from the licensees to the Mortgagor, PBPA. At best, the defendants had a bare licence, not coupled with a grant, terminable at will. In Cowell v Rosehill Racecourse Co Ltd, Dixon J (as he then was) said:[54]
A licence which is not coupled with or granted in aid of an interest is revocable at law. It operates as a bare permission to do what would otherwise be an invasion of the licensor’s rights. If the permission is terminated, further continuance of the acts it authorized becomes wrongful. A licensee does not become a trespasser until he has received notice that the licence is countermanded and until a reasonable time has elapsed in which he may withdraw from the land and remove whatever property he has brought in pursuance of the licence ... But, if he then refuse to leave the premises, he cannot complain of his forcible removal.[55]
[53]Affidavit of Jean (aka John) Arvanitis sworn 1 March 2017, [3].
[54][1937] HCA 17; (1937) 56CLR 605 at 630-631 (‘Cowell’s case’).
[55]See AJ Bradbrook, CE Croft and RS Hay, Commercial Tenancy Law, 3rd ed,[3.8] as to the authority of these observations since Wintergarden Theatres (London) Ltd v Millenium Productions Ltd [1948] AC 173. There is no reason to doubt the authority in the current circumstances.
The learned authors of Commercial Tenancy Law[56] note that the essence of the principle applied in Cowell’scase is that a licence may be determined and the licensee transformed into a trespasser even if the determination involves a breach of contract.[57]
[56]Third ed, AJ Bradbrook, CE Croft and RS Hay, at [3.8].
[57]Citing Porter v Hannah Builders Pty Ltd [1969] VR 673 at 678 (per Lush J).
In my view, the notice to vacate given by the plaintiff to the named defendants is sufficient notice of termination of any such licence (or even a tenancy at will) that may subsist. That notice to vacate follows notices under s 76 of the TLA, the consequence of which is that the plaintiff is entitled to possession as against the mortgagor and any person claiming under the mortgagor.[58]
[58]AJ Bradbrook, CE Croft and RS Hay, Commercial Tenancy Law, 3rd Ed. 3rd Ed. [2.19], Citing Martinali v Ramuz [1953] 1 WLR 1196; [1953] 2 All ER 892; City Mutual Life Assurance Society Ltd v Lance Creek Meat Works Pty Ltd [1976] VR 1 at 10; Dattner v Wharton [2011] VSC 610 at [67] per Habersberger J.
If there is any tenancy agreement, contrary to my conclusion above, then the question arises – what is the position of the plaintiff as mortgagee under the RTA?
Section 216 of the RTA provides that despite any other Act or law to the contrary, a tenancy agreement does not terminate and must not be terminated except in accordance with this Division or Part 7 or 8.[59] Under the RTA a ‘tenancy agreement’ is defined to mean an agreement, whether or not in writing and whether express or implied, under which a person lets premises as a residence.[60]
[59]Section 216 is in Division 1 of Part 6. Part 6 is headed ‘Termination’. Division 1 is headed ‘Termination of Residential Tenancies’. Part 7 is concerned with regaining possession and Part 8 with violence on certain premises.
[60]Definition of ‘tenancy agreement’ in s 3 of the RTA.
Section 223 of the RTA provides for termination of a tenancy agreement where a mortgage gives a notice to vacate under s 268.
Section 268 provides that:
(1)If a mortgagee in respect of rented premises under a mortgage entered into before the tenancy agreement was entered into becomes entitled to possession of, or to exercise a power of sale in respect of, the premises under a mortgage, the mortgagee may give the tenant a notice to vacate the premises. [emphasis added]
(2)The notice must specify a termination date that is not less than 28 days after the date on which the notice is given.
Section 325 of the RTA enables a mortgagee to apply to the Tribunal for a possession order if the mortgagee has given a notice to vacate and the tenant has not delivered up vacant possession. Section 334 of the RTA provides, so far as relevant, that if a possession order is made under Division 1 of Part 7 in respect of rented premises, the tenancy agreement terminates at the end of the day before the day on which possession of the rented premises is delivered up to the landlord or mortgagee. Section 448 of the RTA excludes the jurisdiction of courts other than the Supreme Court where proceedings are before the Tribunal, as long as the Tribunal proceedings came first. Sections 509 and 510 provide, so far as relevant, that the Supreme Court has jurisdiction to hear and determine applications in relation to a tenancy agreement of premises situated in Victoria, and has the same powers as the Tribunal would have had if the application had been heard and determined by it.
Section 87C of the TLA provides for the consequences which flow from a failure to obtain the consent of the mortgagee to a purported lease of mortgaged land:
Mortgagee or annuitant consent required for lease, easement or restrictive covenant
The creation, variation or surrender of a lease or the creation or variation of an easement or restrictive covenant, in respect of land subject to a mortgage or charge, is not valid or binding against a mortgagee or annuitant unless the mortgagee or annuitant has consented in writing to (as the case requires) –
(a) the creation, variation or surrender of the lease; or
(b) the creation or variation of the easement or restrictive covenant.
The Court of Appeal in Galloway v National Australia Bank Limited[61] considered the operation of this provision in relation to the provisions of the RTA. Osborn JJA (with whom Santamaria JJA agreed), said:
The solicitor for the applicant submitted that the provisions of the Residential Tenancies Act 1997 overlay the provisions of the Transfer of Land Act 1958. I do not see that this can be so. If the lease is not valid against the mortgagee, then there is no lease upon which the notice provisions can operate. Similar reasoning applies to the arguments to which I first referred relating to the capacity of the applicant to grant a lease when the land was subject to an order for possession made by the County Court, and subject to a mortgage containing the limitations upon which the Bank relies.
[61][2016] VSCA 330.
The plaintiff also relied upon the principles laid down by J Forrest J in Balanced Securities Limited v Bianco & Ors.[62] In that case, a tenancy arose after the execution of a mortgage, but prior to its registration. The tenant defended the mortgagee’s claim for possession on the basis that it was a tenant in possession for the purposes of the exception to indefeasibility in s 42(2) of the TLA. His Honour rejected this argument holding:[63]
The specific question of the competing rights under the TLA of a mortgagee as against that of a tenant in possession has been considered on a number of occasions by judges of this Court and the Federal Court. In each case the Court recognised (implicitly or explicitly) that the rights of the mortgagee as against the tenant, contrary to the argument of the defendants, arise at the time of the creation of the mortgage and that a tenant taking possession subsequently does so subject to the mortgagee’s rights.[64]
[62][2010] VSC 162.
[63]Ibid [92].
[64]See also Independent Order of Oddfellows Victoria Friendly Society v Telford (1991) V Conv R 54-419; Commonwealth Bank of Australia v Baranyay [1993] Vic Rep 43; (1993) 1 VR 589; and Burke v Dawes (1938) 59 CLR 1 at 18.
Accordingly, because any tenancy agreement arose after the creation of the mortgages, no protection is conferred on the tenants either by the provisions of the RTA or by s 42(2)(e) of the TLA.
I add that this is not the place to attempt to work through the interaction between the provisions of the RTA to which I have referred and the provisions of the TLA. Suffice it to say that in light of the decision of the Court of Appeal in Galloway, it is likely that a mortgagee would seek to proceed in the Tribunal to recover possession from a tenant, under a tenancy agreement entered into after the mortgage, on costs grounds.
Is the summary procedure available to the plaintiff?
The remaining issue between the parties is whether the procedure adopted by the plaintiff is the correct procedure pursuant to which the plaintiff may recover possession of the Property. This falls into two sub-questions, first, whether the summary procedure under O 53 may be used. Secondly, if that procedure cannot be used, can the plaintiff obtain an order for possession pursuant to s 78 of the TLA by the use of the originating motion procedure.
It seems tolerably clear that the exclusion in r 53.01(2) of the Rules is not applicable. The plaintiff is correct when it submits that although the plaintiff is a ‘mortgagee’ with the meaning of r 53.01(2), the Property is not occupied by the ‘mortgagor or successor in title’ of the Property within the meaning of that provision. The sole ‘mortgagor’ named in the mortgages is PBPA. There is no evidence to support the proposition that PBPA ‘occupies’ the Property, and that is the focus of the rule, not the concept of possession, which may be wider and draw on the entitlement to possession. Since its liquidation, PBPA’s director (the first defendant) has lost any ability to exercise the rights and powers of the company, including the right to take and hold possession of the Property on behalf of the company.[65] PBPA’s liquidator has acquired those powers. The liquidator plainly has not recovered possession of the Property from the present occupants, and is not in occupation or physical possession on behalf of PBPA.
