National Australia Bank Ltd v Clowes [2012] NSWSC 80

Supreme Court New South Wales

Medium Neutral Citation: National Australia Bank Ltd v Clowes [2012] NSWSC 80 Hearing dates: 31 January 2012 Decision date: 14 February 2012 Jurisdiction: Equity Division Before: Gzell J Decision: Bank not secured. Catchwords: MORTGAGES - Mortgages and Charges Generally - The Mortgage - bank took a mortgage over a flat in a company title building from the shareholder entitled to occupation - whether bank secured Cases Cited: UTC Ltd (in liq) v NZI Securities Australia Ltd (1991) 4 WAR 349; Harrold v Plenty [1901] 2 Ch 314; General Credit & Discount Company v Glegg (1883) 22 Ch D 549; Stubbs v Slater [1910] 1 Ch 632; Adelaide Building Co Pty Ltd (in liq) v ABC Investments Pty Ltd (1990) 8 ACLC 445 Category: Principal judgment Parties: National Australia Bank Limited (First Plaintiff) Michael Leo Clowes (First Defendant) Patricia Helen Moore (Second Defendant) Representation: Counsel C Colquhoun (Plaintiff) Solicitors DibbsBarker (Plaintiff) File Number(s): 2011/281981

Judgment

The Shares 1The plaintiff, National Australia Bank Ltd, advanced $636,800 to Michael Leo Clowes, the first defendant, and Patricia Helen Moore, the second defendant, on 9 May 2002. The funds were used to acquire shares in Jefferson Pty Limited, the third defendant. 2Jefferson is the registered proprietor of a property in Double Bay, New South Wales. It is a company title property in which shareholders are entitled to occupy flats. Article 3 of Jefferson's articles of association provided: "The shares of the Company shall be held by the members in groups of shares according to the value of the respective flats as set out hereunder. The holder of a group of shares shall subject to the conditions herein contained have the right to use as a home the flat in respect of which such group of shares is held and such holder shall not be liable for payment of rent or any other payment whatsoever except the half yearly levy or charges provided under these Articles in respect of his occupation of such flat. ..." 3The article went on to specify the shares with respect to each flat. For flat 7 the requirement was to hold 9,000 shares numbered 52001 to 61000. It was those shares that Mr Clowes and Ms Moore acquired.