Supreme Court New South Wales Medium Neutral Citation: Mango Media Pty Limited v Smith [2012] NSWSC 686 Hearing dates: 25 May 2012; 8 June 2012 Decision date: 21 June 2012 Jurisdiction: Equity Division Before: Hallen AsJ Decision: (a)Order that the agreement contained in the Mortgage granted 5 September 2011, by the first Defendant to the Plaintiff, be specifically performed by the first Defendant giving to the Plaintiff possession of the land contained within Folio Identifier 46/xxxx being the property known as xxxxx Taylor Street, Narrabri, New South Wales ("the Property") within 28 days of the date hereof. (b)By way of enforcement of Order (a) above, judgment for the Plaintiff against the first Defendant for possession of the Property. (c)Order that the first Defendant deliver possession of the Property to the Plaintiff within 28 days of the date of the making of this order. (d)Order that leave to issue a writ of possession for the Property forthwith be granted to the Plaintiff, but such writ shall not be executed until 30 days after the making of these orders. (e) Direct that within 14 days of being requested, in writing, to do so, the second Defendant advise the Plaintiff, in writing, of the minimum price figure in accordance with Paragraph 4(a) of the notice of motion filed 18 May 2012. (f)Order that the Property be sold by the Plaintiff in accordance with Paragraphs 3 and 4 of the notice of motion filed 18 May 2012. (g)Order that the Plaintiff be appointed to transfer the Property to the purchaser(s) thereof to effectuate the sale. (h)Declare that from date of the exchange of contracts for sale of the Property until completion of that sale, the Plaintiff will be trustee of the Property for the purchaser or purchasers of the Property. (i)Order that after the payment of all expenses in respect of the sale, the sale proceeds of the Property be applied so as to pay to the second Defendant the amount secured by the second Defendant's mortgage being mortgage registered number xxx, and the costs of these proceedings as set out below, and any other encumbrances of the Property in order of priority in accordance with their terms pursuant to the Real Property Act then to the Plaintiff in satisfaction of the Plaintiff's Mortgage, interest and costs, with any residue to be paid to the first Defendant. (j)Note the agreement of the Plaintiff that at all times it will act when selling the Property in accordance with the duties of a mortgagee exercising a power of sale. (k)Order that the first Defendant pay the Plaintiff's costs of the proceedings. (l)Order that the first Defendant is to pay the second Defendant's costs of obtaining advice on the Plaintiff's claim and filing a submitting appearance. (m)Direct that within 7 days of the making of these orders, the Plaintiff provide to the first Defendant's solicitor, in writing, an itemised statement of the current pay-out figure as at that date and an estimate of its costs. (n)Order, in the event that the first Defendant pays the amount due to the Plaintiff under the Plaintiff's mortgage and its costs within 28 days, that these orders shall be permanently stayed. (o)Order that the second Defendant attend upon any settlement of the contract for the sale of the Property and upon being paid the amount due under its mortgage deliver to the Plaintiff, or as it may direct, all deeds or documents of title in the second Defendant's control relating to the Property as may be properly required for the completion of any such sale. (p)Liberty to apply to each of the parties, and to any other party claiming an interest in the Property, with respect to any matter that may arise in relation to the sale of the Property or to the distribution of the sale proceeds be granted. (q)Reserve further consideration in respect of further or other orders as may be required to effectuate judicial sale of the Property and to enable judgment for the amount due under the Plaintiff's mortgage. (r)These orders shall be entered with the details of the complete title reference and address of the Property and of any particulars of mortgage being inserted. Catchwords: Orders sought for judicial sale and consequential relief Legislation Cited: Real Property Act 1900 Uniform Civil Procedure Rules 2005 Uniform Consumer Credit Code Cases Cited: Baltic Shipping Co v Dillon (1991) 22 NSWLR 1 Chateau Constructions (Aust) Ltd v Zepinic [No 5] [2010] NSWSC 265 Harden Shire Council v Richardson [2012] NSWSC 622 King Investment Solutions Pty Ltd v Hussain [2005] NSWSC 1076; (2005) 64 NSWLR 441 Mango Media Pty Ltd v Mertes & Anor [2006] NSWSC 1460: (2006) 14 BPR 26,971 Phillips v Hogg [2001] QSC 390 Sood v Christianos [2008] NSWSC 1018 Category: Procedural and other rulings Parties: Mango Media Pty Limited (Plaintiff) Jeffrey Dennis Smith (first Defendant) Northern Inland Credit Union Ltd (second Defendant) Representation: Counsel: Ms P Clingan (Plaintiff) No appearance (first Defendant) Ms K Millist-Spendlove (second Defendant) Solicitors: Diamond Conway (Plaintiff) Robert Watson Solicitor (as agent for first Defendant) The Law Company (second Defendant) File Number(s): 2012/89875 Judgment Background Facts 1HIS HONOUR: The first Defendant, Jeffrey Dennis Smith, is the registered proprietor of land at Narrabri, in the State of New South Wales, being land comprising Folio Identifier 46/xxxxx ("the Property"). The Property comprises land under the provisions of the Real Property Act 1900. (These reasons will not identify the exact address of any party, or the Property, in conformity with the Court's policy of reducing the risk of identity theft through the Court's published judgments.) 