[65]Corporations Act 2001 (Cth), s 471A. That section provides by sub-section (1), ‘While a company is being wound up in insolvency or by the Court, a person cannot perform or exercise, and must not purport to perform or exercise, a function or power as an officer of the company’. Sub-section (3) provides that ‘This section does not remove an officer of a company from office’. A director is an officer of a company: see definition of officer of a corporation in s 9.
Is a claim by a mortgagee against a third party in occupation of mortgaged land within the terms and intent of r 53.01(1)? The language of the rule is unusual:
(a) first, because it uses the language of ‘occupation’ of land rather than possession;
(b) secondly, because its first limb uses language that presupposes the person with the entitlement to possession, who could be the registered proprietor of the fee simple estate, or a person with a lesser estate in the land such as a lessee or mortgagee, claims against a person who entered into occupation without the plaintiff’s licence or consent or that of any predecessor in title of the plaintiff. That is a person who was a trespasser from the outset of his or her occupation; and
(c) thirdly, because the second limb of the rule presupposes that the person in occupation was originally a licensee and ‘remained in occupation without the plaintiff’s licence or consent or that of any predecessor in title of the plaintiff.’ The words of the second limb do not require that it was the plaintiff or its predecessor in title who licenced the occupier, just that they remain in occupation without that consent. In other words, it is wide enough to include the situation where a mortgagor licenses individuals to occupy land, the mortgagor loses, (by its default under the mortgage), the entitlement to possession, and the mortgagee seeks to recover possession in order to sell the land and recover its secured debt.
The language of the rule reflects the conceptual framework of property in Anglo-Australian law, in that there is no absolute ownership of land and ‘[a]ll titles to land are ultimately based on possession in the sense that the title of the man [sic] seised prevails against all who can show no better right to seisin.’[66] As the learned authors of Australian Property Law observe:
In disputes concerning land the question to be decided as between the plaintiff and the defendant was which party had the better right to seisin. The courts were unconcerned as to whether the plaintiff or the defendant had a right enforceable against the whole world, the concept of relativity of title rather than absolute ownership was firmly established in English law from very early times and has remained one of the cornerstones of Anglo-Australian real property law.[67]
[66]Burn and Cartwright, Cheshire and Burn’s Modern Law of Real Property, 17th Ed, cited in Australian Real Property Law, 5th Ed., AJ Bradbrook, SV MacCallum, AP Moore and S Grattan, [2.50]. Seisin is the possession of land by a person holding a freehold estate in the land: Australian Real Property Law, 5th Ed., AJ Bradbrook, SV MacCallum, AP Moore and S Grattan, [2.55].
[67]Ibid.
In this case, it is the mortgagee who has the better right to possession as against the mortgagor and any person claiming under it. At best, the mortgagor licensed the defendants and the other occupiers of the Property to occupy it, and they remain in occupation without the plaintiff’s licence or consent, and without the licence or consent of any predecessor in title of the plaintiff, being in this case a person who precedes the plaintiff as mortgagee. Put another way, to be entitled to remain in occupation, the defendants and other occupiers must be able to claim that they remain in occupation with the licence or consent of the plaintiff or its predecessor in title, and they do not do so.
For these reasons, it seems to me that the plaintiff’s claim to recover possession of the Property does fall within the words of the second limb of the rule. The question then is whether there is something arising out of the purpose or object of the rule that should lead to the current claim being excluded from its purview?
The history of the rule to which I have referred above, and the exception in r 53.01(2), may suggest that it is of limited application and is not intended to be used by a mortgagee to recover possession of land. As Tadgell JA said in Pappas v Bowmark Pty Ltd:[68]
Order 53 is intended to enable speedy resolution, in favour of a proprietor of land, of a dispute whereby trespassers are keeping the proprietor out. It is a prerequisite to the application of Order 53 that the persons who are in possession and whom it is desired to have removed should have gone into occupation as licensees or without the plaintiff’s consent and remain in occupation without the plaintiff's consent.
[68][1998] VSCA 120 [13].
I venture to think that his Honour, when referring to ‘a proprietor of land’, was not limiting the rule to claims by persons holding a registered estate in fee simple in the land in question. That was the fact in that case and statements of this kind must be considered in their context. The ‘proprietor’, may be registered as proprietor of an estate in fees simple or a lessee with a valid and subsisting lease entitling him or her to possession, or a mortgagee with a right to possession.
