Eagle Star Trustees Limited, Re [1992] QSC 213 [1993] 2 Qd R 21

c TRANSCRIPT OF PROCEEDINGS .,, State Reporting Bureau, I /•. '; I '.~-· .. ~ .. \ 4th F1oor, The Law Courts, George Street, BRJSBANE. 0. 4000 Tel. (07) 227.4360 (Copyright in this transcript is vested in the Crown. Copies thereof must not be made or sold without the written authority of the Director, State Reporting Bureau.) SUPREME COURT OF QUEENSLAND CIVIL JURISDICTION RYAN J No 497 of 1992 IN THE MATTER OF THE MONEY LENDERS' ACTS 1916 - 1962 C and IN THE MATTER OF EAGLE STAR TRUSTEES LIMITED BRISBANE .. DATE 23/6/92 .. JUDGMENT 1 1 -- 1 of 9 -- ...- 230692 1 • JUDGMENT HIS HONOUR: I make the cleclaration sought in paragraphs one and two of the summons. As the application was occasioned by the default of the applicant I make no order as to costs of the application. 10 I publish my reasons. 20(] 0 30 a 50 60 2 -- 2 of 9 -- c\ c-, ._j ,r \,__/ IN THE SUPREME COURT OF QUEENSLAND o.s. No. 497 of 1992 IN THE MATTER of the Money Lenders Acts 191~-1962 - and - IN THE MATTER of EAGLE STAR TRUSTEES LIMITED JUDGMENT- RYAN J. Delivered the Twenty-third day of June, 1992. Counsel: Solicitors: G. Gibson, Q.C. with P. Lohrisch for Applicant A. Heyworth-Smith for Respondent Clayton Utz for Applicant Goss Downey Carne for Respondent Hearing Date: 17 June, 1992. -- 3 of 9 -- !/ IN THE SUPREME COURT OF QUEENSLAND O.S. No. 497 of 1992 IN THE MATTER of the Money Lenders Acts 1916-1962 - and - IN THE MATTER of EAGLE STAR TRUSTEES LIMITED JUDGMENT - RYAN J. Delivered the Twenty-third day of June, 1992. Application has been made by originating summons for (a) a declaration that bill of mortgage No. T 344781B between Eagle Star Nominees Ltd. and Michael Philip Sumner-Potts dated 8 April, 1988 is valid and enforceable in whole as from 8 April, 1988; and (b) a declaration that the deed of guarantee between Eagle Star Nominees Ltd. and Joy Sumner-Potts dated 8 April, 1988 is valid and enforceable in whole as from 8 April, 1988. A preliminary question arises as to whether these declarations may be made in proceedings instituted by an originating summons. Order 64 Rule 1 ( 11) provides that there may be heard and disposed of in chambers any application, not being an application made in a pending cause or matter, for any order authorised by any Statute to be made by a Judge, and not expressly required to be made by a Judge in Court or upon petition. Ins. 4C(3)(b) of the Money Lenders Acts 1916-1962, it is provided the court shall have power to confirm or declare to be valid and enforceable in whole or in part as from the date -- 4 of 9 -- 2 specified in the judgment, decree or order any contract for repayment of money lent or any security given in respect of any such contract or guarantee given with respect thereto. It is that power which the application seeks that I should exercise by way of a declaration. The word "court" is defined in s. 3 to include where necessary any judge of the court. There is nothing in the Money Lenders Acts which expressly requires an application for an order under s. 4C of the Act to be made by a Judge in Court or upon petition. I consider therefore that I have power to make the declarations sought in proceedings instituted by originating summons, and that I should exercise that power in a case where there is no dispute of fact. The applicant was incorporated in Victoria in 1958 in the name of Eagle Star Nominees Ltd. It changed its name to Eagle Star Trustees Ltd. in April 1989. In November 1977 the applicant which carried on the business of a money lender in Victoria was registered under the Money Lenders Acts, and it remained registered until 18 November, 1985. Registration was renewed on (~ 15 January, 1986. The registration lapsed on 14 January, 1988 and was not renewed until 14 April, 1988. It appears clear that the lapse in registration of the applicant as a money lender for the period 15 January, 1988 to 11 April, 1988 was due to an oversight in the operation of a system which involved notice being given ·by the Registrar to an officer in Brisbane, the despatch of the notice to Melbourne, . completion there of the application form, and despatch of this and the registration fee to the Registrar in Brisbane. There was no suggestion that the CJ 0 -- 5 of 9 -- 3 failure in registration was due to any deliberate default by the applicant. On 8 April, 1988 a bill of mortgage was entered into by the applicant as mortgagee and Mr. Sumner-Potts as mortgagor. On the same day a deed of guarantee was entered into between the applicant and Mrs. Sumner-Potts. The loan funds were drawn down on 27 April, 1988. Mr. Sumner-Potts defaulted under the terms of the loans, and on 11 May, 1989 a receiver of the mortgaged property was appointed by the applicant. On 2 January, 1990 judgment was entered against Mr. and Mrs. Sumner-Potts in this Court for moneys due under the bill of mortgage and guarantee. On 16 September, 1991 Mr. Sumner-Potts wrote to the receiver, stating that it appeared to him (he is a barrister) that·the original contract of loan was illegal and void, that the security given for the loan was also void, and that his appointment was void. He referred in this to the fact that the applicant was not registered at the time when approval was given for the loan and the bill of mortgage was entered into. He stated also that he had always thought that he was dealing with Brick