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Haddow v Simala


[2010] QSC 245






Trial Division





9 July 2010




9 July 2010


Chief Justice


On the plaintiff’s application filed 4 June 2010 (as amended):

1.Order that the application be dismissed.

2.Order that the plaintiff pay the defendants’ costs of and incidental to the application, including reserved costs, to be assessed on the standard basis.

On the defendants’ application amended by leave today, order in terms of para 2(a), (b) and (c). 


Transfer of mortgage where sought by only one co-mortgagor; redemption of mortgage where tender not unconditional, and not in full; restraint of sale by mortgagee where sum owing as sworn to by mortgagee not offered for payment into court; appointment of statutory trustees for sale


Plaintiff in person

D A Skennar for the first and second defendants


Chris Reeve and Co Solicitors for the first and second defendants


The claim

[1] On 4 June 2010 the plaintiff filed a claim seeking an order that the first defendant transfer his mortgage to one Marie Le Bagge, a declaration that the first defendant is not entitled to interest under the mortgage and is limited to principal of $130,000, and rectification of the mortgage to remove any obligation to pay both principal (sic) and interest.

The mortgage

[2] The mortgage is dated 2 August 2010. The first defendant is mortgagee. The mortgage names the second defendant and Andrew Haddow as mortgagors. Andrew Haddow is the plaintiff’s son. The mortgagors were de facto partners when the mortgage was granted. The first defendant mortgagee is the father of the second defendant co-mortgagor.

[3] The subject land is residential property at Noosaville. The mortgage recites a consideration of $130,000, a term of 25 years, and an interest rate of eight per cent per annum.

[4] The mortgage contains the following provision in relation to interest:

“3.INTEREST:  The Mortgagor will pay to the Mortgagee interest upon the moneys secured or so much thereof as shall from time to time be or remain owing hereunder at the rate per centum per annum specified in the Bill of Mortgage hereto calculated and charged on the rests and payable on the days and computed all in the manner specified in the Bill of Mortgage hereto PROVIDED ALWAYS that if any such interest or any interest payable on arrears of interest capitalised under this provision shall be unpaid on the due date thereof then in every such case the interest so in arrears shall without prejudice to the rights of the Mortgagee to sue for and recover such interest and to the other rights and powers of the Mortgagee be added to the moneys secured and shall thenceforth bear interest payable at the rate and on the dates or intervals aforesaid and all the covenants and provisions herein expressed or implied with respect to interest on the moneys secured shall equally apply to interest on such arrears.”

[5] The plaintiff contends that because the mortgage does not specify the ‘rests’ upon which interest is to be calculated and payable, no interest was payable during the life of the mortgage. (“Rests” are the times when the outstanding balance and interest are calculated – yearly, monthly or daily.)  That seems an unlikely result. The first defendant contends that the clause should be construed as implicitly providing for the usual position which obtains under residential mortgages, with interest computed and compounding on monthly rests (“compounding” in that unpaid interest is “capitalized”, with future interest calculated on the aggregated amount). While I consider the plaintiff’s contention unpromising, I need not resolve this issue, as will emerge, and should not do so summarily anyway.

[6] The solicitor for the first defendant has calculated the interest, capitalized monthly to 26 May 2010, which, when added to the principal sum of $137,696.49 ($7,696.49 was advanced after the first advance of $130,000), gives a total debt of $301,311.88. (The correctness of that calculation is sufficiently arguably correct to warrant its being regarded as the appropriate sum to be demanded for any redemption of the mortgage, or to found an injunction restraining a mortgagee’s sale.)  The plaintiff has offered to pay a lesser sum, $252,408.22, into court, its disposition pending a court order, or agreement between the parties, as to “the amount actually payable under the mortgage”.

[7] The first defendant’s position is that all of the monies secured by the mortgage became payable (cl 28(a)) on 28 June 2009, when Andrew Haddow transferred his interest in the land to the present plaintiff for the expressed consideration of “repayment of mortgage debt”.

[8] The plaintiff appears to contend that the mortgage is unenforceable because it was never intended to have legal effect, the provision of the sum of $130,000 by the first defendant to the second defendant and Andrew Haddow having been a gift. Inconsistently with that there is, extant, an order of the District Court providing for the sale of the mortgaged property and payment from the proceeds to discharge the first defendant’s mortgage, including interest at eight per cent per annum “calculated monthly”. That order was made in a proceeding under Part 19 of the Property Law Act 1974.

[9] The land has not yet been sold. The first defendant is taking steps to recover possession of the land from the present occupants, Andrew Haddow and Marie Le Bagge, with whom Andrew Haddow currently lives.