Similarly, his Honour’s reference to ‘trespassers’ conjures up images of squatters entering the land and refusing to leave or give up possession to the person with the rightful claim to possession. But in law, a person who remains in occupation of land without the licence or consent of the person immediately entitled to possession is a trespasser as against that person from the time the entitlement arose, once the person has entered onto the land.[69]
[69]Ocean Accident Co v Ilford Gas Co [1905] 2 KB 493; Ebbels v Rewell [1908] VLR 261 at 266; Fleming’s The Law of Torts, 10th Ed., C Sappideen and P Vines, 2011, [3.50].
Despite the fact that the parties produced no reported decisions where a mortgagee has recovered possession of land from third parties, like the defendants and other occupiers of the Property in this case, in my view there is nothing in the purpose or object of the Rules, or in principle, against the use of the procedure where such third parties have, as against the plaintiff mortgagee, no right title or interest in the land sufficient to resist a claim for possession.
The defendants contended that the proper course was for the plaintiff to commence a proceeding by writ against the mortgagor (and presumably the defendants as well) to recover possession of the Property and then to seek summary judgment pursuant to s 61 of the CPA[70]. One may ask, what good would that do? A claim against the mortgagor may proceed on the footing that the mortgagor is in some form of theoretical possession of the property. But it would be necessary to have leave to proceed against PBPA as it is in liquidation. Moreover, clearly the defendants and others are in occupation and there is nothing to suggest PBPA is in occupation, beyond the claim by the defendants that they occupy with the licence of PBPA and the recent assertion of the first defendant that PBPA is in possession of the Property with the defendants, Irene and Stavros.[71] It would be a futile course to adopt.
[70]The procedure is now governed by Part 2 of order 22 of the Rules.
[71]Affidavit of John Arvanitis of 14 March 2017.
So, the alternative is to proceed by writ against the defendants. At the time the originating motion was issued, the plaintiff was aware of the names of two of the occupiers and was not aware of the names of any others. Recovery of possession against one of them would not necessarily have resulted in the recovery of possession against the other, let alone against all occupiers.
Suppose, for example, that there had been no appearance to the writ by one named defendant or a default in pleading by him. The default judgment to which the plaintiff would have been entitled under r 22.03 is ‘judgment for possession against the defendant’.[72]
[72]Rule 22.03(1)(c) of the Rules. Notwithstanding this rule, the forms of judgment prescribed under r 60.08 of the Rules includes from 60H which simply says ’The plaintiff recover possession of the land …’, without limiting the judgment to any particular named defendant.
Rule 21.05 provides that:
A plaintiff who enters or obtains judgment against a defendant in accordance with this Order may enforce the judgment and continue the proceeding against any other defendant, but in a proceeding for the recovery of land against more than one defendant a judgment for possession of the land shall not be enforced against any defendant unless judgment for possession has been entered or given against all the defendants. [emphasis added]
Thus, if there are two or more defendants and one or some of them default, the plaintiff may enter judgment for possession against any defendant who defaults. But the judgment cannot be enforced against any defendant unless judgment for possession is entered or given against all the defendants.[73]
[73]See the comments of Dixon J in Burke v Dawes (1938) 59 CLR 1 at 16.
The position becomes more problematic when there are unknown persons in occupation, as was the case when the plaintiff commenced this proceeding. In theory at least, for the plaintiff to recover possession of land against unknown occupiers, the writ proceeding is potentially deficient. That is the very basis on which O 53 was introduced.[74] There is therefore a forensic advantage, and one intentionally given by O 53, in the use of the summary procedure in the situation faced by the plaintiff here.
[74]See above at paragraph 31 and In Re. Wykeham Terrace, Brighton, Sussex, Ex parte Territorial Auxiliary and Volunteer Reserve Association for the South East [1971] Ch. 204.
This is a case where the Court is able to satisfy itself as to the material facts that bring the case within O 53. Such factual dispute as exists is readily and fairly resolved and the plaintiffs entitlement to possession against the defendants and other occupiers of the Property is clear. The issues that have emerged are primarily questions of law and the defendants and other occupiers have been afforded ample opportunity to present evidence and make submissions. For these reasons, it is an appropriate case for the exercise of the discretion to determine the issues without requiring them to be subsequently tried. There is no proper warrant for ordering the proceeding to continue as if begun by writ pursuant to r 4.07 of the Rules.