Securities with respect to the loan.. The applicant was until 17 December, 1991 the trustee of Brick Securities First Mortgage Trust and Brick Securities Monthly Income Trust. The trust manager was Brick Securities Ltd. The letter of offer of a mortgage loan dated 25 March, 1988 was sent to Mr. Sumner-Potts on 25 March, 1988 by Brick Securities Ltd., but in the heading reference is made to Eagle Star Nominees Ltd. A letter was sent by the solicitors of Brick Securities Ltd. to the solicitors for the applicant dated 29 March, 1988 enclosing the security -- 6 of 9 -- 4 documents. On 8 April, 1988 documents were executed as already mentioned. On 26 April,1988, Mr. Sumner-Potts gave a written undertaking to the applicant. In this he refers to himself as the mortgagor and Eagle Star Nominees Ltd. as the mortgagee. I am unable to conclude that Mr. Sumner-Potts is entitled to any relief on the ground that he thought he was dealing with Brick Securities with respect to the loan. But s. 6 of the Money 'Lenders Acts obliges a money lender to be registered and to renew such registration annually, and non-compliance renders the relevant transaction illegal and void. Lejo Holdings Pty. Ltd. v. Deutsch Bank (Asia) A.G. [1988] 2 Qd.R. 30 at p. 32. There is however a wide discretion vested in the Court by s. 4C of the Money Lenders Acts to excuse a money lender from the consequences of his failure to comply with the requirements of the Act, and to do so by inter alia confirming or declared to be "valid and enforceable" any contract for payment of money lent or any security given in respect of it. See the Lejo Holdings case at p. 43. In Jagues v. Pacific Acceptance Corporation Ltd. [ 1903] S .R. (N.S.W.) 1066 it was said of a corresponding provision in the New South Wales legislation (s. 30A) by Sugerman J. (with whose reasons Walsh J. agreed) that in applying that provision, the Court is required to consider the actual circumstances of the particular case and the conduct and situation of the persons actually engaged in the particular transaction. A money lender may be said to have acted honestly if his failure or neglect was not with any conscious or deliberate plan or purpose to mislead or deceive the borrower, or to take any improper advantage of him l\ .· \ 1'-----/:\ -- 7 of 9 -- ( ('"· ,.----' 5 or to put himself in a position in which he might if opportunity offered be 'able to do any of these things, and was not accompanied by any other conduct so motivated or intended. He added that the Court's jurisdiction under s. 30A is dependent upon its being satisfied not only that the money lender was acting honestly but also that he ought fairly to be excused. In Re Voets Investments Ptv. Ltd. 1962 W.N. (N.S.W.) 670 at p. 674, Jacobs J. remarked: "In considering whether an applicant should fairly be excused it is in my view necessary to take account both of the position of the applicant and of the position of the borrower. However, once it is found that the lender was acting honestly and that the borrower was not oppressed, then it seems to me that an applicant has gone a long way towards establishing that it would be fair to excuse him for his failure to comply with, perform or observe the requirements and provisions of the Act, rather than to leave him without any way of recovering the moneys lent by him." An examination of the material placed before me indicates that the failure or neglect of the money lender was entirely accidental. There is no reason to doubt that its registration \' \ ~~.' would have been renewed as at the date of the subject transaction ,1 ', had it applied for renewal. There is also nothing to suggest \ ·I ( _. that Mr. Sumner-Potts was in any way prejudiced by the failure of the applicant to renew its registration. In the circumstances, I am satisfied that the applicant was, at the time of making the loan and taking the security and guarantee acting honestly and ought fairly to be excused. The question then arises whether I should impose any conditions on the applicant. It was suggested by counsel for the respondents that I should impose a condition that a mediation conference be held between the receiver and the respondents, but -- 8 of 9 -- -------- 6 this seems to me to fall outside any concept of what it would be just and equitable to direct in exercising my discretion under s. 4C of the Money Lenders Acts-. It was suggested also that the mortgagee should be deprived of its entitlement to receive penalty interest. I agree however with the view expressed by Else-Mitchell J. in Jagues v. Pacific Acceptance Corporation Ltd. (1963) S.R. (N.S.W.) 1066 at p. 1099 that "in all but exceptional cases a lender who has made out a case for relief under s. 30A should not be deprived of interest at the rate stipulated in the contract unless that interest is excessive so as to justify the exercise of the power to re-open under s. 30 of the Act [s. 4(2A) of the Queensland Act] or unless there is some wrong doing or similar conduct which justifies the imposition of a penalty upon the lender." In this case, I see no reason why I should limit the right of the lender to recover interest in accordance with the terms of the mortgage. Accordingly, I make the declarations sought in paragraphs 1 and 2 of the summons. As the application was occasioned by the default of the applicant, I make no order as to the costs of the application. J -:_) -- 9 of 9 --