Terranova v Secure Funding Pty Ltd - [2014] WASC 208

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: TERRANOVA -v- SECURE FUNDING PTY LTD [2014] WASC 208

CORAM: ALLANSON J

HEARD: 6 JUNE 2014

DELIVERED : 12 JUNE 2014

FILE NO/S: CIV 1720 of 2014

MATTER :An Application pursuant to Sections 103 and 104 of the Civil Judgments Enforcement Act 2004 in relation to a property (seizure and delivery) order dated 25 March 2014

BETWEEN: SALVATORE TERRANOVA
ANGELINA TERRANOVA
Plaintiffs
AND
SECURE FUNDING PTY LTD
First Defendant
PATRIZIA TERRANOVA
Second Defendant

Catchwords:

Property law - Application to prevent enforcement of property (seizure and delivery) order - Parties executed a deed of priority regarding their securities - Construction of deed - Turns on own facts

Legislation:

Civil Judgments Enforcement Act 2004 (WA), s 103, s 104
Transfer of Land Act 1893 (WA), s 106, s 108, s 116

Result:

Application dismissed

Category: B

Representation:

Counsel:

Plaintiffs:     Mr I R Gillon
First Defendant             :     Mr M F Holler
Second Defendant         :     Mr G Grasa

Solicitors:

Plaintiffs:     Lawton Gillon
First Defendant             :     Norton Rose Fulbright Australia
Second Defendant         :     GG Legal

Case(s) referred to in judgment(s):

Australian Broadcasting Commission v Australasian Performing Right Association Ltd [1973] HCA 36; (1973) 129 CLR 99
Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7
Figgins Holdings Pty Ltd v SEAA Enterprises Pty Ltd [1999] HCA 20; (1999) 196 CLR 245
Partridge v McIntosh & Sons Ltd [1933] HCA 38; (1933) 49 CLR 453
Re Real Estate and Business Agents Supervisory Board; ex parte Cohen [1999] WASCA 47

ALLANSON J: These proceedings were commenced by originating summons, filed 27 May 2014. The plaintiffs, Salvatore and Angelina Terranova, seek orders including a declaration that they are entitled to possession of a property situated at 23 Harris Road, Malaga in priority to the first defendant. The plaintiffs also seek orders to prevent the enforcement of a property (seizure and delivery) order dated 25 March 2014 issued by this court on application by the first defendant, Secure Funding Pty Ltd, in respect of the Malaga property.
This action originally came before me on 28 May 2014 on an interlocutory application by the plaintiffs to prevent the pending enforcement by the sheriff of the property (seizure and delivery) order. The underlying dispute is of sufficiently limited compass that, at the suggestion of counsel for the first defendant and with the agreement of the plaintiff, the matter was programmed through to an early hearing of the originating summons. The second defendant is currently incurring a substantial daily interest charge to the first defendant, and an early resolution is called for.

The evidence

The evidence is found in three affidavits and their attachments:
1.affidavit of Salvatore Terranova, filed on behalf of the plaintiffs in the interlocutory proceedings, dated 26 May 2014;
2.affidavit of Nicolas Robert White, filed on behalf of the first defendant in the interlocutory proceedings, dated 27 May 2014;
3.supplementary affidavit of Mr White dated 3 June 2014.
The attachments to the affidavits…

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: [2014] WASC 208
Decision Date: 12 JUNE 2014

CaseChat Overview and Summary

Terranova, the plaintiff, filed an application to prevent enforcement of a property (seizure and delivery) order against Secure Funding Pty Ltd, the first defendant. This case was before the Federal Circuit Court of Australia, where the central issue was the interpretation of a deed of priority executed between the parties. The plaintiff argued that the first defendant’s priority under the deed should be limited to the amount that the first defendant could recover in priority to other lenders. Conversely, the first defendant contended that its priority should extend to all rights and powers under the deed, including those that would allow it to exercise its securities effectively.

The court was tasked with determining the correct interpretation of the deed of priority, particularly focusing on clauses 3 and 7(b)(iii). The first defendant argued that the deed should be construed in a manner that avoided making commercial nonsense or working commercial inconvenience, a principle that aligns with the objective of achieving a businesslike interpretation of commercial contracts. The court considered the language used by the parties, the context in which the deed was executed, and the commercial purpose intended by the parties. Ultimately, the court found that the first defendant’s interpretation, which allowed for the full exercise of its rights under the deed, was consistent with what a reasonable businessperson would have understood the terms to mean.

The court accepted the first defendant’s submission that the deed was intended to give priority to the securities held by the first defendant, including the rights and powers conferred to enable the securities to be effective. Therefore, the first defendant’s priority under the deed was not limited to the amount it could recover in priority to other lenders but extended to the full operation of its securities. The application by the plaintiff to prevent enforcement of the property (seizure and delivery) order was dismissed.

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

The first defendant's position is summarised in a quote from the reasons of the plurality in Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7 [35], with which they begin their written submissions: The meaning of the terms of a commercial contract is to be determined by what a reasonable businessperson would have understood those terms to mean. That approach is not unfamiliar. As reaffirmed, it will require consideration of the language used by the parties, the surrounding circumstances known to them and the commercial purpose or objects to be secured by the contract. Appreciation of the commercial purpose or objects is facilitated by an understanding 'of the genesis of the transaction, the background, the context [and] the market in which the parties are operating'. As Arden LJ observed in Re Golden Key Ltd, unless a contrary intention is indicated, a court is entitled to approach the task of giving a commercial contract a businesslike interpretation on the assumption 'that the parties ... intended to produce a commercial result'. A commercial contract is to be construed so as to avoid it 'making commercial nonsense or working commercial inconvenience'. Where the plaintiffs focus on cl 3 of the Priority Deed, the first defendant submits that cl 7 is the key. In particular, it refers to cl 7(b)(iii), and the agreement of the parties in that clause that, after giving notice in accordance with the provisions of cl 7(b), it will be at liberty to exercise its rights under its securities. The first defendant also refers to cl 3, and submits that it is an error to focus on the amount the first defendant may recover in priority to other lenders, and to fail to give full effect to the terms of the agreement that 'the Securities will rank and operate at law and in equity so as to confer first priority on the New Mortgagee's Securities up to and including [that amount]' (emphasis added). In effect, the first defendant argues that its construction is based in the language used by the parties. To confine the first defendant's priority under the deed to the amount which the first defendant may recover in priority to the other lenders would fetter the operation of the securities ranking first under the Priority Deed. In my opinion, the submissions of the first defendant should be accepted. The Priority Deed was made in the context where a commercial lender was providing finance on the security of property already encumbered to members of the registered proprietor's family. The loan agreement contained, as a special condition, the requirement for a deed of priority. The Deed provided, in cl 3, that the securities held by the first defendant would rank and operate at law and in equity so as to confer first priority on the New Mortgagee's Securities 'up to and including' the stated amount. In my opinion, a reasonable businessperson would understand the intention of the parties in agreeing to this provision was to give priority to the securities held by the first defendant, including the rights and powers conferred to enable the securities to be effective.