ANZ Banking Group Ltd v Julian & Ors [2000] QSC 115

sssao State Reporting sc oa/ ,,s- BtII"ea tI TRANSCRIPT OF PROCEEDiNGS Copyright in this transcript is vested in the Crown. Copies thereof must not be made or sold without the written 3uthority of the Director, State Reporting Bureau. SUPREME COURT OF QUEENSLAND CIVIL JURISDICTION WILSON J No 10058 of 1999 AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED (ACN 005 357 522) and LIONEL REX JULIAN and EDUAKIA JULIAN and ROSLYN MAY FARRELL BRISBANE .. DATE 31/03/2000 JUDGMENT 1 j,,,,1·, Tl1 1: LIIV C1111rts, CL'111-,..:t· Slrt.:t.:I. Bri,l,:111l', (). ➔ IJIJIJ REVISED COPIES ISSUED State Reporting Bureau Date /5; L:f / 't--:.---C Plaintiffs First Defendants Second Defendant -- 1 of 6 -- 31032000 T4-6/ST8 M/T 7227/2000 (Wilson J) HER HONOUR: This is an application for summary judgment against the first defendants, Mr and Mrs Julian, who have asked for an adjournment. The claim was filed on 9 November 1999. The plaintiff 10 claimed against the first defendants moneys allegedly owing on five accounts. Two of these were personal loan facilities to the first defendants. At the time the claim was issued the amounts allegedly owing on those two accounts were as follows: home loan account, $49,485.50 plus interest; home improvement account, $9,985.47 plus interest. The other three accounts were loan facilities advanced to a partnership consisting of Mr and Mrs Julian and Mr and Mrs Farrell. Mr Farrell is now a bankrupt. Mrs Farrell was joined as second defendant and the plaintiff has obtained judgment against her. At the time the claim was issued the amounts allegedly owing on those three accounts were as follows: fixed fully drawn advance account, $301,450.31 plus interest; variable fully drawn account, $30,931.82 plus interest; overdraft account, $20,856.13 plus interest. Interest claimed up to the issue of the proceeding totalled $13,982.27. The partnership conducted a child care business. The partnership loan facilities were secured by, one, first 2 JUDGMENT 20 30 40 50 60 -- 2 of 6 -- 31032000 T4-6/ST8 M/T 7227/2000 (Wilson J) registered mortgage over land owned by Mr and Mrs Julian and Mr and Mrs Farrell on which the child care centre business was conducted; two, mortgage debenture over the undertaking and assets of A Nova Pty Ltd which held the licence to operate the child care centre; and, three, guarantee by A Nova Pty Ltd. There were defaults under the personal and partnership loan facilities. Notices of demand were served on the defendants in July 1999. A notice of exercise of power of sale was served on 6 July 1999. On 6 September 1999 the plaintiff appointed Messrs Lucas and Clout - (a), as receivers of the land in exercise of powers under the mortgage; and (b), as receivers of the undertaking and assets of A Nova Pty Ltd in exercise of powers under the mortgage debenture. The receivers sold the land and the business as a going concern for $200,000. The sale was completed on 29 February 2000. They accounted to the plaintiff for balance sale proceeds (after deductions for rates and sale expenses) of $190,285.95. The first defendants allege that the sale was at an undervalue to the extent of $130,000. By their amended defence and counterclaim they claim that amount against the plaintiff and the receivers for breach of fiduciary duty and/or breach of duty of care. They allege that the 3 JUDGMENT 10 20 30 40 50 60 -- 3 of 6 -- 31032000 T4-6/ST8 M/T 7227/2000 (Wilson J) receivers were acting as the agents of the plaintiff mortgagee. By way of defence they seek to set off so much of the counterclaim as will satisfy the plaintiff's claim. I observe that even if the counterclaim were wholly successful it would not extinguish the balance claimed on account of the partnership loan facilities, let alone extinguish the balance of the total amount claimed. The first defendants seek an adjournment of the plaintiff's summary judgment application on the ground that the plaintiff has not satisfied its request for copies of the following documents; one, copies of all contracts relative to the sale of the child care centre and land; two, copies of all correspondence, file notes, diary notes and any documents whatsoever in respect of the plaintiff's dealings with the receiver. The plaintiff's counsel submitted that the receivers were agents of the mortgagors, Mr and Mrs Julian and Mr and Mrs Farrell, and that accordingly it is not responsible for their conduct and that the first defendants are merely fishing, hoping to establish a claim. Clause 14.2 of the mortgage provides: "The receiver is the agent of the mortgagor and the mortgagor is solely responsible for the receiver's acts or defaults whether such acts or defaults shall be done or made in relation to the purposes mentioned in this clause or otherwise." 4 JUDGMENT 10 20 30 40 50 60 -- 4 of 6 -- 31032000 T4-6/ST8 M/T 7227/2000 (Wilson J) In Commonwealth Bank of Australia and Muirhead [1997] 1 QdR 567, the Court of Appeal held that section 85 of the Property Law Act 1974 (which deals with a mortgagee's duty in exercising its power of sale) has no application to the exercise of the power of sale by a receiver appointed by the 10 mortgagee who in doing so acted solely as the agent of the mortgagor. At pages 580 to 82 Mr Justice McPherson considered section 92(2) which is in these terms: "A receiver appointed under the powers conferred by this Act shall be deemed to be the agent of the mortgagor and the mortgagor shall be solely responsible for the receiver's acts or defaults unless the instrument of mortgage otherwise provides." His Honour said: "In imposing responsibility for the receiver's acts or defaults solely on the mortgagor, section 92(2) is expressed to apply to a receiver appointed 'under this Act' ... But it is scarcely to be supposed that the principle endorsed in section 92(2) was intended to be confined only to receivers so appointed. If it is sound policy to impose sole responsibility on the mortgagor for the acts and defaults of a receiver appointed by the mortgagee, there is no discernible '.20 30 reason to exclude a receiver appointed under the powers 40 conferred by the instrument of mortgage unless in terms of section 92(2) the instrument itself 'other provides'". As in Muirhead's case, the present mortgage does not "otherwise provide". Counsel for the first respondents submitted that Muirhead is distinguishable because here there is an allegation of interference by the plaintiff mortgagee in consequence of which the receivers became its agent, despite clause 14.2 of the mortgage. He referred to various authorities including 5 JUDGMENT 50 60 -- 5 of 6 -- 31032000 T4-6/ST8 M/T 7227/2000 (Wilson J) American Express International Banking Corporation v. Hurley [1985] 3 All ER 564 and to Professor O'Donovan's text on Company Receivers and Administrators 2nd ed. at paragraph 10.40. However, the first defendants have not led any evidence of interference in this case. They have not satisfied me that they have a present entitlement to the documents they seek. In the circumstances I refuse the application for an adjournment. HER HONOUR: I make orders in terms of the draft which I have initialled and I will have placed with the papers. 6 JUDGMENT 10 20 30 40 50 60 -- 6 of 6 --