Wilde & Anor v Morgan & Ors
[2013] VSCA 250
•20 September 2013
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S APCI 2013 0103
BETWEEN:
| MILTON WILDE | First Applicant |
| - and - | |
| ART PACIFIC PTY LTD (ACN 089 489 270) | Second Applicant |
V
| BRENT LEIGH MORGAN and GEOFFREY NIELS HANDBERG | First and Second Respondents |
| - and - | |
| BENDIGO & ADELAIDE BANK LIMITED ABN 11 068 049 178 | Third Respondent |
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| JUDGES | HANSEN and TATE JJA |
| WHERE HELD | Melbourne |
| DATE OF HEARING | 13 September 2013 |
| DATE OF JUDGMENT | 20 September 2013 |
| MEDIUM NEUTRAL CITATION | [2013] VSCA 250 |
| JUDGMENT APPEALED FROM | Re Art Pacific Pty Ltd; Wilde v Morgan & Ors [2013] VSC 330 (Derham AsJ, 27 June 2013) |
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Mortgage – Default notice – Service – Memorandum of Common Provisions – Construction – Effect of provision of a ‘new’ address – Whether in replacement of or additional to address of property in mortgage as a place at which notice may be left or given – Transfer of Land Act 1958 (Vic) s 113 – Leave refused to rely on doctrine of fair notice.
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APPEARANCES: | Counsel | Solicitors |
| For the Applicants | Mr B Carew with Ms A M Haban-Beer | ICA Lawyers |
| For the Respondents | Mr S R Horgan SC with Mr C Möller | Piper Alderman |
HANSEN JA:
This is an application for leave to appeal from the dismissal by Derham AsJ[1] on 27 June 2013 of an originating process by which the applicants sought declarations under s 418A(2) of the Corporations Act 2001 (Cth), that:
(1)the appointment of the first and second respondents as agents for the third respondent by Deed of Appointment of Agents for Mortgagee in Possession dated 23 October 2012 (the Deed) under a mortgage of land between the second applicant and the third respondent was invalid;
(2)further or alternatively, the first and second respondents entry into possession or assumption of control of the land of the second applicant pursuant to the Deed was invalid.
The second applicant and mortgagor is Art Pacific Pty Ltd (Art), the sole director of which is the first applicant, Milton Wilde. The third respondent and mortgagee is Bendigo & Adelaide Bank Limited (Bendigo).
[1]Re Art Pacific Pty Ltd; Wilde v Morgan & ors [2013] VSC 330 (‘Reasons’).
The case concerned a Default Notice purportedly served on Art under the mortgage. If the notice was not validly served, the appointment by Bendigo of the first and second respondents as its agents was not valid.
Derham AsJ stated that the following two issues were raised:
(1)Was the Default Notice properly served in accordance with cl 13.01 of the Memorandum of Common Provisions AA662 (incorporated in the mortgage) by being left at the address of the mortgagor shown in the mortgage?
(2)If not, was there proper service of the Default Notice under s 113 of the Transfer of Land Act 1958 as applied by the Memorandum of Common Provisions or independently, by it being left at the address of the mortgagor shown in the mortgage?
Derham AsJ concluded that the Default Notice had been duly served as provided in cl 13.01. He further considered, but found it unnecessary to decide, whether service had been effective pursuant to s 113. Finally, he refused the applicants’ late application to rely on the doctrine of ‘fair notice’ holding, in any event, that the doctrine would not avail the applicants.
In my view, his Honour’s decision is not attended by doubt.
The mortgaged property is situated at 253-257 Maroondah Highway, Ringwood. Art became the sole registered proprietor of the property on 15 November 2002; the mortgage was registered at the same time.
The address of Art stated in the mortgage is 255 Maroondah Highway, Ringwood. That is also an address of the mortgaged property. The second page of the mortgage includes provision for stating an ‘address for notices and other communications, if different to that shown on the first page of this cover sheet’: the space (which allowed for completion of addresses and fax numbers for mortgagor and mortgagee) was left blank, so that there was no different address from that on the first page of the mortgage as the address of the mortgagor notices and for other communications.