2The Property is subject to a registered first mortgage to the second Defendant, Northern Inland Credit Union Ltd, which, apparently, secures the amount of $84,820.21. The Property is also subject to an unregistered second mortgage to the Plaintiff ("the Plaintiff's mortgage"), securing the principal amount of $68,000. The Plaintiff is described as a financier and credit provider. 3It appears that the first Defendant's application for finance made to the Plaintiff was through a finance broker. There is a letter of offer, dated 20 August 2011, from the Plaintiff, to RMG Finance, relating to the first Defendant borrowing $68,000. 4The Plaintiff's mortgage, which was granted on 5 September 2011, was one whereby the Plaintiff agreed to advance to the first Defendant the amount of $68,000 and the first Defendant agreed to repay that sum, with interest and costs by 5 March 2012. The rate of interest was 12.50 per cent per month (or 150 per cent per annum). 5It was a term of the Plaintiff's mortgage that upon default being made, the Plaintiff was entitled to take possession of, and to sell, the Property. Another term of the mortgage was that the first Defendant would pay the Plaintiff's costs and charges occasioned by any default under the mortgage. I shall return to these terms later in these reasons. 6The Plaintiff alleges that the debt secured by the Plaintiff's mortgage was not repaid by 5 March 2012, or at all. It claims that the amount due and payable to it was $69,557.80, comprising the principal sum ($68,000), unpaid interest ($1,117.80) and costs and charges up to the date of the commencement of the proceedings ($440). The Proceedings 7As stated, the Plaintiff commenced the present proceedings by Statement of Claim, which originating process was filed on 21 March 2012. 8The evidence reveals that Sandra Griffiths, a licensed process server, served the first Defendant, personally, with the Statement of Claim and a document headed "Possession of Land Coversheet" on 18 April 2012. At the time of service, Ms Griffiths spoke with a person who confirmed his identity as the first Defendant and also confirmed that he lived, on his own, in the Property. (Thus, there are no other occupiers of the Property and, since the first Defendant is a party to the proceedings and has been served with a notice to occupier, no other notices need be served.) 9The first Defendant failed to file an Appearance or any Defence to the Statement of Claim within the time prescribed by the Uniform Civil Procedure Rules ("UCPR") or otherwise. 10However, on 8 June 2012, the date to which the matter was adjourned (as will be seen later in these reasons), Mr R Watson, a solicitor, sought leave to appear for the first Defendant, as city agent, and gave an undertaking that his principal would file an Appearance on behalf of the first Defendant in due course, so that an application for an adjournment could be made. 11The evidence also reveals that Ms Griffiths served another copy of the same documents on the second Defendant at its office in Tamworth, on 21 March 2012. 12The second Defendant filed an Appearance on 26 April 2012. By that Appearance, the second Defendant "submits to the making of all orders sought and the giving of entry of judgment in respect of all claims made, save as to costs". Until 8 June 2012, the second Defendant did not take an active part in the proceedings. 13In the Statement of Claim, the Plaintiff sought judgment against the first Defendant in the amount of $69,557.80, plus interest on the sum of $68,000, calculated at the rate of 150 per cent per annum, from 10 March 2012 to the date of judgment, plus interest thereafter, at the same rate, until payment of the judgment debt. 14The Plaintiff also sought that the Plaintiff's Mortgage "be specifically performed by the first Defendant giving the Plaintiff possession of the Property", an order for possession, and leave to issue a writ of possession forthwith, an order that the first Defendant give vacant possession of the Property within 14 days of the order, an order that the Plaintiff sell the Property in such manner and on such terms as were identified in the Statement of Claim, or as the Court from time to time may direct, consequential orders and directions as to the method of sale. 15On 18 May 2012, the Plaintiff filed a "Notice of Motion for Default Judgment on Claim for Judicial Orders for the Sale of Land and Debt". The same relief as was sought in the Statement of Claim was sought in the Notice of Motion. That Notice of Motion was returnable before the Registrar on 25 May 2012. 16In support of the Notice of Motion, the Plaintiff relied, principally, upon an affidavit, sworn 17 May 2012, of Yanis Artis Derums, a director of the Plaintiff. Mr Derums confirmed that: (a)The principal amount of $68,000 was advanced to the first Defendant on 5 and 6 September 2011; (b)A caveat was lodged on the title of the Property on 6 September 2011 by, or on behalf of, the Plaintiff; (c)The consent of the second Defendant, as registered mortgagee, to register the Plaintiff's Mortgage was sought and that the second Defendant withheld its consent to the registration as a result of the first Defendant's failure to sign a Deed of Priority prepared by the second Defendant; (d)The Plaintiff, by its solicitors, issued a Notice to Mortgagor pursuant to s 57(2)(b) of the Real Property Act dated 9 March 2012. The Notice required the Plaintiff to comply with the Notice within 31 days after service of the Notice; (e)The first Defendant had not made any payments from the date of the commencement of the proceedings and that, at the date of the affidavit, interest had accrued (from 10 March 2012 until 25 May 2012) in the amount of $24,147.90, filing fees were $2,219, service fees were $302.50, making a total amount due of $96,227.20; (f)Interest would continue to accrue at a daily rate of $279.45 per day; (g)By reason of the default, the Plaintiff sought to exercise its power of entry into possession of the Property in accordance with the provisions of the Plaintiff's Mortgage and, thereafter, wished to sell the Property. 