New South Wales Supreme Court CITATION : Perpetual Trustees Victoria Ltd v Van den Heuvel [2008] NSWSC 350 HEARING DATE(S) : 17 April 2008 JUDGMENT DATE : 23 April 2008 JUDGMENT OF : Malpass AsJ DECISION : Notice of Motion for summary relief dismissed; plaintiff to pay the costs of the Notice of Motion. CATCHWORDS : COMMON LAW - summary relief - possession - forged mortgage - indefeasibility - entitlement to relief under other legislation - discretionary relief - relevant considerations Contracts Review Act 1980 LEGISLATION CITED : Consumer Credit (NSW) Act 1995 Real Property Act 1900 CATEGORY : Principal judgment Chandra v Perpetual Trustess Victoria Ltd (2007) ANZ Conv R 481 Farah Constructions Pty Ltd v Say Dee Pty Ltd [2007] HCA 22; 230 CLR 89 CASES CITED : Permanent Trustee Co Ltd v Frazis [1999] NSWSC 319 Perpetual Trustees Victoria Limited & Anor v Tsai (2004) 12 BPR 22,281 Yazgi v Permanent Custodian Limited [2007] NSWCA 240; (2007) ANZ Conv R 566 PARTIES : Perpetual Trustees Victoria Ltd (Plaintiff) Elizabeth Van den Heuvel (Second defendant) FILE NUMBER(S) : SC 14905/05 COUNSEL : A Leopold SC/ D Thomas (Plaintiff) GA Rich (Second defendant) SOLICITORS : Gadens Lawyers (Plaintiff) Nelson & Co Solicitors (Defendants) IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION Associate Justice Malpass Wednesday 23 April 2008 14905/05 Perpetual Trustees Victoria Ltd v Peter Van den Heuvel & Anor JUDGMENT 1 HIS HONOUR: The first and second defendants are the registered proprietors of a property known as 18 McIntosh Street Queanbeyan ("the property"). On or about 16 November 2004, a loan agreement was made purportedly between the plaintiff and the defendants. Pursuant to the loan agreement, the plaintiff was to lend the sum of $185,250.00 to the defendants on the security of the property. 2 The plaintiff alleges that it advanced the said sum. It further alleges that it has a registered mortgage securing repayment of the sum advanced and other monies. The terms of the mortgage secured the "secured money" jointly and severally (see, inter alia, definition of "Secured Agreement"). The definition refers to "any one of us". It further alleges that there has been default under the mortgage since 15 May 2005. 3 On 21 October 2005, proceedings were commenced by Statement of Claim. This process claims, inter alia, judgment in a monetary sum and an order for possession of the property. 4 The plaintiff has obtained default judgment against the first defendant (1 September 2006). The second defendant has filed both a Defence and a Cross Claim. (This was done on 16 May 2007.) The plaintiff has filed a Defence to the Cross Claim. (This was done on 7 June 2007.) 5 The second defendant (who is the wife of the first defendant) alleges that her signature was forged on both the loan agreement and the mortgage. Her resistance to the plaintiff's claim relies on entitlement to relief under the Contracts Review Act 1980 ("the Act") and the Consumer Credit (NSW) Act 1995 ("the Code"). 6 The plaintiff now seeks summary relief in respect of both its claim and the Cross Claim (the original application was filed on 23 January 2008). An Amended Notice of Motion was filed in court. The application is defended by the second defendant. During the hearing, the claim for a monetary judgment was abandoned. 7 The hearing of the application took place on Thursday 17 April 2008. The plaintiff has relied on affidavits (two) sworn by Mr David (an Assistant Manager of the plaintiff) on 6 February 2007 and 21 December 2007 and an affidavit sworn by Ms Craig on 1 April 2008. It also tendered Exhibit "A" and "B". The second defendant has not placed any evidence before the Court. 8 It is common ground, for the purposes of this application, that the signature of the second defendant to both documents was forged. Similarly, it is common ground that she is not bound by the terms of the loan agreement. The plaintiff relies on the indefeasible interest acquired in the land by reason of registration of the mortgage under the Real Property Act 1900 ("RP Act"). 9 Further, it is common ground for the purposes of this application, that the plaintiff accepts as being true the allegations made by the second defendant in her Cross Claim. 10 The parties have referred the Court to a number of authorities (including Perpetual Trustees Victoria Limited & Anor v Tsai (2004) 12 BPR 22,281; Chandra v Perpetual Trustees Victoria Ltd (2007) ANZ Conv R 481; Yazgi v Permanent Custodian Limited (2007) ANZ Conv R 566; Permanent Trustee Co Ltd v Frazis [1999] NSWSC 319; Farah Constructions Pty Ltd v Say Dee Pty Ltd [2007] HCA 22; 230 CLR 89). 11 The authorities establish that at common law prior to registration the mortgagee receives nothing under a forged instrument. It is a nullity. The fact of registration gives the mortgagee the estate or interest in land conferred by the mortgage. 12 In Yazgi v Permanent Custodian Ltd [2007] NSWCA 240; (2007) ANZ Conv R 566, Beazley JA said as follows: "19 The extent to which a registered mortgage gave to the mortgagee an indefeasible interest in property was considered in PT Ltd & Anor v Maradona Pty Ltd & Ors (1992) 25 NSWLR 643 where Giles J (as his Honour then was) said at 679: 'That which is attained by registration is, in the words of s 42 [of the Real Property Act 1900 (NSW), an estate or interest in the land. Registration does not validate all the terms and conditions of the instrument which is registered. It validates those which delimit or qualify the estate or interest or are otherwise necessary to assure that estate or interest to the registered proprietor.' (Emphasis added)" 13 As the law presently stands, some uncertainty remains as to what is indefeasible and consequently what could be the subject of relief to the second defendant under legislation that has application in the circumstances of this case. 14 During submissions, it was made clear that what the second defendant relied on was restricted to the relief to which she may be entitled under either the Act or the Code. There was issue between the parties as to whether or not the second defendant had any entitlement to relief under either of them. 15 A question of amendment to add a claim in respect of unconscionability was ventilated and opposed at a late stage during submissions. The extent to which it was really pressed may be debatable. However, it seems to me that any such amendment was unlikely to assist the second defendant in resisting the application and in any event was ventilated at too late a stage. 