Re Commonwealth Bank of Australia [2009] NSWSC 81

New South Wales Supreme Court

CITATION : Re Commonwealth Bank of Australia [2009] NSWSC 81

HEARING DATE(S) : 18/02/09

JUDGMENT DATE : 25 February 2009

JURISDICTION : Equity Division

JUDGMENT OF : Young CJ in Eq

DECISION : Order that monies paid into court be paid out to an unsecured creditor with a judgment debt.

CATCHWORDS : PROFESSIONS AND TRADES [168]- Lawyers- Costs- How far secured- Whether an unsecured creditor with a judgment debt can have monies owed to it paid out of court. REAL PROPERTY [18]- Joint tenancy- Severance- Where there is a surplus on the sale by a mortgagee of property held under joint tenancy, that surplus is held under joint tenancy.

LEGISLATION CITED : Real Property Act 1900, ss 58(3), 105(1)

CASES CITED : Brereton v Edwards (1888) 21 QBD 488 Stephens v Debney (1959) 60 SR (NSW) 468

Commonwealth Bank of Australia (P) BMW Australia Finance Limited (Applicant) PARTIES : Tamiano Sessamoni Finau (First Respondent) Cindy Louise Finau (Second Respondent) Frances Mary Willott (Third Respondent)

FILE NUMBER(S) : SC 5073/08

COUNSEL : Ms C Homer (S) (Applicant) No appearance for the Respondents

SOLICITORS : Bartier Perry (Applicant)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

YOUNG CJ in EQ

Wednesday 25 February 2009

5073/08 – RE COMMONWEALTH BANK OF AUSTRALIA JUDGMENT 1 HIS HONOUR: The Commonwealth Bank of Australia, as mortgagee, paid into Court the surplus after satisfying its mortgage over property in Orange. The amount paid in was $6,595.62. 2 The registered proprietors of the land appear to be all respondents to the present motion. 3 The applicant, BMW Australia Finance Limited (BMW), obtained a judgment in the local court against the first of the respondents. It issued a writ of execution on 7 February 2008 and had that writ recorded against the title. Under s 105(1) of the Real Property Act 1900, that recording does not create any interest in land. 4 The Commonwealth Bank, as I have said, sold the property under its powers as a mortgagee. Accordingly, the recorded writ became of no value to anybody. 5 The first two respondents, two of the former registered proprietors, Mr and Mrs Finau appear to be husband and wife and the third, Mrs Willott, is Mrs Finau's mother. Mrs Finau has now "absconded" and cannot be served. 6 There was a family dispute amongst the respondents which ended up in the Federal Magistrates Court at Parramatta. Terms of settlement were handed up and the Federal Magistrate made orders that the proceeds of sale of the property were to be applied: (a) in payment of the costs of sale; (b) to discharge the Commonwealth Bank's mortgage; (c) to discharge BMW's writs; (d) to pay out money to GE Finance; and (e) to pay Permanent Custodians which was the mortgagee of certain land at Bathurst. 7 BMW is currently owed about $21,000, much more than the amount in Court. 8 However, BMW only has judgments against two of the three registered proprietors and no claim at all against the third, Mrs Willott. 9 As I have said before, there is no charge over the land because of the recording of the writs: BMW is an unsecured creditor. 10 Section 58(3) of the Real Property Act 1900 requires the mortgagee to account first in payment of the costs of sale, then to satisfy its own debts and thirdly "in payment of subsequent mortgages, charges or covenant charges (if any) in the order of their priority, and the surplus (if any) shall be paid to the mortgagor, charger or covenant charger, as the case may be." 11 Accordingly, the monies in Court must be treated as being the monies of the mortgagors and BMW is an unsecured creditor with a judgment debt (with a right to obtain execution) and we know of at least one other unsecured creditor, namely GE. 12 Four matters need to be considered, namely: