Perpetual Trustee Company Limited & Anor v Kinsella [2006] NSWSC 1005

New South Wales Supreme Court

CITATION : Perpetual Trustee Company Limited & Anor v Kinsella [2006] NSWSC 1005

HEARING DATE(S) : 25 September 2006 JURISDICTION : Common Law

JUDGMENT OF : Michael Grove J at 1

EX TEMPORE JUDGMENT DATE : 09/25/2006

DECISION : JUDGMENT FOR POSSESSION OF LAND; STAY OF ISSUE OF WRIT OF EXECUTION

CATCHWORDS : REAL PROPERTY - MORTGAGES - DEFAULT - SUBSEQUENT PAYMENT OF SUM EQUIVALENT TO ORIGINAL CAPITAL LOAN - RECENT BANKRUPTCY OF DEFENDANT - APPARENT EXCESS OF VALUE OF PROPERTIES OVER TOTAL INDEBTEDNESS - PLAINTIFF ENTITLED TO JUDGMENT - STAY OF ISSUE OF WRIT OF POSSESSION

PARTIES : Perpetual Trustee Company Limited and Challenger Managed Investments Limited v Jeffrey John Kinsella

FILE NUMBER(S) : SC 15859/05

P. Walsh (Plaintiff) COUNSEL : In person (Defendant) S. Nash (solicitor for Trustee in Bankruptcy of Defendant)

SOLICITORS : Sunman & Walker (Plaintiff)