I therefore conclude that this application for possession by the plaintiff falls within O 53 of the Rules, and it is appropriate for determination now.
If I am wrong in concluding that the use of the summary procedure under O 53 is available to the plaintiff in the current circumstances, and that the procedure that should have been adopted is to issue a writ against the known occupiers as defendants, then the plaintiff submits that the alternative claim is available and the claim for possession can be brought by originating motion. That course is available under the Rules where it is unlikely that there will be any substantial dispute of fact and, for that reason, it is appropriate that there be no pleadings or discovery.[75]
[75]Rule 4.06(a) of the Rules.
The plaintiff’s claim for possession is straightforward and does not involve any substantial dispute of fact. The primary questions are legal and have been dealt with above. All that is left is a proposition that matters of procedure should ‘trump’ the substance of the claim. The claim for possession is capable of being properly brought at under s 78 of the TLA[76] on a standard originating motion in Form 5B or 5C. The Court’s power of dispensation under r 2.04 of the Rules enables a dispensation with compliance with the Forms.
[76]Section s 81(1) of the TLA also supports the claim for possession: see City Mutual Life Assurance Society Ltd v Lance Creek Meat Works Pty Ltd [1976] VR 1.
The defendants’ objection to the use of the originating motion procedure in this case takes no account of the objective of the exercise of power under the Rules. The Court is required to exercise any power under the Rules in an endeavour to ensure that all questions in the proceeding are effectively, completely, promptly and economically determined.[77] Moreover, the approach of the defendants is against the overarching purpose now imposed by the CPA.
[77]Rule 1.14(1)(a) of the Rules.
It is well to recall that s 7 of the CPA provides that the overarching purpose of the Act and the rules of court in relation to civil proceedings is to facilitate the just, efficient, timely and cost‑effective resolution of the real issues in dispute. That is what proceeding by originating motion achieves in this case. The proceeding was commenced on 23 December 2016 and scheduled for hearing on 17 January 2017. The plaintiff readily agreed to an adjournment from 17 January to 22 February 2017. It was again adjourned from 22 February to 16 March 2017 to enable the defendants to file affidavits and submissions, which they did. There has been ample opportunity for the defendants to identify any deficiency in the plaintiff’s proof of its entitlement to possession of the Property under the mortgages. Nothing has been raised in relation to those proofs. All that is raised are specious claims to rights under tenancy agreements or licences. These have been readily dealt with. Everything else raised is palpably designed to cause delay. It is just, efficient, timely and cost‑effective to determine the claim and defences without further ado.
Further, under s 9 of the CPA, in making any order or giving any direction in a civil proceeding, this Court must further the overarching purpose by having regard to the objects set out in s 9(1)(a)-(g) of the CPA. These objects include the just determination of the civil proceeding, the efficient conduct of the business of the Court, the efficient use of judicial and administrative resources, the timely determination of the civil proceeding and dealing with a civil proceeding in a manner proportionate to the complexity or importance of the issues in dispute and the amount in dispute. All of these objects are furthered by the determination now of the plaintiff’s claim, and the defences raised by the defendants and the other occupiers of the Property.
Conclusion
For the reasons expressed above, in my view:
(a) the plaintiff has established its entitlement to a judgment for possession of the Property against the defendants and other occupiers of the Property;
(b) the summary procedure under O 53 is available to the plaintiff in this case;
(c) if I am wrong in in this conclusion, I dispense with the requirement for the plaintiff to proceed by origination motion in Form 5B or 5C, prescribed pursuant to r 60.08 of the Rules, and authorise the plaintiff to proceed by Form 5E as amended pursuant to the order of the Court made on 22 February 2017; and
(d) there will be an order that the plaintiff recover possession of the land described in the amended originating motion filed 23 February 2017, being the lands situate and known as 323-33 Point Nepean Road, Dromana, Victoria and 3-5 Heales Street, Dromana, Victoria, and being the lands more particularly described in Certificates of Title Volume 2411 Folio 008, Volume 4034 Folio 739, Volume 8177 Folio 586, Volume 8531 Folio 974 and Volume 10662 Folio 275, and an order that the defendants pay the plaintiffs costs of the proceeding on a standard basis.
Whether there should be a stay of the order for the recovery of possession, or whether there should be any injunction granted to the plaintiff as foreshadowed in the affidavit of Mr Tandora and by counsel for the plaintiff, will yet need to be argued and determined.
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