11 Oonoonba Road Pty Ltd & Anor v ACP Properties (Townsville) Pty Ltd & Ors [2022] QCA 153

SUPREME COURT OF QUEENSLAND CITATION: 11 Oonoonba Road Pty Ltd & Anor v ACP Properties (Townsville) Pty Ltd & Ors [2022] QCA 153 PARTIES: 11 OONOONBA ROAD PTY LTD ACN 615 776 148 (first appellant/first respondent) TIMOTHY EDMONDS (second appellant/second respondent) v ACP PROPERTIES (TOWNSVILLE) PTY LTD ACN 631 282 203 (first respondent/first applicant) ACP PROPERTIES (QLD) PTY LTD ACN 606 370 870 (second respondent/second applicant) STEPHEN GEORGE CAMPBELL (third respondent/third applicant) FILE NO/S: Appeal No 2394 of 2021 DC No 2476 of 2019 DIVISION: Court of Appeal PROCEEDING: Application for Reopening (Civil) ORIGINATING COURT: District Court at Brisbane – [2021] QDC 10 (Barlow QC DCJ) DELIVERED ON: Date of Orders: 15 August 2022 Date of Publication of Reasons: 19 August 2022 DELIVERED AT: Brisbane HEARING DATE: 15 August 2022 JUDGES: Morrison and Flanagan JJA ORDERS: Date of Orders: 15 August 2022 Application to reopen is dismissed with costs. CATCHWORDS: APPEAL AND NEW TRIAL – PROCEDURE – QUEENSLAND – POWER OF COURT – COSTS – where the court delivered its reasons in respect of the appeal – where the appellant succeeded on appeal – where the Court set aside the orders at first instance – where the parties made further submissions as to costs – where the Court made further orders as to costs – where the applicants applied to reopen the appeal under r 667(2)(d) of the Uniform Civil Procedure Rules 1999 – where the applicants contend there was an error in calculation – whether the orders made reflected the intention of the Court – whether the application should be allowed -- 1 of 6 -- 2 Property Law Act 1974 (Qld), s 88 Uniform Civil Procedure Rules 1999 (Qld), r 667 11 Oonoonba Road Pty Ltd & Anor v ACP Properties (Townsville) Pty Ltd & Ors [2021] QCA 254, cited Atlantic 3-Financial (Aust)Pty Ltd & Anor v Marler & Anor [2003] QSC 197, cited Newmont Yandal Operations Pty Ltd v J Aron Corporation (2011) 70 NSWLR 411; [2007] NSWCA 195, accepted COUNSEL: D A Savage QC, with W Evans, for the appellants/respondents N H Ferrett QC, with J P Hastie, for the respondents/applicants SOLICITORS: Macrossan & Amiet Solicitors for the appellants/respondents Archibald & Brown Lawyers for the respondents/applicants [1] MORRISON JA: The Court delivered its first set of reasons in respect of this appeal on 26 November 2021.1 The only substantive order made at that time was that the orders made at first instance were set aside. The parties were invited to make submissions on the final form of orders to reflect those reasons, and as to costs. The Court delivered its second set of reasons, dealing with those issues, on 20 May 2022.2 [2] The applicant, ACP Properties (Qld) Pty Ltd (ACPQ), applied to reopen the appeal under r 667(2)(d) of the Uniform Civil Procedure Rules 1999 (Qld). It contended that there is an error in calculation, evident on the face of the second reasons, such that the orders made do not reflect the evident intention of the Court. [3] At the conclusion of the hearing the application was dismissed with costs. What follows are my reasons for joining in those orders. [4] The relevant findings made in the first set of reasons were as follows: (a) Oonoonba and ACPQ purchased land for development, as tenants in common in equal shares; (b) ACPQ lent Oonoonba $1,647,500 for the development (the ACPQ Loan); (c) by way of security Oonoonba mortgaged its half interest in the land to ACPQ; the mortgage was registered; (d) Oonoonba was not able to repay the ACPQ Loan; (e) the National Australia Bank lent ACPQ and Oonoonba the sum of $1.6 million dollars (the NAB loan); it required a registered first mortgage over the land to support the loan, as well as a guarantee from the principal of Oonoonba, Mr Edmonds; (f) to permit the NAB mortgage to be registered, ACPQ released its own mortgage; ACPQ was therefore left with an executed but unregistered mortgage from Oonoonba; (g) ACPQ unlawfully registered its mortgage as a second mortgage; 1 11 Oonoonba Road Pty Ltd & Anor v ACP Properties (Townsville) Pty Ltd & Ors [2021] QCA 254. 