17I note that by Part A of Annexure A to the Plaintiff's Mortgage, the first Defendant, as mortgagor, irrevocably appointed, the Plaintiff, and any Director and Secretary and State Manager for New South Wales, and any duly constituted Attorney for the time being of the Plaintiff and any Receiver appointed by the Plaintiff under the Plaintiff's Mortgage or under any security collateral thereto, or under statutory powers in that behalf, jointly, and each of them severally, the true and lawful Attorney and Attorneys of the first Defendant in the name of the first Defendant or the Plaintiff or any such Attorney or Attorneys as mortgagee, to be his attorney, with full power to: "... do any act matter or thing which the Mortgagor should do or should have done hereunder and to do all such acts and matters and things (including the execution of all such Deeds Memoranda of Mortgage Transfers of land and other documents whatsoever) as such Attorney or Attorneys may deem expedient for carrying out or in connection with the exercise of all or any of the rights or powers herein contained or implied or for the protection of this Mortgage or giving effect to this Mortgage or for the enforcement hereof AND with full power to any such Attorney or Attorneys for all or any of such purposes from time to time to appoint a substitute or substitutes and to revoke any such appointment AND the Mortgagor hereby agrees to ratify and confirm all and whatsoever any Attorney or Attorneys as aforesaid shall do or cause to be done in pursuance of the authority hereby conferred." 18I also note Clause 19 of the Memorandum to the Plaintiff's mortgage, which, relevantly, provides: "19.1 On the happening of an Event of Default all of the Moneys Hereby Secured shall, at the option of the Mortgagee (notwithstanding any delay or previous waiver of such option), immediately become payable on demand. 19.2 At any time after the happening of an Event of Default in addition to its rights, powers and remedies by statute, law or equity, the Mortgagee may: (a) enter upon and take possession of the Mortgaged Property, manage the Mortgaged Property and/or receive any rents and profits from the Mortgaged Property; (b) grant to any person an option to purchase the Mortgaged Property upon such terms and conditions as the Mortgagee thinks fit; (c) sell the Mortgaged Property and buy-in, rescind or vary any agreement for sale and resell; ... (k) employ or engage any person (including any employee of the Mortgagee) for or in relation to the performance of any of the rights and powers given to the Mortgagee or to delegate any such acts to any person; ... (p) charge against the account of the Mortgagor a reasonable administration fee in an amount determined by the Mortgagee for each follow up, recovery, collection or enforcement action taken by the Mortgagee in relation to any moneys overdue by the Mortgagor under this Mortgage or any Agreement; ... 19.3 The Mortgagee may sell, lease or licence the Mortgaged Property together with any other property of the Mortgagor (whether real or personal) which is under mortgage or charge to the Mortgagee and in respect of which a power of sale, leasing or licensing has become exercisable, by one contract and at one price or at one rent or fee or in any other manner which the Mortgagee thinks fit. The Mortgagee shall have power to apportion all costs, expenses, purchase money, rent and fees between any property dealt with under this clause. The Mortgagee may set aside from the proceeds of any sale, lease or licence such amount as it thinks fit to meet any future claims by the purchaser or the lessee or any statutory authority and retain that amount until the possibility of such claim being made has been extinguished. ... 19.7 In addition to its rights, powers and remedies under this Mortgage the Mortgagee has all of the rights, powers and remedies conferred on a mortgagee by statute, law or equity. Those rights, powers and remedies may be exercised either separately or concurrently and whether or not those or other rights, powers and remedies have already been exercised successfully or unsuccessfully." 19The Notice of Motion was returnable, first, before the Registrar and was referred to me in the Friday duty List on 25 May 2012. Hearing on 25 May 2012 20When the matter first came before me on 25 May 2012, there was no appearance by, or on behalf of, either Defendant. I was informed that there had been no appearance before the Registrar either. In relation to the second Defendant, this was not surprising, in light of its submitting Appearance. 21I then read the Statement of Claim, the Notice of Motion and the affidavit of Mr Derums to which I have referred. 