New South Wales Supreme Court CITATION : VESCIO v. WESTPAC BANKING CORPORATION [2003] NSWSC 1270 revised - 22/03/2004 HEARING DATE(S) : 25-26/03/2003 JUDGMENT DATE : 26 March 2003 JURISDICTION: EQUITY JUDGMENT OF : Bryson J at 1 DECISION : Separate question answered "yes" CATCHWORDS : MORTGAGES - mortgagee's remedies - notice before exercising power of sale Real Property Act 1900 s.57(2)(b) - finding of fact that notice delivered - consideration of requirements of Conveyancing Act 1919 s.170 - separate question answered "yes", notice given. Real Property Act 1900 LEGISLATION CITED : Conveyancing Act 1919 Law of Property Act 1925 Interpretation Act 1987 Connor v Blacktown District Hospital (1971) 1 NSWLR 713 Holwell Securities Ltd v Hughes (1973) 1 WLR 757 Bressan v Squires (1974) 2 NSWLR 460 CASES CITED : Levitt v Illawarra Seafood Pty Ltd (No 2)(1983)3 BPR 97165 at 9140 Lolly Pops (Harbourside) Pty Ltd v Werncog Pty Ltd (1998) 9 BPR 97719 at 16370 to 16372 Walville Pty Ltd v Liristis Holdings Pty Ltd 2001 NSWSC 894 In Re 88 Berkley Road [1971] 1 Ch 648 PARTIES : Paul Michael Vescio - Plaintiff Westpac Banking Corporation - Defendant FILE NUMBER(S) : SC 4525/2000 COUNSEL : T. Lee - Plaintiff P. Dowdy - Defendant SOLICITORS : Terence Lockyer Lee & Associates - Plaintiff Henry Davis York - Defendant IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION BRYSON J. WEDNESDAY 26 MARCH 2003 4525/2000 PAUL MICHAEL VESCIO v WESTPAC BANKING CORPORATION JUDGMENT 1 HIS HONOUR: For reasons which I stated yesterday I directed decision separately of two questions whether at the time of the sale of the upstairs unit the defendant had given any notice under and in accordance with s 57 (2) (b) of the Real Property Act 1900 and a like question relating to the sale of the downstairs unit. 2 In the amended statement of claim the plaintiff positively alleges and bases claims on allegations that no notice pursuant to s 57 (2) (b) by the defendant in relation to each sale was ever served upon the plaintiff in the manner authorised by s 170 of the Conveyancing Act. 3 In law then the plaintiff bears the burden of proof of the negative that no notices were given. However, the defendant in the nature of the issue comes under a considerable forensic burden because the defendant is in a far better position to establish facts relating to compliance with s 57 and s 170 than the plaintiff. 4 The plaintiff's evidence-in-chief in his affidavit of 7 November 2000, para 11, said to the effect that the only default notice (which he uses to refer to a s 57 (2) (b) notice) which he ever received is an earlier default notice delivered the previous year relating to a relatively small breach. He said: Not only have I no recollection of ever receiving any further default notice, all documents received by me in connection with the mortgage are placed immediately in my files and the thorough search has revealed no further default notice. 5 He went on to say that he received a demand notice thereafter in April of 2000 and that nothing further occurred until he received some letters about 29 June 2000 which required him to vacate the premises. 6 This evidence was supplemented by oral evidence and was challenged in cross-examination. The plaintiff produced a bundle of envelopes, exhibit 4, which he said are examples of windowed envelopes which he had received from the bank at his address at Pozieres Parade, Allambie Heights. He said he had never received any envelope from the bank which had a handwritten address. 7 The plaintiff's evidence further shows that 53 Pozieres Parade, Allambie Heights is his ordinary residence; it is a house owned by his mother who lives separately from his father; and only the plaintiff and his mother live there. 8 The plaintiff works for or in association with his father who is concerned in the building industry. For much of 1999 he worked at Wollongong with his father and at that time lived in Figtree but travelled up and down to Allambie Heights throughout the year. The work at Wollongong came to an end, as I understand him, about March 1999, although the evidence is a little ambiguous, and may possibly refer to March 2000. 9 However, once the Wollongong work came to an end he returned to living at Pozieres Parade and continued studying and with his father looked at new contracts from time to time. 10 His routine for dealing with mail while living at Poziers Parade was that when he came home from a job or came home from studying at TAFE he would collect the mail; the mail that had arrived at 53 Poziers Parade would be collected from the mailbox by his mother and she would hand his mail to him; his mother worked part-time five days a week at a chemist shop; she collected the mail and handed it to the plaintiff from time to time. 11 The plaintiff's evidence showed that he received a number of communications from the bank in this way but he adhered to the evidence to the effect that he had not received the relevant default notice and indeed his oral evidence was a little stronger than the statement in the affidavit that he had no recollection of ever receiving any default notice. 