New South Wales Supreme Court CITATION : Higgs v Retsinias [2008] NSWSC 10 HEARING DATE(S) : 16 January 2008 JUDGMENT DATE : 16 January 2008 JURISDICTION : Common Law JUDGMENT OF : Campbell JA EX TEMPORE JUDGMENT DATE : 16 January 2008 DECISION : First defendant to pay costs of plaintiff of proceedings, those costs to be assessed in accordance with provisions of registered mortgage. CATCHWORDS : MORTGAGES - default under mortgage - order for costs relating to enforcement of mortgage - reasonableness of mortgagee's conduct - whether mortgagee disentitled to amount for enforcement costs - mortgage includes covenant allowing recovery of enforcement costs on basis different to that upon which courts would ordinarily order costs to be paid - MORTGAGES - circumstances in which mortgage will be void for uncertainty LEGISLATION CITED : Real Property Act 1900 CATEGORY : Consequential orders Keith Arthur Higgs - Plaintiff Katina Retsinias - First Defendant PARTIES : Scott Darren Pascoe - Second Defendant MDN Mortgages Pty Ltd - Third Defendant FILE NUMBER(S) : SC 14884/07 COUNSEL : A Jungwirth - Plaintiff R Jefferis - First Defendant SOLICITORS : Jackson Smith Lawyers - Plaintiff S E Doyle and Associates - First Defendant IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION CAMPBELL JA WEDNESDAY 16 JANUARY 2008 14884/07 - KEITH ARTHUR HIGGS V KATINA RETSINIAS & 2 ORS HEARING PROGRESSIVE LIST JUDGMENT – Ex Tempore 1 HIS HONOUR: This is an application by a mortgagee of premises for an order for costs relating to enforcement of the mortgage. 2 The only live defendant in the proceedings is the first defendant. The first defendant is the registered proprietor of land in Folio Identifier 1/SP13978 known as Unit 2, 8 Fall Street Cremorne. The certificate of title of that property shows that it is subject to a registered mortgage to the plaintiff. The registered copy of that mortgage contains covenants as follows: "3.5 ...You must, on demand by Us, pay to, or as directed by, Us, and indemnify Us against, all costs, losses, charges, expenses, liabilities, damages, fees and disbursements (including all reasonable legal costs on a solicitor and own client basis) paid or incurred by Us or incidental to: ... (d) any breach of, or default under, this Mortgage by You (including the reasonable fees of all professional consultants properly incurred by Us in consequence of or in connection with, any such breach or default); ... … 23. When We ask, You must pay Us any reasonable amount We reasonably incur in enforcing this Mortgage after You are in default. These may include expenses incurred in preserving or maintaining the Property such as insurance, rates and taxes payable for the Property and, if you do any Building Work on the Property, may also include any expenses incurred in completing or varying or stopping that Building Work." 3 It is undisputed that there was a loan made by the plaintiff to the first defendant. The proceedings in which the present application is made were commenced in August of 2007, by summons in the Commercial List, seeking a variety of orders. Those orders included possession of the property, an order for costs, and judgment for a sum of a little over $56,000 together with interest from 7 August 2007 to the date of judgment. 4 There were some difficulties in effecting service, and indeed on the material before me it is not clear that the summons was ever actually served. However, in some fashion or another, it clearly came to the attention of the first defendant, because on 26 October 2007 she appeared in person at a directions hearing. She has subsequently filed a notice of appearance in the proceedings, on 30 November 2007. 5 It is common ground that all principal and interest owing in relation to the loan that was made have now been repaid. The only outstanding dispute concerns whether the plaintiff is entitled to costs in relation to its enforcement action in relation to the mortgage. 6 Mr Jefferis, counsel for the first defendant, raises two bases upon which he submits there is no such liability. The first is a contention that the mortgage document itself is void for uncertainty. That contention is based upon a number of textual matters within the mortgage. The mortgage, when originally typed, stated, in the box on the front page that identifies the mortgagor, that the mortgagor was "Catherine Retsinias". That name was altered in handwriting, to, "Katina Retsinias" in that particular box. The name as so altered is the correct name of the first defendant. Likewise, immediately under the place where Ms Retsinias was to sign on the front page of the mortgage, the name was shown in the document as originally typed as being "Catherine Retsinias" but that likewise was altered in handwriting to read "Katina Retsinias". 