22I enquired on counsel for the Plaintiff, Ms P M Clingan, whether: (a)In view of the relief being sought, I had jurisdiction to hear the matter; (b)Any notice of the Plaintiff's notice of motion, or of its intention to proceed with the hearing of the notice of motion on 25 May 2012, had been given to the first Defendant; and (c)An order for sale could be made, other than one that was subject to the second Defendant's mortgage without its formal consent: Sood v Christianos [2008] NSWSC 1018. 23In relation to the first matter, counsel submitted that I had power to hear and determine the matter. She referred to King Investment Solutions Pty Ltd v Hussain [2005] NSWSC 1076; (2005) 64 NSWLR 441, in which there had been an appeal to Campbell J (as his Honour then was), from a decision of Macready AsJ, who had granted summary judgment to an unregistered mortgagee on all its claims. 24In relation to the second matter, counsel responded that no notice had been given to the first Defendant of the Plaintiff's intention to proceed with the hearing. In fact, the notice of motion had not been served upon the first Defendant at all. Counsel submitted, however, that it was unnecessary to serve the notice of motion, or otherwise give notice to the first Defendant, because he was in default, having filed no Appearance or defence within the time required by the UCPR, or at all. Counsel relied upon UCPR rule 16.2(1)(a) and rule 16.3(1A)(b). 25The Plaintiff's counsel, subsequently, in written submissions, relied upon UCPR rule 36.8, which provides that unless the court orders otherwise, judgment for possession of land may not be given, or entered, against a defendant in his absence unless the plaintiff files an affidavit: (a)stating that, when the originating process was filed or (if the claim for possession arises from an amendment to the originating process) when the amendment was made: (i)specified persons (other than parties to the proceedings) had been in occupation of the whole or any part of the land, or (ii)no persons (other than parties to the proceedings) had been in occupation of the whole or any part of the land, and (b)stating that, as to each person specified in accordance with paragraph (a) (i) (other than a person whose occupation the plaintiff does not seek to disturb): (i)the originating process has been duly served on the person, or (ii)the person has, since the time referred to in paragraph (a), ceased to be in occupation of any part of the land, and (c)in relation to a claim for possession by reason of default in the payment of money, stating particulars of the default, and that the Plaintiff had filed such an affidavit. 26In order to avoid any potential argument about jurisdiction to hear the matter, I stated that I would seek an order from Bergin CJ in Eq that the matter be delegated to me. Her Honour made that order. 27In relation to the second matter, I note that UCPR rule 16.3(1A) commences with the words "Unless the court otherwise orders". No order had been made that notice need be given to the first Defendant, or that the notice of motion needed to be served on him, as he had not filed an Appearance or any defence to the Statement of Claim. 28I indicated that, perhaps, service of the notice of motion, or at least, notice of the hearing date, and the intention to proceed, should be given to the first Defendant because the relief being sought was important and was likely to affect, not only his ownership of the Property, but also his occupation of it. 29In relation to the third matter, counsel contended that the second Defendant had filed a submitting appearance and, therefore, had consented to the making of all orders sought and the giving of entry of judgment in respect of all claims made, save as to costs. 30I stood the proceedings over until 8 June 2012 for hearing. The Hearing on 8 June 2012 31Ms Clingan of counsel appeared, once again, for the Plaintiff. 32I received for filing, and read, an affidavit of Sandra Griffiths sworn 31 May 2012 in which she deposed to having personally served, upon the first Defendant, a copy of a letter dated 18 May 2012, a copy of the Notice of Motion for Default Judgment on Claim for Judicial Orders for the sale of land filed on 18 May 2012, a copy of the affidavit of Yanis Artis Derums and an affidavit of Vanessa Marquez Vallejo, the solicitor with the daily carriage of the matter for the Plaintiff, of 24 May 2012. 33As stated, Mr R Watson, solicitor, sought leave to appear as city agent for a firm of solicitors to whom the first Defendant had given instructions, on 7 June 2012, to seek an adjournment so that the first Defendant might attempt to arrange finance. 34Ms K Millist-Spendlove of counsel appeared for the second Defendant. She indicated that her instructions were that the first Defendant was not in default in respect of the second Defendant's registered mortgage, and that on 7 June 2012, the first Defendant had approached the second Defendant about the possibility of re-financing so that the amount due to the Plaintiff could be repaid. 35She stated, also, from the bar table, without demur from Mr Watson, that no written application for finance by, or on behalf of, the first Defendant had been received by the second Defendant. 36Mr Watson made an application for an adjournment, which the Plaintiff opposed. As there was no evidence of any of the matters stated by Mr Watson from the bar table, and as he could not state that any written application for finance had, in fact, been made, or whether it would be successful, when made, (although he stated that his principal believed it would be considered favourably), I refused the application. The matter then proceeded. 