12 A letter of demand, which the plaintiff acknowledged in evidence that he did receive in April 2000, contains in it a reference to an earlier default notice and said in so many words "you have been served with a default notice..." and referred to consequences of the default notice in terms of an acceleration clause accelerating the requirement to pay the whole moneys due on demand. The demand notice received in April referred to action of various kinds which the bank might possibly take and in a formal statement at the conclusion of the notice referred to the possibility of the bank taking possession of the property and selling it. The demand notice did not, however, state that the earlier notice referred to in its terms had brought this about. 13 The defendant's counsel commented and placed some reliance on the circumstances that although the plaintiff when he received the notice in April saw that it referred to an earlier notice which he had not received, the plaintiff did not take any relevant action such as pointing out to the bank that he had not received it or asking what it was or asking for a copy. This is to some degree an anomaly of the plaintiff's position but I do not attribute great significance to it, bearing in mind that the plaintiff worked in association with his father, to whom I attribute most business initiatives in connection with this loan and the matter of the default. 14 In my view the proofs offered by the plaintiff to the effect that the notice of March 2000 was not received through the post at Poziers Parade are not altogether convincing. 15 The plaintiff's evidence depends to a considerable extent on practice and routine. As he first stated it he referred to his practice of placing documents in his files and the fact that the default notice had not been found on a thorough search. His oral evidence shows that his mother was the householder and had a practice of receiving documents from the post and handing on to him presumably the documents that she perceived it was appropriate to hand on. In a full and clear proof of what the plaintiff endeavoured to prove it would have been desirable that his mother give evidence of her practices and also of anything she might know about the receipt of any such letter in the mail. Although I did not perceive anything in the demeanour of the plaintiff which led me to think that his evidence should not be treated as sincere, it seems to me that he has not offered full and clear proof of the negative proposition of which the burden of proof rests upon him. 16 The defendant put in evidence the affidavit and oral evidence of Mr Ian Clark who at the time of alleged dispatch of the default notice on 3 March 2000 was employed by the bank and was working in the Debt Resolution Collection Unit at the bank's mortgage centre in Adelaide. 17 His duties included involving himself in recovery of debts of customers where the customers are in default on their facilities. He produced in evidence exhibit 3, a document internal to the bank called a service agreement which specifies what the bank's internal organisation required to be done by the Collections and Recoveries Unit. This document specifies in fairly close detail a procedure to be followed for preparing, addressing and posting notices and for keeping records of so doing. Mr Clark's evidence should be understood subject to the circumstance that he has no actual recollection of events of 3 March 2000, or of his handling the default notice on that day, and his evidence is based upon his knowledge of the practice at that time, of his own pursuit of that practice and conformity with it and of what he is told by some written material which he has produced. 18 He produced a copy of the default notice retained by the bank bearing an endorsement made by him on the relevant day, 3 March 2000, saying: The document on which this stamp is placed is an exact copy of the default/demand notice posted to the addressee of the notice in a prepaid envelope on today's date to the address appearing on the notice. 19 This note signed and dated by him equipped him rather well to speak of the events of that day on the basis of recollection refreshed by a contemporaneous note. 20 His evidence then avers that he did sign the default notice and write the date in and he went on, speaking from refreshed recollection on the basis of his practice and the documents to say that he obtained a photocopy of it to make the note on the duplicate, signed his signature, printed his name and dated the stamp and that he acted in accordance with standard practice and obtained a plain white unmarked envelope and hand wrote the recipient's address on the envelope, attached a postage stamp of the right value and that, following the practice, he would have written out an envelope addressed to Mr Vescio, stamped it and put the envelope (with, his oral evidence shows, the notice itself) in a special tray in the relationship collections unit. 21 The source of the address which he says he would, according to practice, have written on the envelope is a bank record, which he calls a copy of the printout of the NCS computer record details in respect of the plaintiff. This shows the plaintiff's address but there are some small departures from entire correctitude. The plaintiff's name is given as "Mr Vescio, Paul Micheal." This name and spelling are exactly reproduced in the copy default notice. The address is given as "53 Poziers Pde, Allambie, 2100, NSW." 22 A location called Allambie does in fact appear on maps but the usual means of referring to the district is "Allambie Heights." However that may be, the bank's record shows that the address for Mr Vescio, the plaintiff, known to the bank was as I have quoted and it should be understood that Mr Clark's evidence means that that address appeared on the envelope. 