The Default Notice, dated 15 October 2012, was delivered by being placed under the door to the premises on the property at 255 Maroondah Highway, Ringwood. An attempt was made to effect service at the registered office of the mortgagor, being at ‘Rear 253 Maroondah Highway, Ringwood’ but the gates were locked and service could not be effected. That was at the rear of the mortgaged address, and was a separate and distinct part of the land. The property at 255 Maroondah Highway had been leased to tenants in May 2007, with Bendigo’s consent.
The Default Notice stated that Art was in default of its facilities with Bendigo, that Bendigo terminated the facility and demanded payment of all moneys owing, then stated the amount owing to be $1,124,161.37, and that if the demand was not complied with within seven days of service Bendigo may exercise its powers pursuant to the mortgage.
Art did not comply with the demand, and on 23 October 2012 Bendigo appointed the first and second respondents by the Deed.
Clause 13.01 provided as follows:
Notices And Sundry Provisions
13.01Any notice or certificate to be given to or demand to be made on the Mortgagor and any appointment to be made by or on behalf of the Mortgagee shall be deemed to have been duly given or made if it is in writing, signed by an Authorised Officer of the Mortgagee and left at or sent by prepaid mail:
(a) to the address of the Mortgagor as shown in this Mortgage;
(b)where a new address has been notified in writing by the Mortgagor to the Mortgagee, to that new address;
(c)in the case of a corporate Mortgagor, to its registered office or to the address the corporation has notified the Mortgagee in writing; or
(d) in any manner provided by Statute, where applicable.
A communication sent by mail shall be deemed to have been received by the Mortgagor on the second day after posting (excluding days on which no mail deliveries are made).
Mr Wilde gave evidence that he handled all communications with Bendigo, and that formal communications from Bendigo to Art, save for emails, had been by post to Art’s post office box, as advised to Bendigo. He produced a series of letters from Bendigo to Art between 2002 and 10 August 2012 to substantiate the point.
Mr Wilde said that he became aware of the Default Notice in the following circumstances. In the course of discussions as to a restructure of the loan facilities, Bendigo obtained a valuation of the property in November 2011 following which Bendigo advised that it would not extend the loans beyond 24 April 2012 and required all loans to be refinanced or repaid by that date. However an issue of rent review arose with the tenant of the property, and, the review being disputed, the application to refinance could not be finalised pending resolution of that issue. Bendigo was not persuaded of that and required resolution by 17 August 2012 failing which they would move to recovery action. That was followed by Bendigo demanding a payment on 24 August 2012. Then, a letter dated 23 October 2012 from the first and second respondents to Art’s solicitors, asserting their appointment under the Deed, came to Mr Wilde’s attention. A complete copy of the Deed was received on 2 November 2012; it was seen that it referred to the Default Notice (of which Mr Wilde had to then been unaware). His solicitors followed up in February 2013 and a copy was received later that month.
The applicants argued before Derham AsJ that by reason of a different address having been advised to Bendigo, and which address was used for communications, that cl 13.01 should be construed, in the light of sub-cl (b), and the course of dealings between the parties, so that that address became the address at or to which notice was to be left or sent. The difficulty with that argument, as Derham AsJ pointed out, was that each sub‑cl (a)-(d) operated separately as a statement of the way in which a notice may be given or made under the mortgage. That followed from the use of the disjunctive ‘or’ after sub cl (c), and on the operation of the clause read as a whole.
The next issue was s 113 of the Transfer of Land Act 1958 (Vic). The applicants submitted that s 113(1) was, on its terms, restricted to service by post. The respondents submitted to the contrary, relying on the word ‘may’ in sub‑s (1), and on sub‑s (2) together with the facultative nature of the provision.
As to this, Derham AsJ expressed the preliminary view that s 113(2) enabled service of the Default Notice by leaving it at the address of the mortgagor shown in the mortgage. In view, however, of the answer on the first issue it was unnecessary to come to a concluded view on the issue concerning s 113. It was also unsafe to do so in view of an insufficiency in the arguments.