37In refusing the adjournment, I indicated that I would, in all probability, be reserving my decision. Until my reasons for judgment were delivered, the first Defendant could take such steps as he thought appropriate, and if the parties came to an arrangement, they could advise the court. No advice has been received. 38I ensured that the Plaintiff's evidence to which reference had been made on 25 May 2012 was identified. Neither Mr Watson nor Ms Millist-Spendlove indicated that he, or she, did not have a copy of the documents relied upon. 39The Plaintiff then read a further affidavit, the original of which was filed in Court, disclosing that the first Defendant signed a Business Purposes Declaration as part of the application for finance with the Plaintiff. (No suggestion was made that the Plaintiff's mortgage is subject to the Uniform Consumer Credit Code.) 40Another affidavit of Vanessa Marquez Vallejo was read. To that affidavit was annexed a copy of a document headed "Certificate of Independent Financial Advice to Borrowers", signed by an accountant, David Mahafty, who gave financial advice to the first Defendant in respect of the financial risk the first Defendant was assuming in signing the documents; an acknowledgement in the form of a Declaration of Independent Financial Advice by the first Defendant, acknowledging the receipt of independent financial advice regarding the loan and security documents from the Plaintiff and a statement that he had "freely and voluntarily signed" the Plaintiff's mortgage and his understanding of his obligations under that mortgage, and the rights of the Plaintiff if he failed to make payments on time, or otherwise comply, with the terms and conditions of the loan documents; and a "Borrower's Acknowledgement", in which the first Defendant acknowledged and warranted that "the terms and conditions of the Security Documents have been fully explained to me ... by my solicitor, who is a witness to this Acknowledgement". The independent legal advice appears to have been given by "L Moss" on 31 August 2011. 41There was evidence of the value of the Property tendered. The document, which was in the form of a residential valuation and security assessment, revealed that the Property has a site area of 778.8 square metres, and has a main building, being a three bedroom, two bathroom, single storey detached dwelling, with a single garage. 42A copy of the affidavits that were filed in court, and a copy of the residential valuation and security assessment were provided to Mr Watson and Ms Millist-Spendlove. Neither objected to the affidavits being read. In any event, as the documents annexed to the affidavits were documents, the original of which the first Defendant appeared to have signed, there was no prejudice suffered by the first Defendant. 43Ms Clingan made submissions about a number of the matters. In view of the attendance on behalf of both Defendants, the submissions did not need to address earlier concerns regarding the matter proceeding without any notice to the first Defendant. 44Ms Clingan had earlier provided written submissions, which will remain with the court papers, and which I have read. 45I allowed Mr Watson to make any submissions on the orders sought by the Plaintiff. The only submission he made related to the rate of interest charged under the Plaintiff's mortgage. This submission might have been made as a submission in support of a defence of hardship to a claim for specific performance but it was not put that way. Nor were any other submissions based upon hardship made (presumably because there was no evidence to justify such submissions). Nor was there any suggestion that there could otherwise be a challenge to the validity of the Plaintiff's mortgage. 46Ms Millist-Spendlove made a submission that the second Defendant's costs of appearing today should be borne by the first Defendant. Mr Watson did not really oppose this, stating that he had required the assistance to confirm that the first Defendant was not in default in respect of the second Defendant's registered mortgage. 47Following the submissions, I reserved my decision. Determination 48UCPR rule 16.2 provides that a defendant is "in default" for the purposes of this Part if he, she or it, fails to file a defence within the time limited by rule 14.3 (1) or within such further time as the court allows. In this case, there can be no dispute that the first Defendant is in default. 49Under UCPR rule 16.10, whatever the plaintiff's claims for relief against a defendant in default, the court may, on application by the plaintiff, give such judgment against the defendant as the plaintiff appears to be entitled to on his, or her, statement of claim. 50Bearing in mind the affidavits of service read on the hearing and the appearance on behalf of the first Defendant, I am satisfied that the first Defendant was served with the Statement of Claim and notified of the Plaintiff's claims. I was also satisfied that I should deal with the matter on the basis that the first Defendant defaulted in filing an Appearance and also a defence. 51I was also satisfied, bearing in mind the affidavits of service read on the hearing, and the appearance on behalf of the second Defendant, that the second Defendant had been informed that the matter was to proceed to final hearing on 8 June 2012, and that because of the nature of its Appearance, the matter could then proceed. 