23 Mr Clark described the routine and his evidence is borne out by production of a copy, exhibit 2, of the postal service register for 3 March 2000 maintained in the Relationship Collections Unit of the mortgage centre in which, among other records, a record of dealing with the default notice appears. 24 The entry contains Mr Clark's handwriting for the type of notice, loan account number, name of the person being served and the address. It also contains entries which as a matter of routine would be made and the record shows were made by a collector who took the item to the mail team, named Mr Eiffe, and by the person who posted the article, named Mr Simonetti. Neither of those persons has given evidence and there is some evidence of an enquiry made of Mr Simonetti to which he responded in terms which suggest that he was not willing or not able to give any useful evidence after the lapse of time. 25 There are some small infelicitous aspects of Mr Clark's evidence. When describing his practice he gave the wrong street number, 57 Poziers Parade but at other places in his affidavit and in the records which he produces with it the correct street number, 53, uniformly appears. I have no doubt overall that his evidence supports my finding that he put the correct street number on the envelope. 26 He was also challenged in cross-examination with a suggestion that the post code as he wrote it in the postal service register is difficult to read and may refer to some other initial number than 2 for the post code 2100. I am unable to believe that this can have been a practical difficulty in all reality as the address directed the letter to New South Wales, all post code numbers for which begin with the number 2 (with minor exceptions for articles directed to post boxes). 27 Overall Mr Clark's evidence paints a picture of a carefully constructed routine supported by contemporaneous records, and gives proof of acts which depends after a lapse of several years far more on the records and their contemporaneity than on the evidence of recollections of persons who took part in the events; true recollections of such events are not to be hoped for. 28 A number of observations were made adverse to Mr Clark's evidence and the defendant's case about posting the default notice. As I have said, my view of the reliability of the practice and his evidence is not disturbed by anomalies relating to his handwriting or to his having misstated the street number at one place. I do not see any real anomaly in the bank choosing to use plain envelopes for one purpose while using windowed envelopes for most of its purposes. There is no overall improbability about what Mr Clark says he used for envelopes. He did not give any really clear evidence finally about whether or not there was a return address printed or written on the back of the envelope. I do not see that as a real anomaly. He spoke of a practice of returning undelivered mail after the Post Office had opened the mail to find out who the sender was, and in that case there was a practice of entering the fact that the document was returned unclaimed in the file relating to the customer. I see no real anomaly in the bank not having a practice of photographing envelopes as well as keeping a Xerox copy of default notices. 29 The observations were made that Mr Clark did not, even according to routine, himself see some parts of the events such as the default notice being actually placed in the envelope which in the routine was done by someone else, nor did he see the act of handing mail, including this article, to the representative from Australia Post who, according to routine, would call at the mortgage centre and pick up the mail. 30 As I have said in another connection, it is not to be hoped for that every detail of such an event would be proved by the evidence of the person who participated in it. Clearly enough, practices can be proved and relied on in proof of the probability that events actually happened in accordance with the practice. The principal authority known to me is the decision of the Court of Appeal in Connor v Blacktown District Hospital (1971) 1 NSWLR 713. Where routines and practices have been carefully constructed and are well recorded, they can in fact be quite convincing. They can be even more convincing than claims of recollection based on a witness casting his mind back some years to a relatively minor event. 31 The possibilities that the practice miscarried in this case in some way, that the document was in some way lost or mislaid and did not ever reach a postal officer, that the envelope did not bear the address which Mr Clark according to routine should have placed on it, or other possible miscarriages can be discerned, but in a system where facts are found on probabilities these do very little to disturb the impression produced by his evidence of the overall routine. 32 On these considerations I find that the default notice, a copy of which is annexure A to Mr Clark's affidavit, in fact was posted in an envelope addressed to the plaintiff on 3 March 2000 in the manner and circumstances which Mr Clark's evidence suggests that it was posted. 33 Many circumstances can be recognised which may have led a letter so posted not to have been delivered to 53 Poziers Parade, Allambie Heights. It is an infrequent but a recurring experience that mail articles are lost in the mail; such miscarriages occur and I cannot close my eyes to the possibility. 