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

MICHAEL GROVE J

Monday 25 September 2006

15859/05 - PERPETUAL TRUSTEE COMPANY LTD & ANOR v JEFFREY JOHN KINSELLA

JUDGMENT

1 HIS HONOUR: These are proceedings by a mortgagee seeking possession of two parcels of land offered as security for mortgages entered into by the defendant Jeffrey John Kinsella. Upon the matter being called for hearing this morning, Ms Nash, solicitor, announced her appearance for the trustee in bankruptcy of the defendant. She indicated that she had some knowledge of these proceedings and that the trustee was content that Mr Kinsella be heard in relation to matters particularly pertaining to possession of one of the parcels of land which is apparently Mr Kinsella's domestic residence. 2 Be that as it may, Mr Kinsella has appeared for himself this morning and, despite the existence of the sequestration order, I have listened to the submissions that he has wished to make in relation to the proceedings generally. 3 It should be observed that there is apparently some misfortune affecting the defendant which has led to these proceedings. In exhibit 5, there is a document which was dispatched by the defendant by email to representatives of the mortgagee. Although I have no evidence supporting these assertions, I have no reason to doubt them. 4 Included in the information in that document is an assertion that in mid-2003, as a result of Mr Kinsella being the victim of crime, he was seriously injured. He described suffering 40 stitches in his head, fractures of the neck and below the right knee and of his ribs. He states that he was incapacitated for around nine months and sustained a number of permanent disabilities as a result. 5 That document also points out that Mr Kinsella was unable to continue with his business and that he sold it, as a result of which a sum said to be $450,000 was left with his solicitor, Mr Steven Parrott. 6 The original loan obtained from the plaintiff by the defendant appears to have been a capital sum of $204,000, but the amounts were distributed in accordance with the directions which are set out in exhibit B. The substantial amount of the advance went towards discharging existing liabilities of the defendant to the National Australia Bank. 7 Various schedules of principal and interest debits and credits appear in the evidence. It suffices to observe that the loan was taken out in May 2002 and that within approximately a year, as a result of default, legal fees were incurred. Mr Kinsella acknowledges various visits to his premises by Sheriff's officers in relation to the execution of writs. 8 Presumably consequent upon the injuries he sustained in mid-2003, it is obvious that thereafter there was a considerable cessation of any payments by way of interest to the mortgagee. I observe that the loan was for a period of three years and was of the type commonly referred to as "interest only". Mr Kinsella testifies that he gave his solicitor instructions to use the amount of $450,000, to which I have made earlier reference, to discharge liability to all his creditors, including the mortgagee. 9 What followed is, in some respects, somewhat curious. Mr Kinsella asserts that his solicitor told him that he was having difficulty contacting Mr Sunman, solicitor for the mortgagee, as a result of which Mr Kinsella contacted him directly. He asserts that he obtained from Mr Sunman information that a sum of $204,000 would entirely discharge the moneys due under the mortgage. Mr Sunman has given evidence and has been cross-examined. Without going into all the detail, his version of events is quite different and is supported by contemporaneous correspondence in which he recorded that, whilst that sum would be accepted, the indebtedness both as to principal and interest would be greater than the sum of $204,000. 10 A further matter of curiosity is that that sum, which is identical to the amount of the original advance, was drawn from a building society apparently by Mr Parrott in April - that is to say, prior to the conversation which Mr Kinsella asserts he had with Mr Sunman. Mr Kinsella places considerable reliance upon a document which, in effect, is a letter from Mr Parrott his then solicitor, dated 6 July 2004, in which the cheque was forwarded to the solicitors for the mortgagee. The letter from the defendant's solicitor states that the amount is in full and final settlement of this matter and there is an endorsement "Received the documents as listed above", signed on behalf of the solicitors for the mortgagee. 11 It is plain that that acknowledgement of receipt does not amount to an agreement for accord and satisfaction in full and final settlement. In any event, Mr Kinsella has candidly acknowledged that he was not aware of the existence of that letter until some considerable time later when he was consulting with Mr Parrott. 12 There are other incidental matters which, in my view, are supportive, at least, to Mr Sunman's version of events. These include the absence of any request either by Mr Kinsella or by his solicitor to have discharge of the mortgage attended to, or for return of the documents of title held as security. Mr Kinsella has explained that he didn't think that this was routine. I am merely saying that to the extent that that was the case, it is certainly not contradictory of what Mr Sunman had to say and, in a sense, is supportive of his evidence. 13 The complaints of Mr Kinsella are compounded by the circumstance that the schedule of debits and credits shows a debit for an early discharge fee and, of course, no such discharge ever took place. To the extent that that may be regarded as an error, it is a matter to be adjusted in accounting, but it does not demonstrate that there was an accord and satisfaction in the way now asserted by Mr Kinsella. 14 He has further complained that it was unfair to leave the matter for about 11 months before it was raised again. There is a letter written by Mr Sunman in which he acknowledges that the existence of the undischarged debt, as it were, was overlooked for that period of time. There was, of course, no obligation on Mr Sunman or, for that matter, on the mortgagee to attend to matters which were the responsibility of Mr Kinsella himself. 15 The other matter about which he complains is the adding in of legal fees associated with the mortgage and the abandoned attempts at execution. Without going to the documentation, it is inevitable that such expenses are payable by a mortgagor in accordance with the invariable forms of mortgage that one sees in this State. 16 As I have indicated, it may technically be the case that Mr Kinsella is not in a position to advance these arguments and that they should be advanced on his behalf, if at all, by the trustee. But in the light of the way that proceedings have been conducted, I have given these reasons in order to demonstrate that, in any event, the resistance by Mr Kinsella to the orders sought by the plaintiff would have inevitably failed even if presented by the trustee. 17 I have proceeded to ex tempore judgment in this matter not only because it seems to me that the outcome is clear and inevitable, but by reason of the matter that was raised concerning stay of execution. 18 I should record that default judgment was previously entered but set aside by a Deputy Registrar. A significant contributor to the basis for Mr Kinsella being let in to defend focussed upon facts upon which Mr Parrott and Mr Sunman disagreed. Although notified that Mr Parrott was required for cross examination, he did not attend and I did not permit his affidavit to be read. 19 Mr Kinsella informs me that his bankruptcy is quite recent and arises out of a debt which apparently accrued as a result of a judgment by somebody who sued him in relation to a dog bite. In any event, he says that the amount of debt which led to his bankruptcy, together with the amount owing to the mortgagee, are considerably less than the value of the two properties which are the subject of security. 20 I pointed out to him that there was expressly no objection to his making an application for stay of execution, and in response to my invitation he sought a period of at least 30 days in order to see whether or not all of his matters could be adjusted, as it were. 21 In response to my inquiry, Mr Walsh, of counsel, on the instructions which he had, indicated that his client may be amenable to dealing, through the trustee, with any reasonable proposition to enable Mr Kinsella to remain in possession of his home and to discharge his various debts, or appropriately secure them. In order to enable this to be done, the plaintiffs would consent to a stay of execution of the writs for a period of two months. Mr Kinsella acknowledged that this was an offer of perceptible goodwill. Inevitably, though, the amount of his indebtedness will be increased by the legal costs of these proceedings. 22 In the ultimate, then, I propose to make orders in accordance with the statement of claim and to stay the writs of possession for two months and give liberty to apply in respect of those matters. As has been pointed out, within two months it should be known as to whether or not the propositions being advanced are likely to bear fruit. I have pointed out to Mr Kinsella that in the event that such accommodation cannot be reached, he might anticipate that execution on the writs would take place. For those reasons, then, I make the following orders: 23 That the first plaintiff be adjudged entitled to possession of the land comprised in certificate of title folio identifier 504/46727, known as 116 Port Stevens Road, Taylors Beach, in the State of New South Wales. I give leave to issue a writ of possession to enforce that order and I stay the issue of such writ to 25 November 2006. 24 I further order that the first plaintiff be adjudged entitled to possession of the land comprised in certificate of title folio identifier 353/24393 and known as 65 Rigney Street, Shoal Bay, in the State of New South Wales. 25 I give leave to issue a writ of possession to enforce that order. The issue of such writ stayed until 25 November 2006. 26 Liberty to either party to apply in respect of those orders. 27 I order the defendant to pay the plaintiff's costs of the action. **********