52There were no reasons given why the first Defendant had done nothing, since the service of the Statement of Claim upon him, or why he had waited until the day before the matter was to be heard, to instruct solicitors. 53Having read the evidence, it is clear that as the Plaintiff's mortgage is unregistered, but in registrable form, the statutory power of sale under the Real Property Act, s 58, is not presently available to the Plaintiff. 54Campbell J (as his Honour then was) made clear in King Investment Solutions v Hussain, at [81], that the interest of a mortgagee of Torrens title land, even when the mortgage is registered, is in the nature of a statutory charge and that an unregistered mortgage would, likewise, be regarded by Equity as conferring an equitable charge. 55There is no dispute that the Real Property Act, itself, confers no status upon the Plaintiff's mortgage. Rather, as was stated by Campbell J in King Investment Solutions v Hussain at [54]: "the attributes of such a mortgage derive from the contract between the mortgagor and mortgagee, and the general law. Relevant provisions of the contract can include whether there is a right to possession of the mortgaged land, whether there is a power of sale out of court upon default, whether there is a covenant to execute a registrable mortgage, and whether there is a covenant to procure the registration of a registrable mortgage. The rights under the general law could be affected by whether the unregistered mortgagee had custody of the certificate of title, and whether there were any prior mortgages. Rights under the general law may also depend upon the extent to which it is possible to obtain specific performance of particular covenants in the mortgage. Provided only that the intention to make the land security for a debt is clear, an unregistered mortgage will confer at least the rights which the general law confers upon a chargee. Whether there are any more extensive rights will depend upon the circumstances of the particular mortgage." 56It is to obtain specific performance of the Plaintiff's mortgage that these proceedings have been brought for orders for sale and possession of the Property. 57His Honour observed at [80] - [81]: "80 In the present case, the mortgage of the second mortgagee contains a contractual power of sale. In itself, that provides a basis for the Court to have jurisdiction to make an order for sale of the mortgaged property, by way of an action for specific performance. 81 ... The interest of a mortgagee of Torrens title land is only ever, even when the mortgage is registered, in the nature of a statutory charge, together with some of the attributes of an old system mortgage that are not inconsistent with the Torrens system and such equitable rights as arise from the contract between the mortgagor and mortgagee. An unregistered mortgage will likewise be regarded by equity as conferring an equitable charge together with some of the attributes of an old system mortgage that are not inconsistent with the Torrens system and such equitable rights as arise from the contract between the mortgagor and mortgagee. ... an order for judicial sale is the standard way of enforcing an equitable charge." 58In the present case, the first Defendant's intention to make the Property the subject of security for the debt owed to the Plaintiff is clear. 59Furthermore, it seems to me that, subject to one matter, the Plaintiff is entitled to the orders it seeks as an equitable mortgagee of the Property. As Slattery J said in relation to the jurisdiction to order judicial sale in Chateau Constructions (Aust) Ltd v Zepinic [No 5] [2010] NSWSC 265: "72 The principal remedies of an equitable chargee are judicial sale (Matthews v Goodday (1861) 31 LJ Chancery 282 and 10 and Tennant v Trenchard (1869) LR 4 Chancery 537) and the appointment of a receiver (E L G Tyler, P W Young and C Croft, Fisher and Lightfoot Law of Mortgage 2nd Australian Edition (2005) Butterworths at [2.8]). Upon default an equitable chargee is entitled as of right to an order for sale: Sood v Christianos [2008] NSW SC 1087. It is doubtful that r 27 UCPR, which confers power on the Court to dispose of land by sale, itself empowers the court to order sale of property by a second mortgagee under an unregistered mortgage: King Investment Solutions Pty Ltd v Hussain [2005] NSWSC 1076 at [79] per Campbell J. But the court has inherent jurisdiction to order a sale of property to enforce an equitable charge: King Investment Solutions Pty Ltd v Hussain [2005] NSWSC 1076 at [80], [81] and [134]." 60On its entitlement to possession, the Plaintiff submits: "23. The plaintiff is entitled to possession pursuant to clause 19.2 of the Memorandum of Mortgage registered dealing number Xxxxxxx referred to and incorporated in the Mortgage in registrable form... 24. The Memorandum of Mortgage is incorporated by virtue of Annexure "C" on page 12 of the affidavit of Yanis Artis Derums, being the front page of the Mortgage and page 13 of the Annexure "C" being the Annexure to the Mortgage. 25. The rights of the plaintiff upon default of the first Defendant are contained in Clause 19 of the Memorandum of Mortgage... 26. The plaintiff has a right of sale upon default pursuant to clause 19.2(c) of the Memorandum of Mortgage. 27. The Plaintiff relies on its contractual right of sale, not upon the power conferred by s 109 of the Conveyancing Act. 28. Following King v Hussain, the exercise of the Court's equitable jurisdiction to order a sale of mortgaged property does not depend upon the service of notices under the statutory provisions: King Investment Solutions v Hussain [2005] NSWSC 1076 at [84]; Sood v Christianos [2008] NSWSC 1087 at [10]. 