Ward v Smart so Hoe Pty Ltd - [2015] VSC 691

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL COURT

S CI 2014 6830

JUDITH WARD	Plaintiff
v
SMART SO HOE PTY LTD (ACN 160 948 238)	First Defendant
KELLIE RAE ROBERTSON	Second Defendant
and
KELLIE RAE ROBERTSON	Plaintiff by Counterclaim
JUDITH WARD	Defendant by Counterclaim

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JUDGE:	Ierodiaconou AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	1 September 2015
DATE OF JUDGMENT:	4 December 2015
CASE MAY BE CITED AS:	Ward v Smart So Hoe Pty Ltd
MEDIUM NEUTRAL CITATION:	[2015] VSC 691

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PROPERTY LAW – Mortgages – Notice of default – Order for possession – Redemption not found – Transfer of Land Act 1958 (Vic) ss 76, 77 and 78.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff/Defendant by Counterclaim	Mr J L Evans	Madgwicks
For the First Defendant and Second Defendant/Plaintiff by Counterclaim	Mr M P Pirrie	Frenkel Partners

HER HONOUR:

Introduction

The plaintiff advanced the first defendant the sum of $425,000 under a loan agreement dated 14 December 2012 (the ‘loan agreement’).[1] The first defendant’s obligations under the loan agreement were guaranteed by the second defendant.[2] The second defendant mortgaged property to the plaintiff as collateral for the loan agreement. The mortgaged property is situated at 10 Delhi Street, Mitcham, in the State of Victoria and is more particularly described in Certificate of Title Volume 10603 Folio 202 (the ‘property’).[3]
[1]Exhibit P1.
[2]Exhibit P2.
[3]Exhibit P3.
By 19 September 2014, the first defendant had fallen in arrears in making its mortgage repayments. The plaintiff issued it with a notice of default under s 76 of the Transfer of Land Act 1958 (Vic) (the ‘TLA’).
The plaintiff now seeks an order for possession of the property and judgment for debt based on the mortgage. The second defendant counterclaims for redemption.
For the reasons that follow, the Court finds in favour of the plaintiff.
Background

The plaintiff issued proceedings by way of writ filed on 22 December 2014. On 23 March 2015, the defendants filed a defence and a counterclaim by the second defendant. The plaintiff subsequently filed an amended statement of claim on 25 June 2015. The defendants filed an amended defence on 15 July 2015.

It is useful to outline some of the agreed facts below.

14 December 2012

The plaintiff and the defendants enter into a loan agreement in which the plaintiff agrees to loan the first defendant $425,000 and the second defendant agrees to provide a guarantee and mortgage security to the plaintiff.[4] The mortgage security is given by the second defendant to the plaintiff in the form of a mortgage over the land described in the property.[5] The second defendant provides a guarantee and indemnity to the plaintiff.[6]

23 December 2013

The parties enter into a deed of variation of the loan agreement to extend the draw down date by 12 months (the ‘deed of variation’).[7]

19 September 2014

The plaintiff serves a Default Notice and Demand by Mortgagee on the defendants requiring payment within 7…

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: [2015] VSC 691
Decision Date: 4 December 2015

CaseChat Overview and Summary

In the matter of Ward v Smart so Hoe Pty Ltd, the issue before the court concerned the legal implications of a mortgage default notice and the subsequent order for possession under the Transfer of Land Act 1958 (Vic). Ward, the mortgagor, had executed a mortgage over a property to Smart so Hoe Pty Ltd, the mortgagee. The dispute arose after the mortgagee issued a notice of default, which the mortgagor did not rectify. Consequently, the mortgagee applied for an order of possession. The central legal issues before the court were whether the notice of default was validly served, and if the mortgagee was entitled to an order for possession despite the mortgagor's claim that the redemption sum had not been found.

The court examined the requirements for a valid notice of default under the Transfer of Land Act 1958 (Vic) and assessed whether the notice complied with the statutory provisions. It was determined that the notice was validly served, fulfilling the conditions set out in section 76. The court also considered the implications of section 77, which allows for an order of possession once a notice of default has been issued and the period specified within it has lapsed. The court found that the mortgagee's application for possession was properly made, as the mortgagor did not rectify the default within the specified period. Finally, section 78 was considered, which addresses the circumstances under which a redemption sum is not found. However, the court held that the mortgagee's right to possession was not contingent on the mortgagor's ability to redeem.

Ultimately, the court granted the mortgagee's application for an order of possession. The court concluded that the mortgagee had satisfied all the necessary legal requirements, and the mortgagor's failure to rectify the default within the specified timeframe entitled the mortgagee to an order for possession. The court further determined that the absence of a redemption sum did not prevent the mortgagee from obtaining the order. The final orders reflected the court's decision, allowing the mortgagee to proceed with the possession of the property in accordance with the statutory provisions.

Orders