2 11 Oonoonba Road Pty Ltd & Anor v ACP Properties (Townsville) Pty Ltd & Ors [2022] QCA 87. -- 2 of 6 -- 3 (h) ACPQ sold the land to ACP Properties (Townsville) Pty Ltd (ACPT) in purported exercise of its power of sale as mortgagee; (i) the sale to ACPT was unlawful insofar as it related to the sale of Oonoonba’s half interest in the land; that was the only part of the land the subject of the unlawfully registered second mortgage; (j) ACPT had meanwhile taken an assignment of the NAB’s mortgage; that was a mortgage over both half shares in the land; ACPT paid $550,077.96 to the NAB for that assignment; (k) the sale to ACPT settled and title to the entirety of the land was registered in ACPT’s name; (l) the net proceeds of sale, $2,733,297.07 were paid solely to ACPQ; and (m) one half of the net proceeds were paid to ACPQ3 for its half share in the land; the other half was paid in reduction of the amount owed to ACPQ by Oonoonba under the original ACPQ Loan; nothing was paid to ACPT in reduction of the NAB loan or mortgage. [5] In the second set of reasons, this Court recorded where the parties were agreed as to certain facts:4 (a) the starting point for the assessment consequent upon the first set of reasons was that the net proceeds of the sale by ACPQ was $2,733,279.07; (b) the NAB loan debt at the date of completion of the sale (31 May 2019) was $555,077.20; (c) the amount available after settling the debt under the NAB loan was $2,178,201.11; and (d) each half share at that point was $1,089,100.56. [6] The Court found that the net proceeds of sale, after the NAB loan was paid out, should have been applied pursuant to s 88(1) of the Property Law Act 1974 (Qld). That was reflected in the following passages of the second reasons:5 “[22] Further, s 88 provides that the residue of the money so received “shall be paid to the person entitled to receive … the proceeds of sale”. The section does not require that the ultimate recipient be the holder of a mortgage, whether registered or not. It obliges the mortgagee conducting the sale, as trustee under s 88(1), to hold the residue for the person who is entitled to receive it. Implicit in the obligations as part of that statutory trust, is an obligation to ascertain the person who is entitled to receive the proceeds of sale. [23] In my view, the release of ACPQ’s mortgage released it as a charge on the land but did nothing to impair ACPQ’s entitlement to enforce the personal covenants under the mortgage. ACPQ had taken steps to enforce the mortgage prior 3 In the first set of reasons this was incorrectly referred to as ACPT. 4 Second reasons [8]-[11]. 5 Second reasons [22]-[25]; internal footnote omitted. -- 3 of 6 -- 4 to it purporting to exercise the statutory power of sale. Oonoonba could have been under no misapprehension that ACPQ was seeking repayment of its debt. [24] Therefore, in my view, ACPQ had an entitlement under s 88(1) to have the proceeds of sale properly applied after the NAB loan was repaid, to receive that part of the residue to which it was entitled as against Oonoonba, in respect of Oonoonba’s debt to it. [25] Consequently, the release did not, as Oonoonba contended, extinguish the security as well as the benefit s 88 of the Property Law Act upon the distribution of the sale proceeds.” [7] The next consideration was to establish the amount of the ACPQ loan as at the date of sale, 31 May 2019. [8] The parties were not able to agree upon the state of the loan account in the event that the NAB loan and mortgage had been properly satisfied from the proceeds of sale. Oonoonba contended that the debt at the time of sale would have been in the sum of $1,845,951.75. ACPQ contended that the correct figure was $1,923,424.20. It attached a schedule to its submissions setting out the justification for that figure. The relevant part