CATCHWORDS MORTGAGEE - several mortgagees - tenants in common - money advanced by one mortgagee - whether demand must be made by all mortgagees APPLICATION FOR POSSESSION - whether there has been default entitling the mortgagee to possession Drake v Templeton (1913) 16 CLR 153 Refd Re Casalin Pty Ltd (unreported decision of Dowsett J, Supreme Court of Queensland, 22 December 1986) Refd Warr v Jones (1876) 24 WR 695 Refd Drake v Templeton(1913) 16 CLR 153 Refd Powell v Brodhurst [1901] 2 Ch 160 Cons Ex parte: Losa [1982] Qd R 381 Refd Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 Refd Ronald Owen v Carrington Confirmers Pty Limited (In Liquidation) No QG148 of 1994 Kiefel J Brisbane 28 April 1995 IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY GENERAL DIVISION No. QG148 of 1994 BETWEEN: RONALD OWEN Applicant AND: CARRINGTON CONFIRMERS PTY LIMITED (IN LIQUIDATION) Respondent JUDGE MAKING ORDER: Kiefel J. DATE OF ORDER: 28 April 1995 WHERE MADE: Brisbane MINUTES OF ORDERS THE COURT ORDERS THAT: 1. The respondent's motion for possession be dismissed. 2. Custom Credit Corporation Limited (In Liquidation) be joined as a respondent to the action. 3. Custom Service Leasing Limited be joined as a respondent to the action. 4. The respondent pay the applicant's costs of and incidental to the hearing on 24 March 1995. 5. The applicant's costs otherwise on the motion be his costs in the cause. NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY GENERAL DIVISION No. QG148 of 1994 BETWEEN: RONALD OWEN Applicant AND: CARRINGTON CONFIRMERS PTY LIMITED (IN LIQUIDATION) Respondent CORAM: Kiefel J. DATE: 28 April 1995 PLACE: Brisbane REASONS FOR JUDGMENT In this action the applicant seeks declarations and orders having the effect of setting aside securities held by the respondent, on a number of grounds. The statement of claim, which has been amended, will be the subject of a motion to strike it out as disclosing no reasonable cause or causes of action, which however is to be heard following the conclusion of this motion, in which the respondent, Carrington Confirmers Pty Limited (In Liquidation) ("Carrington Confirmers") seeks orders that the applicant deliver up possession of land at 5 Groves Road, Gympie, Queensland and described as Miners Homestead Lease Number 5776 Lot 6 on Plan Number MP 40089 County of March, Parish of Gympie and containing an area of 2.023 hectares. Clause 23 of the mortgage document relied upon, that dated 26 July 1993, provides that, subject to any statutory requirement of notice, upon default by the mortgagor under the mortgage, the mortgagee may, amongst other things, enter upon and take possession of the land without first giving notice. Clause 20 also provides for entry into possession upon default and contains no reference to the requirement of notice. Carrington Confirmers is one of three mortgagees named in the memorandum of mortgage. That memorandum refers to all three corporations as the "mortgagee" and states that the mortgage is held by them as tenants in common in equal shares. The other two corporations, Custom Credit Corporation Limited and Custom Service Leasing Limited were not parties to either the demand for payment of monies said to be due under the mortgage or to the demand for possession, which demands were issued by Carrington Confirmers and delivered by it to the applicant. The terms of the first mentioned demand by Carrington Confirmers conveyed a requirement of payment to it. The other two mortgagees are not presently parties to these proceedings although there is now an application to have them joined. Whatever the outcome of this motion it is clear that their interests under the securities sought to be avoided require them to be joined to these proceedings. The mortgage does not contain any authority which would permit one mortgagee to act without the other or to require payment of monies due and direct that it be paid only to that mortgagee. Clause 1, which contains the mortgagor's covenant to pay on demand, concludes: "...AND the principal sum and any other monies owing by the Mortgagor to the Mortgagee shall unless the Mortgagee in writing otherwise agrees be repayable by the Mortgagor to the Mortgagee on demand". No agreement in writing existed at the time the notices were given. The terms of the mortgage, I consider, require that all three mortgagees, as tenants in common, act together in making demand, that payment be made to all three and that an effective discharge could only be given by the three. The situation here is similar to the exercise of powers granted to a number of mortgagees considered in Drake v. Templeton (1913) 16 CLR 153, 158 per Griffiths CJ. and