The final matter of the doctrine of ‘fair notice’ was precluded by Derham AsJ on a finding that it was raised too late (following reservation of judgment) for the case might have been conducted differently if raised earlier. In any event, his Honour found on the facts that the so called doctrine would not have applied. That was because, shortly stated, there was an absence in the relevant facts and circumstances, of that degree or quality of knowledge in Bendigo that could properly attract the application of the doctrine.
The applicants submit that all of his Honour’s conclusions were wrong. It is convenient to take each in turn.
Clause 13.01
The Proposed Notice of Appeal contends that the judge misconstrued cl 13.01. He should have found that properly construed cl 13.01 provided for a substitute address for service under cl 13.01(a), upon notification being given of a new address under cl 13.01(b).
The applicants submitted that the purpose of cl 13.01 was not merely to facilitate service but also to ensure that notice served comes to the attention of the mortgagor. This is to be understood in the light of the seriousness of a notice such as that served here. The word ‘new’ in cl 13.01(b) was significant. It was to be understood in context as contemplating a replacement address, to be substituted for the old address. The implication of the word ‘new’ is that it is intended to distinguish the new from the previous or old address. Counsel recognised that ‘new’ might also mean a further or additional address, rather than a substitution. He submitted that the concept of replacement should be the preferred meaning. Further, the disjunctive ‘or’ should not be understood as producing a series of alternatives, for that would be inconsistent with the purpose of the provision and negate the intention of the parties that the new address be the address for service.
I reject these submissions.
As the judge pointed out, the use of the disjunctive ‘or’ following sub‑cl (c) indicates, in accordance with accepted principles of construction,[2] that each sub‑clause is an alternative or independent basis of service. There are, in fact, not four but five bases, as sub‑cl (c) contains two bases of service.
[2]Pearce & Geddes, Statutory Interpretation in Australia (LexisNexis, 6th ed) [12.2].
If it were to be considered that the provision of a new address had the result that sub‑cl (a) ceased to be available, would service under sub‑cll (c) and (d) also cease to be available? As the judge said, there is no reason why that would be so. And, before his Honour, counsel submitted that sub‑cll (c) and (d) were not affected by his submission. Indeed, it would seem to be inconsistent with the facultative nature of cl 13.01, that sub‑cll (c) and (d) should be supplanted or confined. Sub‑cl (c) deals with corporations, and expressly provides for service at the registered office or the address notified; on the applicants’ submission, taken literally, the effective notification of a ‘new’ address would be to negate service at the registered office. It is as much unlikely that the intention is that sub‑cl (d) be rendered unavailable in the event of notification of a new address, for that would exclude service in reliance on facilitative provisions for service of documents, such as those contained in the Corporations Act and s 113 of the Transfer of Land Act. It is not surprising that before his Honour counsel for the applicants conceded that the provision of a new address did not exclude service in accordance with sub‑cll (c) and (d). Nevertheless, the interpretation contended for left an incongruity in operation of the clause. That is, that the effect of notifying in writing a new ‘address’ is that sub‑cl (a) ceases to be an available basis of service, while sub‑cll (c) and (d) are unaffected.
If the logic of the applicants’ submissions were that notification by Art of a ‘new’ post office box address meant, for all purposes of cl 13.01, that that became the sole address available for giving a notice or demand, the consequence would be that Bendigo could not give a notice by leaving at or posting to the mortgaged, or any other, property. So unlikely a result would that be, and so ill would it sit with cl 13.01 read as a whole, and with the allowance of physical delivery to the registered office pursuant to s 109X of the Corporations Act (via cl 13.01(d)), that it is not surprising that counsel sought to confine the argument to sub‑cll (a) and (b).
The judge concluded as follows:
In my view, the construction advanced by the plaintiffs is against both the natural meaning of the clause construed as a whole, and against its evident object or purpose mentioned above. Clause 13.01 is, as Mr Möller submitted, facultative in that it confers a power on the Mortgagee to effect service in a number of different ways of its choosing. The mode of service in paragraph (b) is an option the Mortgagee has, amongst the other options set out. If a new address is notified, service at that address will be good as well, if the Mortgagee chooses to take that course. That notification of a new address under clause 13.01(b) cannot, consistently with the purpose of the clause and the disjunctive “or” notionally at the end of each paragraph, render clause 13.01(a) – or any of the other sub-clauses to clause 13.01 – nugatory. That this is the correct construction of the clause is confirmed by the other options that it is conceded are available to the Mortgagee under paragraphs (c) and (d) of the clause.[3]
Thus, the giving or making of a notice or demand in accordance with any of the paragraphs of clause 13.01 will be effective and be deemed to have been given or made whether it in fact comes to the notice of the Mortgagor.[4]
I agree.