of the schedule is set out below.6 ACPQ Loan Judgment 17/12/21 Date: Rate 4.67% Date Transaction Amount Balance 23/12/2016 Advance $1,350,000.00 $1,350,000.00 10/05/2017 Interest $ 24,046.31 $1,374,046.31 10/05/2017 Advance $ 100,000.00 $1,474,046.31 30/06/2017 Interest $ 9,649.29 $1,483,695.60 30/06/2017 Advance $ 100,000.00 $1,583,695.60 10/08/2017 Interest $ 8,328.97 $1,592,024.57 10/08/2017 Advance $ 97,500.00 $1,689,524.57 12/06/2018 Interest $ 67,454.50 $1,756,979.07 Increased rate 9.36% 31/05/2019 Interest $166,445.12 $1,923,424.20 31/05/2019 Sale Proceeds $(1,089,100.56) $ 834,323.64 17/12/2021 Interest $224,945.95 $1,059,269.59 Total amount owing: $1,059,269.59 [9] That schedule proceeded on the basis that Oonoonba’s half share of the net proceeds was to be applied to the loan standing at $1,923,424.20. That is why the Court’s reasons stated:7 6 Highlighting added. 7 Second reasons [28]-[29]. -- 4 of 6 -- 5 “[28] Therefore, assuming that the NAB loan was paid out first from the sale proceeds, at that point the ACPQ loan stood at $1,923,424.20. [29] On the basis that half of the sale proceeds went to Oonoonba, one must deduct the agreed figure of $1,089,100.56. As the schedule reflects, the result is that Oonoonba owed $834,323.64 as at 31 May 2019.” [10] Those paragraphs are relied upon as the source of the contention that there was a double discount. The contention treats what was said there as the final calculation of the offset of Oonoonba’s half share of net proceeds against the ACPQ loan. [11] However, having said that, the Court then proceeded to address the contention (advanced by Oonoonba on the appeal) that there had been an abandonment by ACPQ of the excess of the loan sum above $750,000.8 The Court found that ACPQ had abandoned the loan amount in excess of $750,000:9 “[42] In my view, the contention that ACPQ abandoned any excess above $750,000.00 on its claim should be accepted. That is particularly so given that its closing submissions recognised that the debt to ACPQ was greater than the half share due on the sale proceeds, yet the suit was maintained in the District Court and no attempt was made to do anything but pursue the pleaded claim. [43] The result is that Oonoonba’s debt to ACPQ on its loan should be taken to be $750,000.00 as at 31 May 2019. [44] On the basis that ACPQ must account to Oonoonba for the half share that should have been directed its way on 31 May 2019, namely $1,089,100.56, less $750,000. The net sum is $339,100.56.” [12] That part of the second reasons dealing with the question of waiver and abandonment were findings qualifying what had been said earlier in those reasons at paragraphs [28]-[29]. That is why the issue of abandonment was referred to as a “complication” affecting the correct approach.10 [13] It may be accepted, as ACPQ submits, that the approach on an application to reopen is that reflected in Newmont Yandal Operations Pty Ltd v J Aron Corporation,11 namely: (a) the jurisdiction comprehends the correction of errors where the result is that the orders do not reflect the court’s intention; and (b) the court’s intention is to be objectively determined. [14] ACPQ’s submission was that the Court’s intention, objectively determined, is that reflected in the passages set out above in paragraph [9] above without reference to the qualification dealt with on the abandonment issue, and reflected in the passages 8 Second reasons [30]-[42]. 9 Second reasons [42]-[44]. 10 Second reasons [30]. 11 (2011) 70 NSWLR 411, at [79], [102]. See also Atlantic 3-Financial (Aust) Pty Ltd & Anor v Marler & Anor [2003] QSC 197 at [15]. -- 5 of 6 -- 6 set out in paragraph [11] above. One cannot read one section without the other, as the latter section was a qualification on the earlier section. [15] The orders do reflect the Court’s intention. [16] For the reasons which I have expressed above the application to reopen was dismissed, with costs. [17] FLANAGAN JA: I agree with the reasons of Morrison JA. -- 6 of 6 --