16 There is authority at first instance (see, inter alia, Frazis) to the effect that the Act does not have application in the present circumstances. The thrust of the submissions made on behalf of the second defendant is to the effect that such authority is erroneous. Stress was placed on what was said to be the width of the meaning to be given to the word "contract" as it appears in s 7. 17 The purpose of such legislation seems to be to enable a party who is bound by a contract to seek relief from the contractual terms thereof. It was not to seek relief from the consequences of registration under the RP Act. It is such thinking which leads me to prefer the view that the authority has been correctly decided. 18 However, one consideration in the determination of this application is whether or not the second defendant should have the opportunity to test that matter of statutory construction in the context of the relevant evidence at a trial. 19 The parties have not drawn my attention to any authority that concerns the application of the Code in circumstances such as the present. However, it might be thought that a similar approach should be taken in relation to it. 20 The Code has application to the provision of credit as prescribed by s 6. Relief may be sought, inter alia, by a "debtor" or a "mortgagor" (see, inter alia, s 70). There has been dispute as to the proper meaning to be given to such terms. The dispute extended beyond s 70 to s11. 21 The application of the Act depends on the credit being provided either wholly or predominantly for personal, domestic or household purposes. In this case, the loan agreement contained a declaration that the credit was to be applied wholly or predominantly for business or investment purposes. This declaration does not bind the second defendant. The plaintiff contends that the first defendant is the "debtor" for the purposes of the statutory construction required in this case (inter alia of s 11(2)). There is material before the Court that suggests that what was advanced was not provided for business or investment purposes. 22 The plaintiff conceded that it was not unarguable to contend that the second defendant was a "mortgagor". There was a registered mortgage. The registration passed an estate or interest from the second defendant to the plaintiff. The registration had the effect of validating certain terms of the mortgage. 23 Another consideration in the determination of this application is whether or not the second defendant should also be allowed to fully argue these matters of statutory construction in the context of the relevant evidence at a trial. 24 For completeness, I should mention s 38. It was referred to during submissions. One of its requirements is that the form of written mortgage must be signed by the mortgagor. Non compliance brings about unenforceability. 25 Summary relief is a discretionary remedy. The discretion is to be exercised so that the dictates of justice are best served. The authorities have well established that relief should only be granted in what may be described as clear cases. The onus rests with the party seeking the relief. 26 The purpose of the granting of summary relief is to bring an expeditious termination to a hopeless case. It is a weapon intended to enable the avoidance of useless expense that may be involved in a trial of a case with no prospects of success. Whilst there is no temporal restriction on the bringing of an application, its purpose is best served if it is brought expeditiously and at an early stage in the proceedings. 27 In this case, the proceedings were commenced as long ago as October 2005 and are yet to brought to trial. The progress has been leisurely. The present application was not brought until 23 January 2008 (about 7 months after the filing of the Defence and Cross Claim). During the time that preceded the bringing of it, the pleadings had closed and there has been preparation for trial. It seems to me that this belated application should have been brought at a much earlier time. 28 The normal expectation would have been that diligently prosecuted proceedings should have been well and truly disposed of by trial prior to the bringing of the present application. The Court has been told that there has been significant delay by reason of default on the part of the plaintiff. The plaintiff has not sought to explain either the default or the delay. In the circumstances, I regard the default, delay and lack of explanation as matters of significance in the exercise of the discretion. 29 In the context of this litigation, I consider the dictates of justice are best served if the matter is allowed to proceed to trial. Whilst the case of the second defendant may not be seen as being a strong one, I consider that she should be allowed to put her submissions on statutory construction on an occasion when all of the relevant evidence is before the Court. What is presently before the Court does not suggest that any such trial would be lengthy. 30 Therefore, having regard to the relevant circumstances of this case, I am not satisfied that the plaintiff has discharged the onus which would entitle it to summary relief. 31 Accordingly, the Notice of Motion for summary relief is dismissed. The plaintiff is to pay the costs of the Notice of Motion. The exhibits may be returned. ********** 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. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.