In J P Morgan Trust Australia Limited v Anthony Robert Bridge [2013] NSWSC 668, the Court was required to consider the rights and standing of a mortgagor who re-enters possession of a property after execution of a writ by the sheriff.

Background

J P Morgan lent Mr Bridge and his partner the sum of $225,150 pursuant to an agreement made in February 2007. A mortgage over their property secured the loan. There was no dispute that the borrowers defaulted under the agreement by failing to make payments when due. The lender commenced proceedings by statement of claim filed on 13 September 2012. Mr Bridge filed no defence to the statement of claim. The lender obtained judgment by default for possession of the security property and a money judgment for $335,363.69. The Court issued a writ of possession. And on 30 April 2013 the sheriff executed the writ and the lender took possession of the security property. After the execution of the writ, Mr Bridge re-entered the property and remained in possession.

Arguments

By a notice of motion filed on 14 May 2013, the lender sought leave to apply for the issue of a writ of restitution. This in order to restore to the lender possession of land where a defendant has wrongfully regained possession. Mr Bridge opposed the issue of a writ of restitution on the following grounds:

• Mr Bridge argued that the loan was predatory and should be set aside. He said that the lender advanced the loan without any concern as to whether or not he had the capacity or the ability to meet repayments due under the agreement on a monthly basis;
• The lender was tardy in implementing a direct debit system for the repayments that he was required to make;
• Mr Bridge did not achieve success when he complained to the banking and financial services ombudsmen;
• Mr Bridge could not afford legal advice and had no success obtaining pro bono assistance.

Based upon the facts and in light of authority dealing with writs of restitution, the lender argued that Mr Bridge did not have a case. In reliance upon the Supreme Court’s decision in Perpetual Limited v Kelso [2008], the lender contended that the execution of a writ of possession meant that it was too late for Mr Bridge to revisit the issues or to seek to set aside the judgment giving rise to the writ. Any attempt to oppose a writ of restitution would be ‘hopeless’ as it was necessarily based upon the same judgment.

Judgment

The associated concepts of certainty and finality of judgments and orders of the courts underpinned the Court’s judgment. Whilst the court has an inherent power to stay the execution of a judgment, even once a writ for enforcement of the judgment has been issued, Justice Harrison held:

“Once the writ has been executed…and practical effect has been given to the order of the Court, the force of the writ has been spent and the rights of the parties correspondingly subsist only in their respective legal and physical positions as the party in possession of the property on the one hand and the party who has been legally ejected on the other, together with all of, but only, the usual rights and obligations that come with those positions”

Accordingly, once the sheriff executed the writ of possession, Mr Bridge became a ‘legal stranger’ to the land. Once he re-entered the property he became in status nothing more that a trespasser. He had no right to retake possession of the property, or any standing to make the arguments he did.  Therefore, Mr Bridge’s only remaining rights were that the lender conduct the sale of the property in a proper manner. And to account to him in accordance with its obligations as a mortgagee exercising its power of sale.

The Court granted the lender the relief it sought, being leave to apply for the issue of a writ of restitution.

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This publication is provided for your general information and interest only. It is not intended to be comprehensive, and does not constitute and must not be relied on as legal advice. You must seek specific advice tailored to your circumstances.

The post Mortgagor Unlawfully Takes Possession of Security Property appeared first on Elliott May.

In Secure Funding Pty Ltd v Colin West [2013] NSWSC 746 a short stay of execution was granted by the Supreme Court to allow the borrowers to make the missed payments and to provide evidence of the progress of an application for further finance. The decision demonstrates the scope of the court’s discretionary power to stay proceedings.

In Tringali v Stewardson Stubbs & Collett Pty Ltd, it was held that the power to stay execution of a judgment or order could be exercised “in any situation where the requirement of justice demands it”. This case heard by the Supreme Court of New South Wales concerned an application for a stay upon a writ of possession of a residential property.

Facts

Mr and Mrs West mortgaged their property to Secure Funding. The mortgage fell into default and at the time of the proceedings the loan account was some $31,000 in arrears. The total loan balance owed to the lender was $164,000.

This was not the first time Secure Funding had sought judgment for possession in relation to this loan facility. Secure Funding’s first application was compromised upon terms that involved Mr and Mrs West having an opportunity to sell the security property to their daughter and her partner. It was proposed that their purchase be funded through Indigenous Business Australia (“IBA”). The eviction was to be stayed for a period of three months provided Mr and Mrs West made the minimum monthly loan repayments in a timely fashion. They were also to keep the lender informed about the progress of the proposed sale of the property (“First Compromise”). If the required payments were not made on time, the borrowers would be required to deliver vacant possession of the property to the lender within 7 days after the service of a notice to that effect.

The very first loan payment due under the First Compromise was not made and the borrowers were thus in default. The borrowers also did not comply with the lender’s request to deliver vacant possession of the security property. And so and eviction was scheduled.

Application to Stay Proceedings

The borrowers applied to stay the eviction proceedings for seven weeks. The basis of this application was to give their daughter the chance to advance her loan application with IBA. Evidence supported the borrower’s contention that an application for finance had been made to IBA, but had somehow gone astray. An urgent application for finance was re-lodged once it became clear the Sheriff’s execution of the warrant was imminent. IBA informed Mrs West that a conditional approval might be available within seven days. But this required an adequate valuation of the property. However, settlement of the loan application would take four to six weeks. This evidence made it clear that the loan application had not advanced beyond the most preliminary stages.

The lender argued that the court should not grant a stay on the terms outlined by the borrowers. The Judge agreed, finding that it was unclear whether the loan application was in adequate terms or whether the application had been received and accepted. Therefore, the court was not prepared to grant a seven week stay. Especially as evidence about the reasons for the stay were so manifestly inadequate.

However, the Judge noted that the borrowers had made at least one payment under the First Compromise. Also, Mrs West, her daughter and her daughter’s partner were all in paid employment. And in the course of the discussion with the Court, Mrs West had offered to ensure compliance with the First Compromise which would effectively bring the payments up to date.

Execution of writ of possession stayed for seven days

On this basis, the Judge was prepared to grant a stay for seven days only to allow for evidence to be provided which would show:

• that the arrears had been cleared;
• documentary evidence of the loan application made to IBA; and
• evidence of the likely timetable for IBA to approve and deal with that application.

Related articles

Mortgagor Unlawfully Takes Possession of Security Property

Mortgagee Possession Increasingly Hindered by Mortgagors

This publication is provided for your general information and interest only. It is not intended to be comprehensive, and does not constitute and must not be relied on as legal advice. You must seek specific advice tailored to your circumstances.

The post Execution of a Writ of Possession Stayed by Supreme Court appeared first on Elliott May.