29. The plaintiff's Mortgage contains a contractual power of sale and the plaintiff is seeking specific performance of its contract. Specific performance was sought in the statement of claim and the plaintiff is seeking entry of default judgment in the terms of the orders sought in the statement of claim." 61I accept these submissions. 62On the question of possession, I also note what has recently been said by Johnson J in Harden Shire Council v Richardson [2012] NSWSC 622, at [167] and at [195]: "167 I accept that vacant possession is a normal incident of sale, the availability of which is generally necessary for completion of the sale: King Investment Solutions Pty Limited v Hussain [2005] NSWSC 1076 at [133]. The vendor's obligation to give vacant possession to the purchaser should occur concurrently with the payment of the purchase price and the transfer of title: Isaacs v McGuire (1888) 14 VLR 815 at 818. A mortgagee exercising power of sale is obliged to recover physical possession of the property from the mortgagor: Reynolds v Doyle (1919) 19 SR (NSW) 108 at 110; Lang, "NSW Conveyancing Law and Practice", CCH, paragraph [10-130]. Mortgagees normally take possession as a preliminary to sale, so that the property can be sold with vacant possession: Butt, "Land Law", Lawbook Co, 6th edn, 2010, paragraph [18 106]. ... 195 I am satisfied that the Plaintiff is a mortgagee within s.109(1)(a) by reference to a charge (under s.550 Local Government Act 1993) and the definition of "mortgage" in s.7 Conveyancing Act 1919. As vacant possession is a normal incident of sale (see [167] above), I accept that a condition of sale that a property be conveyed subject to vacant possession falls within the words in s.109(1)(a) Conveyancing Act 1919." 63I have considered the rate of interest applicable under the Plaintiff's mortgage. I must remember, however, the rate is part of the contract for which the Plaintiff gave good consideration. The first Defendant received the benefit of independent advice from an accountant and a lawyer each of whom explained his obligations and responsibilities to him. 64It is well recognised that contracts should be honoured: Baltic Shipping Co v Dillon (1991) 22 NSWLR 1, per Gleeson CJ, at 9. Nor is there any suggestion that the first Defendant lacked understanding of the nature or terms of the Plaintiff's mortgage. 65I am satisfied that the Plaintiff has demonstrated an entitlement to the relief sought in the Statement of Claim and in the Notice of Motion, being judgment for possession of the Property, and leave to issue a writ of possession forthwith. The ordinary rule is that costs follow the event, and the first Defendant should be ordered to pay the Plaintiff's costs of the proceedings. 66The Plaintiff handed up, as an aide memoire, a calculation of the amount due. (I did not require a further affidavit as Mr Watson did not suggest that the first Defendant had paid any amounts to the Plaintiff.) The aide memoire reveals that the amount of principal is $68,000 and that interest from 5 September 2011 until 8 June 2012 is $26,617.80. The amount of interest was calculated from 5 September 2011 (the date of the Plaintiff's mortgage) until 8 June 2012. Furthermore, there is some evidence that the first Defendant may not have received all of the principal amount until 6 September 2011. 67Having considered the evidence in Ms Vallejo's affidavit of 24 May 2012, I am not satisfied that the amount shown in this aide memoire is correct and I am not prepared to rely upon it. A letter from the Plaintiff dated 20 August 2011, reveals that the amount of $68,000 (which is the principal sum) included an amount of $16,320, being six months interest in advance. 68I note also, that in Paragraph 11 of the Plaintiff's Statement of Claim, interest is sought from 6 March 2012. 69I require the Plaintiff to establish the amount due under its Mortgage by affidavit before judgment for that amount is to be entered. 70I make clear that even though I am prepared to make an order for specific performance, it is an in personam order for the first Defendant to give up possession, which does not bind the second Defendant, as registered first mortgagee. It would be open to the second Defendant to exercise its statutory right under s 60 Real Property Act to possession upon default, and that statutory right would be likely to have priority over the right to possession of the Plaintiff in the event that the first Defendant defaulted on the registered mortgage. 71Although Mr Watson did not specifically seek it, in light of the possibility that the first Defendant will be able to refinance and pay out the amount due to the Plaintiff, I consider that a short opportunity should be given to the first Defendant to allow redemption to take place, as this is one of the discretionary issues often considered when this type of remedy is granted: King Investment Solutions v Hussain at [111] and [119]. The power to order a judicial sale of land at the request of a creditor is a "drastic remedy" (Phillips v Hogg [2001] QSC 390 at [21]) albeit not "a remedy of last resort" (Mango Media Pty Ltd v Mertes [2006] NSWSC 1460; (2006) 14 BPR 26,971, per Brereton J, at [31]), but is one to which the Plaintiff has resorted because the debt charged on the Property has not been repaid. 