Re Casalin Pty Ltd (unreported decision of Dowsett J., Supreme Court of Queensland, 22 December 1986 where His Honour refers in detail to Warr v. Jones (1876) 24 WR 695). The respondent submitted that those cases can be distinguished from the present for two reasons, the first of which is that Drake v. Templeton (and Warr v. Jones) were cases concerned with an exercise of power of sale and not, as here, a claim for possession. The difference is said to arise in the requirements for the giving of notice, in that clause 23 does not require any notice to be given prior to possession being taken. The Court, it is said, is simply asked to recognise the respondent's right to possession by an appropriate order or declaration, which right is not dependent upon the validity of any notice. The submission however overlooks the fact that the right to possession under clause 23 arises on default, and here the default relied upon is the failure to comply with the demand for payment of the monies secured, which demand must however be made by all three mortgagees. The respondent also relied upon the fact, as now appears by the further affidavit material filed, that the only monies ever advanced were advanced by Carrington Confirmers and not the other two mortgagees, a situation which did not pertain in the cases to which I have referred and from which I take it I am to conclude that Carrington Confirmers could itself give an effective discharge. I was not referred to authority on the point and given the terms of the mortgage doubt that that could be the case. A similar conclusion was reached, as a matter of construction, in Ex parte: Losa [1982] Qd. R. 381, 384, although the case there referred to, Powell v. Brodhurst [1901] 2 Ch. 160, suggests that in actions for foreclosure or redemption, equity permits an enquiry into the true beneficial interest of the person who has been paid to determine whether the payment is good. But that is not the present issue. The question is whether there has been default entitling the mortgagees to possession. The mortgage provides that that occurs when demand is made by the three mortgagees and the mortgagor does not fulfil his obligation to pay to those three mortgagees. To hold that a demand by one must be complied with because one asserts that the others have no real interest in the monies advanced, would seem to me to expose the mortgagor to the risk to which Farwell J. in Powell v. Brodhurst referred (p. 167), where the mortgagor fails to fulfil his promise to pay according to the terms of the mortgage. The respondent's motion for possession will be dismissed. It has been unnecessary for me to consider in detail the submissions for the applicant against any order declaring that the respondent (and it would follow the other two mortgagees) has a right to possession. The principal submission had reference to an alleged ulterior motive on the part of the respondent, not in the context of the exercise of powers under the security, but to explain why the mortgage sued upon, together with a facility letter, were brought into existence. It is alleged by the applicant that the mortgagee was not able to prove the quantum of the debts said at that time to be owing by the applicant to it and then obtained the further acknowledgment and security documents to overcome this difficulty. It is said that this conduct ought to be characterised as unconscionable in equity or under the Trade Practices Act 1974. There is however nothing in the circumstance of the applicant as disclosed by the material which would suggest that he suffered under any relevant disability (see Commercial Bank of Australia Ltd v. Amadio (1983) 151 CLR 447) and at the time of these negotiations and in the execution of the mortgage on two occasions, the applicant had independent legal advice. As to the question of costs, the problem with the exercise of mortgagee's powers by one only was not a matter adverted to by the applicant's legal representative when the matter first came before me. I propose then to order that the respondent pay the applicant's costs of and incidental to the further hearing, on 24 March 1995, but that the applicant's costs otherwise on the motion be his costs in the cause. I certify that this and the preceding five pages are a true copy of the reasons for judgment herein of the Honourable Justice Kiefel. Associate Date: 28 April 1995 Counsel for the applicant: Mr D.C. Fitzgibbon Solicitors for the applicant: Armstrong Counsel for the respondents: Mr J.D. Batch Solicitors for the respondents: Walsh Halligan Douglas Date of Hearing: 8 December 1994, 24 March 1995 Place of Hearing: Brisbane Date of Judgment: 28 April 1995