Savieri v Brown [2008] NSWSC 1210

New South Wales Supreme Court

CITATION : Savieri v Brown [2008] NSWSC 1210

HEARING DATE(S) : 8 May 2008

JUDGMENT DATE : 20 November 2008

JURISDICTION : Equity

JUDGMENT OF : White J

DECISION : Refer to para 53 of judgment.

CATCHWORDS : BANKRUPTCY – effect of bankruptcy on property and proceedings – whether proceedings were in respect of a provable debt – plaintiff alleged to have forfeited his equitable interest in the property prior to bankruptcy – defendant the legal owner then asserted his right to possession – proceedings not in respect of a provable debt - REAL PROPERTY – equitable co-ownership – each co-owner entitled to occupy the whole property – whether plaintiff's equitable interest forfeited – whether defendant entitled to judgment for possession

LEGISLATION CITED : Bankruptcy Act 1966 (Cth) Bankruptcy Act 1914 (UK)

CASES CITED : Ezekiel v Orakpo [1977] QB 260 Thrift v Thrift (1975) 10 ALR 332

Fisher & Lightwood's Law of Mortgage, 2nd Aust ed (2006) TEXTS CITED : Peter Butt, Land Law, 5th ed Lawbook Co (2006) McDonald, Henry & Meek: Australian Bankruptcy Law & Practice (looseleaf), Lawbook Co

David Julian Savieri PARTIES : v Colin Raymond Brown

FILE NUMBER(S) : SC 6482/06

COUNSEL : Plaintiff: In person Defendant: M P Cleary

SOLICITORS : Plaintiff: n/a Defendant: Stacks, The Law Firm

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

WHITE J

Thursday, 20 November 2008

6482/06 David Julian Savieri v Colin Raymond Brown JUDGMENT 1 HIS HONOUR: The defendant and cross-claimant, Mr Brown, seeks a judgment for possession of a property located at 560 Crowdy Head Road, Crowdy Head ("the Crowdy Head property"). The plaintiff and cross-defendant, Mr Savieri, is in occupation of part of the property. 2 The plaintiff and defendant are brothers. In 2001, they purchased the Crowdy Head property in equal shares as tenants in common. The property consists of two separate titles of approximately one acre each. On one block of land, two units are constructed. The plaintiff and his son occupy one unit. The defendant and his wife occupy the other. The property was purchased for $379,000. Part of the purchase price was advanced by the Commonwealth Bank on first mortgage security. The plaintiff and the defendant were joint borrowers. 3 It was agreed between the plaintiff and the defendant that they would make equal contributions to the purchase price and the repayment of the Commonwealth Bank loan. 4 The plaintiff and defendant funded the balance of the purchase price either from their own resources or by borrowing as individuals. The plaintiff borrowed $11,000 from Citibank Pty Ltd ("Citibank"). It was common ground that, at least initially, as between the plaintiff and the defendant, the defendant would be responsible for paying moneys due to Citibank. 5 The plaintiff moved into one of the units in January 2002. Until about the end of 2004, the defendant made his contribution to the Commonwealth Bank mortgage by paying his share of the repayments to the plaintiff directly or into the plaintiff's bank account. Following the breakdown of the plaintiff's domestic relationship with his de facto partner, the plaintiff failed to make the payments due on the Commonwealth Bank loan for a period of about eight months. That loan went into default and the Commonwealth Bank threatened to exercise its power of sale. In November 2005, the Commonwealth Bank served a statement of claim seeking a writ of possession. 6 Following a settlement conference in September 2005, the defendant arranged a loan which he applied to pay the arrears owing to the Commonwealth Bank. 7 Both the plaintiff and the defendant signed an agreement dated 4 May 2006. There is a complication flowing from the fact that prior to returning his signed counterpart of the agreement, the defendant made alterations to the typewritten text to the disadvantage of the plaintiff. However, the agreement has been partly performed and neither party contends that no binding agreement was entered into by reason of the changes the defendant made. 8 After reciting that the parties were the registered proprietors of the Crowdy Head property which was mortgaged to the Commonwealth Bank to secure repayment of a loan of approximately $288,000, and after reciting that the mortgage had fallen into arrears and that the defendant had paid the arrears, the agreement recited that consequent upon the plaintiff's financial difficulties, the plaintiff was unable at that time to secure a loan in his name to refinance the Commonwealth Bank mortgage and that the parties were desirous of retaining the property for their mutual benefit and to avoid its falling into the hands of the mortgagee. The agreement provided that the plaintiff would transfer to the defendant his registered interest in the property. Contemporaneously with that transfer the defendant was to obtain a new mortgage in his sole name. Clause 5 provided that the defendant "shall hold the property on trust for himself and [the plaintiff] as Tenants in Common in equal shares". 9 The agreement signed by the plaintiff provided that the new mortgage to be taken out by the defendant would be in the sum of $437,000; that the plaintiff would be responsible to meet repayments on $300,000 of the principal sum plus interest; and that the defendant would be responsible to meet repayments on $137,000 plus interest. Clause 6(iii) provided that the plaintiff agreed to make monthly repayments to the defendant so that the defendant did not fall into default under the terms of the new mortgage, and that each monthly payment was to be made no later than the tenth day of each month. 10 The defendant agreed to transfer 50 percent of the property back to the plaintiff within three months of the plaintiff's giving notice of his ability to secure a loan in his name and to refinance his share of the new mortgage. 11 In the agreement the plaintiff was called "David" and the defendant "Colin". 12 Clause 1 provided: " 1. In this Deed default includes:- (i) David failing to pay to Colin any of his share of the new Mortgage, rates, insurance premium and other outgoing in respect of the property when it falls due; (ii) Either party doing something he agrees not to do; (iii) Either party not doing something which he agrees he will do; (iv) Either party dies or becomes bankrupt or an order is made pursuant to any law relating to mental health for the management of that party's affairs. " 13 Clause 7 provided: " 7. (i) The parties hereby expressly agree that it is a fundamental condition of this Agreement that in the event of David becoming in default under this Deed and failing to remedy such default within a period of two (2) months or, such earlier time as Colin may reasonably consider the default is not capable of remedy, then Colin may terminate this Deed and David's interest in the property shall by reason of the default vest in Colin and David's interest in the property shall thereupon be and become extinguished. (ii) David agrees to waive any rights he may have for relief against forfeiture should Colin validly terminate this Agreement and thereby David's interest in the property be extinguished. (iii) The parties agree that should David's interest in the property be extinguished in accordance with this Deed, he will not be entitled to any reimbursements of the monies that he had paid into Colin's account pursuant to this Deed. " 14 Clause 13 provided: " 13. Upon settlement of the refinance referred to clause 4 hereon Colin shall ensure that all arrears of rates are paid and the rates and charges on the property are brought up to date and David shall (with the exception of his liability in relation to the new Mortgage secured against the property pursuant to this Deed) provide Colin with all details so that settlement cheques can be drawn and forwarded to creditors to pay out all of his liabilities standing as at the date of settlement of the refinance, which as at the date of the deed are acknowledged and estimated as follows: ... "