72I am of the view, in light of the amounts involved, that a short period should be allowed to enable the first Defendant to redeem if he is able to. I shall allow 28 days for this purpose. 73In relation to costs, the Plaintiff seeks an order for costs based upon the Plaintiff's mortgage. As Brereton J said in Mango Media Pty Ltd v Mertes, at [36]: "In my view clauses such as clause 16 of the mortgage do not constrain the Court's discretion as to how it awards costs, although they may be a relevant factor to be taken into account. It may well be that by reason of clause 16 the plaintiff is entitled to add on to the mortgage and recover in that way costs on a solicitor and own client basis, even though not awarded by an order of the court, but I do not think that the position adopted by the defendant in this case has been such as would justify an indemnity costs order, and the costs order will be on the ordinary party and party basis." 74The second Defendant seeks costs also. I am only prepared to allow such costs for the taking of advice in respect of the claim made by the Plaintiff and for the filing of the submitting appearance. The first Defendant should pay those costs. I am not prepared to order that the second Defendant should receive its costs of today. It was a decision made by the second Defendant to appear today, and whilst counsel has been of assistance, that alone does not warrant any additional order for costs. 75Accordingly I make the following orders: (a)Order that the agreement contained in the Mortgage granted 5 September 2011, by the first Defendant to the Plaintiff, be specifically performed by the first Defendant giving to the Plaintiff possession of the land contained within Folio Identifier 46/xxx being the property known as xxx Taylor Street, Narrabri, New South Wales ("the Property") within 28 days of the date hereof. (b)By way of enforcement of Order (a) above, judgment for the Plaintiff against the first Defendant for possession of the Property; (c)Order that the first Defendant deliver possession of the Property to the Plaintiff within 28 days of the date of the making of this order. (d)Order that leave to issue a writ of possession for the Property forthwith be granted to the Plaintiff, but such writ shall not be executed until 30 days after the making of these orders. (e)Direct that within 14 days of being requested, in writing, to do so, the second Defendant advise the Plaintiff, in writing, of the minimum price figure in accordance with Paragraph 4(a) of the notice of motion filed 18 May 2012. (f)Order that the Property be sold by the Plaintiff in accordance with Paragraphs 3 and 4 of the notice of motion filed 18 May 2012. (g)Order that the Plaintiff be appointed to transfer the Property to the purchaser(s) thereof to effectuate the sale. (h)Declare that from date of the exchange of contracts for sale of the Property until completion of that sale, the Plaintiff will be trustee of the Property for the purchaser or purchasers of the Property. (i)Order that after the payment of all expenses in respect of the sale, the sale proceeds of the Property be applied so as to pay to the second Defendant the amount secured by the second Defendant's mortgage being mortgage registered number xxxx, and the costs of these proceedings as set out below, and any other encumbrances of the Property in order of priority in accordance with their terms pursuant to the Real Property Act then to the Plaintiff in satisfaction of the Plaintiff's Mortgage, interest and costs, with any residue to be paid to the first Defendant. (j)Note the agreement of the Plaintiff that at all times it will act when selling the Property in accordance with the duties of a mortgagee exercising a power of sale. (k)Order that the first Defendant pay the Plaintiff's costs of the proceedings. (l)Order that the first Defendant is to pay the second Defendant's costs of obtaining advice on the Plaintiff's claim and filing a submitting appearance. (m)Direct that within 7 days of the making of these orders, the Plaintiff provide to the first Defendant's solicitor, in writing, an itemised statement of the current pay-out figure as at that date and an estimate of its costs. (n)Order, in the event that the first Defendant pays the amount due to the Plaintiff under the Plaintiff's mortgage and its costs within 28 days, that these orders shall be permanently stayed. (o)Order that the second Defendant attend upon any settlement of the contract for the sale of the Property and upon being paid the amount due under its mortgage deliver to the Plaintiff, or as it may direct, all deeds or documents of title in the second Defendant's control relating to the Property as may be properly required for the completion of any such sale. (p)Liberty to apply to each of the parties, and to any other party claiming an interest in the Property, with respect to any matter that may arise in relation to the sale of the Property or to the distribution of the sale proceeds be granted. (q)Reserve further consideration in respect of further or other orders as may be required to effectuate judicial sale of the Property and to enable judgment for the amount due under the Plaintiff's mortgage. (r)These orders shall be entered with the details of the complete title reference and address of the Property and of any particulars of mortgage being inserted. ********** Amendments 05 July 2012 - Counsel added Amended paragraphs: Coversheet 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. Decision last updated: 05 July 2012