7 The mortgage took the form commonly used of the prescribed form of Real Property Act mortgage (a single page) to which was annexed a set of conditions. Those conditions were of a kind that could apply to a large number of mortgages, but which were made applicable to the particular transaction in question by a reference schedule, that gave various details that were peculiar to the particular transaction in question. In that reference schedule, the mortgagor was identified as (after a handwritten amendment has been made) "Katina Retsinias". Her address was given as Unit 2, 8 Fall Street, Cremorne, in that identification. The property address was stated, in the reference schedule, to be, "Unit 1, 8 Fall Street Cremorne". And the folio identifier of the mortgaged property was stated to be 1/SP 13978. 8 The heading to the annexure to the prescribed form read: "This and the following 18 pages is Annexure A referred to in the Mortgage between Catherine Retsinias (Mortgagors), Ann Ross and Catherine Retsinias (Borrowers) and David Carmine Longo (Mortgagees)" 9 In that heading, the forename of the first defendant was never corrected, where it was crossed out. The reference to Mr Longo as a mortgagee was quite inappropriate - all the other references in the document to the mortgagee were to the plaintiff in these proceedings, Keith Arthur Higgs. 10 Mr Jefferis submits that these textual matters are sufficient to make the mortgage void for uncertainty. I do not accept that that is so. For a mortgage to have sufficient certainty it is necessary for there to be certainty about who the parties to the mortgage are, what the property the subject of the mortgagee is, the amount secured by the mortgage, and the terms upon which it is secured. In my view, reading the mortgage as a whole, there is no doubt of the identity of both mortgagor and mortgagee. They are, respectively the first defendant, and the plaintiff. Nor is there doubt about the identity of the mortgaged property. The textual matters to which I have referred can all be read in a way that is consistent with this interpretation, purely as a matter of construction, without there being any rectification of the document. 11 The second submission that is made by Mr Jefferis is that the conduct of the mortgagor has not been reasonable, and that this disentitles him to any amount for enforcement costs. I accept that reading Clause 3 and 23 of the mortgage together, only reasonable costs can be recovered. 12 It appears from the mortgage document that the loan amount was some $45,000 dollars, for a term of 24 months. The date of the mortgage was 8 March 2005. The amount secured had not been repaid by 8 March 2007, thereafter some enforcement attempts were made, which included service of a notice under section 57(2)(b) Real Property Act. That notice was sent by letter, addressed to the first defendant at "1/8 Fall Street, Cremorne, NSW 2089." There is no evidence one way or the other as to whether that 57(2)(b) notice came to the attention of the first defendant. 13 What is clear, it seems to me, is that there was default under the mortgage, and that a situation arose in which it would be reasonable for the mortgagee to incur some costs in seeking to enforce the mortgage. 14 The amount of costs that the mortgagee claims is in the order of $21,000. Some criticism is made of various particular aspects of the conduct of the mortgagee. Criticism is made of the commencement of the proceedings in the Commercial List rather than in the ordinary possession list, of the fact that the proceedings were (it is said, though without evidence) never actually served on the first defendant, and of various other matters. In my view, it is not appropriate for this Court to go into those questions, once it is clear (as I have held) that it would be reasonable for the mortgagee to incur some enforcement costs. 15 It is well established that when a mortgage includes a covenant that costs of enforcement may be recovered by the mortgagee on some particular basis, different to the usual basis upon which courts would ordinarily order costs to be paid in inter-partes litigation, the Court will give effect to any such agreement in an order for costs that it makes in favour of a mortgagee in litigation. 16 In my view, the appropriate course in the present case is to make the following order, which I now make: 1. Order that the first defendant pay the costs of the plaintiff of the proceedings, those costs being assessed in accordance with the provisions of clause 3.5 and clause 23 of the mortgage registered number AB342487F between the plaintiff and the first defendant. 17 The quantum of any such costs is a matter for assessment, if not agreed. ********** 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.