[3]Reasons [50].
[4]Reasons [51].
Counsel for the respondents submitted that even if the judge was wrong in his construction of cl 13.0(1)(a) and (b), sub‑cll (c) and (d) remained and service of the Default Notice could be upheld under cl 13.01(d). That was because the giving of notice by leaving at the address stated in the mortgage constituted service in accordance with s 76 and s 113 of the Transfer of Land Act 1958 (Vic).
This argument was not put to his Honour. It is not necessary to deal with it.
Section 113
The Proposed Notice of Appeal included one ground relating to s 113; it merely said that the judge failed to make findings in respect of the construction of s 113 or whether service was deemed to have been effected under s 113. In his oral submissions, the applicants’ counsel barely mentioned this ground. In view of the conclusion reached on cl 13.01, it was unnecessary for the judge to finally conclude on s 113, just as it is unnecessary for this Court to do so. Nothing more need be said.
Doctrine of fair notice
The applicants’ counsel said that this was his main argument. As mentioned above, his Honour refused leave for the applicants to re-open their case to rely on the doctrine. Before so ruling, his Honour heard submissions on the application, and as to the argument sought to be made. In his reasons he set out the parties’ submissions and his conclusions as to the applicability of the doctrine, in the event he should have granted leave. His view was that the facts precluded application of the doctrine.
The applicants submitted that the judge was wrong to refuse leave. The submission was concerned with proof of service of the Default Notice which, it was said, was fundamental to the manner in which the parties ran the case. The applicants’ written outline stated that leave should have been granted because there was no prejudice to the respondent, and it was just that the applicants be allowed to advance the argument.
In relation to his Honour’s view that the doctrine would not apply in this case, the applicants submitted, in essence, that he failed to find whether the Default Notice came to the notice of the applicants. The applicants submitted that on the evidence the Default Notice did not come to their attention. Further, Bendigo knew that tenants, and not Art, occupied the premises, and notice could easily have been posted. In the circumstances the doctrine was invoked. In the course of this submission, counsel referred us to authorities which, with one exception, were concerned with service of a statutory demand. There was no case like the present in which the doctrine had been applied.
While his Honour referred to Mr Wilde’s evidence, he did not expressly find whether he accepted Mr Wilde’s evidence that he was not aware of the Default Notice until November 2012. The explanation for the absence of an express finding could be that it was unnecessary in view of the refusal of leave to rely on the doctrine. More particularly, the issue in the case was whether cl 13.01(a) was applicable and satisfied; if so, service was ‘deemed’ to have been duly made. The
issue was not whether or when the Default Notice came to the attention of the applicants.
Apart from that, the applicants must confront the difficulty that the refusal of leave was an exercise of discretion on a matter of practice and procedure. The applicants must therefore establish error in the House v The King sense.[5] In refusing leave, the judge said:
The doctrine of fair notice cannot be relied on where the defendants had no notice that it would be relied upon and where, had they had such notice, they might have taken a different course in relation to both cross-examination of Mr Wilde, the person whose affidavit provided all the substantive evidence in support of the application (there was no cross-examination), and may have introduced evidence that would be relevant to the matter. Accordingly, I refuse the plaintiffs leave to make the supplementary submissions based on the doctrine.[6]
[5](1936) 55 CLR 499.
[6]Reasons [64].
No error is demonstrated in his Honour’s approach. Moreover, in his oral submissions the applicants’ counsel could not identify relevant error. Accordingly, the attack on the refusal of leave fails. That being so, it is unnecessary to consider the substantive argument as to the application of the doctrine.
For these reasons leave to appeal should be refused.
TATE JA:
For the reasons stated by Hansen JA, I would also refuse the application for leave to appeal.
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