34 It should be recognised that the plaintiff's evidence in support of the proposition that the default notice did not arrive at 53 Poziers Parade, and the inference from that that it was not posted, itself depends on some routines and on the presumption which the plaintiff's case would seek to raise, that routines were probably followed. 35 His own evidence showed dependence on his having no recollection of receiving the default notice but also on his evidence about his practice of placing documents in files and his not finding them on search. 36 This part of his evidence and of his case depends on the probability of a routine having been followed and there are contingencies which could adversely affect the reliability of it. 37 His evidence and his case also depend on the practice or usual course of his mother as a householder receiving the mail and distributing to him the appropriate letters; once again a case based on practice, not supported by much in the way of evidence of the practice or of its being routinely followed and in particular not supported by evidence of his mother. 38 Overall I am not impressed by the proofs offered in support of the proposition that it should be found on the balance of probabilities that the documents were not received at 53 Poziers Parade. It may well be that they were not but as a matter of probabilities I am not satisfied that it has been shown that they were not. 39 Exercise by the defendant of its power of sale appears to depend on the proposition that the same default notice of 3 March 2000 supports the exercise of the power of sale in respect of each of two mortgaged properties. The notices fit into the mechanism in the Real Property Act at paras 57 (2) (b) and (b1). The significant passage in para (b) refers to service "...in the manner authorised by s 170 of the Conveyancing Act 1919." However, s 58 A deals with dispensing with notice and prescribes in subs (1) that notice of various kinds, including default notices may by agreement expressed in the mortgage be dispensed with: ... and in such case s 58 shall operate as if no notice or lapse of time were thereby required, 40 On the facts I have found it should be concluded that the notice was served in accordance with s 170 of the Conveyancing Act 1919, at least when the terms of that section are read literally. Subsection 1 (b) provides to the effect that any notice required to be served shall be sufficiently served: (b) if left at or sent by post to the last known residential or business address in or out of New South Wales of the person to be served. That was literally fulfilled. 41 There are circumstances in which notwithstanding that s 170 is literally fulfilled it has been regarded as essential that the notice should actually be delivered and delivered within time contractually prescribed. 42 In relation to the exercise of options significant authority supports the lack of effect of posting a notice without actual receipt of the notice - Holwell Securities Ltd v Hughes (1973) 1 WLR 757, a decision of the Court of Appeal in England. This conclusion is also supported by several decisions in this Court; Bressan v Squires (1974) 2 NSWLR 460, Levitt v Illawarra Seafood Pty Ltd (No 2)(1983)3 BPR 97165 at 9140; Lolly Pops (Harbourside) Pty Ltd v Werncog Pty Ltd (1998) 9 BPR 97719 at 16370 to 16372. 43 I discussed these cases in my judgment in Walville Pty Ltd v Liristis Holdings Pty Ltd 2001 NSWSC 894. However, they relate to the exercise of an option, in that case an option to renew a lease, and special difficulties of exact compliance attend exercise of options. 44 I was referred to In Re 88 Berkley Road [1971] 1 Ch 648 in which Plowman J decided on the generally corresponding provisions of s 196 (4) of the Law of Property Act 1925 that actual receipt of the notice was not required. Section 196 (4) is not in identical terms to s 170, and as Plowman J's judgment shows at 654-655 that a different view has sometimes been taken. 45 On the whole I incline to the view that what s 170 requires is posting, not actual notice, and that when s 170 applies because it is made to apply by other legislation (and not by some contractual arrangement of parties) compliance by posting is sufficient, whether or not there is a successful outcome and the notice is actually delivered. I do not think, however, that I can express a concluded view on this and on the facts that I have found a concluded view is not required. 46 I was also referred to s 76 of the Interpretation Act 1987 which in my understanding creates a mechanism which a party attempting to prove service can avail himself of but does not make a general prescription regulating matters which are already regulated by s 170. In particular I see no implication from the terms of subs 76 (1) (b) that if evidence sufficient to raise doubt is adduced the document should be taken not to have been effected at all; to my mind the better reading is that para (b) deals only with establishing the day on which service is to be taken to have been effected. 47 For these reasons I answer the separate question in each case: Yes, at the time of the sale of each unit the defendant had given notice under and in accordance with s 57 (2) (b) of the Real Property Act 1900. ********** Last Modified: 11/28/2007 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. 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