Plaintiff’s application

[10] The instant application filed by the plaintiff on 4 June 2010 seeks an order that upon the plaintiff paying into court the amount of $252,408.22, the first defendant be restrained from enforcing his mortgage and transfer that mortgage to Marie Le Bagge. (It also seeks rulings as to interest:  that it is not payable monthly, or to be compounded, and that some interest claimed is “statute barred”.)

[11] This proceeding and the proceeding in the District Court are part of the fallout following the termination of the de facto relationship between the second defendant and Andrew Haddow. The point was made in the Court of Appeal in reasons for judgment published 16 November 2007 when the court dismissed an appeal against an order for the provision of security for costs. The plaintiff was not legally represented before me. His son Andrew assisted him. It was fairly plain that the plaintiff was Andrew’s “mouthpiece”.

Objections to plaintiff’s affidavits

[12] I note that Ms Skennar, who appeared for the respondents, objected, and with good reason, to much of the plaintiff’s affidavit material. It has been unnecessary for me to rule expressly on those objections.

Section 94 Property Law Act:  entitlement to redeem, obligation to transfer

[13] There are substantial disputes between the parties about the legal effect of the mortgage (the “gift” issue) and its proper construction (the interest issue). Those matters aside, the application cannot succeed because of two fundamental flaws. They arise from s 94(1) of the Property Law Act:

94Obligation to transfer instead of discharging mortgage

(1)Where a mortgagor is entitled to redeem the mortgagor shall because of this Act, have power to require the mortgagee, instead of discharging, and on the terms on which the mortgagee would be bound to discharge, to transfer the mortgage to any third person as the mortgagor directs, and the mortgagee shall because of this Act be bound to transfer accordingly.”

[14] In the first place, the second defendant has not joined the plaintiff in seeking the transfer. Section 94 provides that a mortgagee (here the first defendant) may be compelled to transfer the mortgage to a third party as directed by the mortgagor. The plaintiff, as transferee from Andrew Haddow, is only one of two mortgagors. The plaintiff’s claim ignores the second defendant’s status as co-mortgagor. The second defendant has not sought or consented to the proposed transfer. There is accordingly no effective mortgagors’ direction or requirement in terms of the section.

[15] The plaintiff asserted the second defendant is driven by malice. There is no evidence of that. Her motivation is however irrelevant. It lies in her court whether or not to require a transfer, and she does not. The court could not and would not direct her to do so.

[16] In the second place, a mortgagee’s obligation to transfer as directed by his or her mortgagor depends on that mortgagor’s being “entitled to redeem”. A mortgagor is entitled to redeem the mortgage only if the mortgagor has made proper tender of the entire amount payable under the mortgage (Challenge Bank Ltd v Hodgekiss (1995) NSW Conv R 55-756, Tritech Technology Pty Ltd v Gordon (2000) 48 IPR 52, 55-6). No such tender was made here. Quite apart from the dispute over the amount due, all the plaintiff has offered to do is to pay an amount into court, its fate to depend on subsequent agreement between the parties or the court’s determination of what is due. Earlier, he tendered the capital amount of $130,000 with the balance to be held in the trust account of the first defendant’s solicitor pending the court’s determination of the interest payable. To warrant redemption, the tender of payment must be unconditional (Ellis v Ellis (1924) SASR 379, 395).

[17] For these reasons, the plaintiff’s claim for a transfer to Ms Le Bagge is misconceived.

[18] It is not necessary for me to enter upon another possible issue, but I should record it, and that is the suspicion that Marie Le Bagge may for present purposes be “the alter ego of the mortgagor”, and therefore not a “third person” within the contemplation of the section (Ley v Scarff (1981) 55 ALJR 103, 106 per Barwick CJ).

Restraint of mortgagee’s exercise of power of sale

[19] It remains to mention the plaintiff’s claim for an order that upon the plaintiff’s proposed payment into court, the first defendant be restrained from enforcing his mortgage. Notwithstanding the contention that the relevant monies were given to the second defendant and Andrew Haddow by the defendant, that is, as a gift, no ground has been established which would justify restraining the first defendant from exercising his rights as mortgagee. In any case, the court would only restrain the first defendant from exercising those powers if the plaintiff were to pay into court the due amount as claimed and sworn to by or on behalf of the first defendant (Inglis v Commonwealth Trading Bank of Australia (1972) 126 CLR 161, 165, 169), and that has neither occurred nor been offered.

[20] For all of these reasons, the plaintiff’s application must fail.

[21] One would hope Mr Andrew Haddow would now cooperate in the implementation of the sale of the property provided for in the order of the District Court, and the due discharge of the mortgage debt. The challenge to the mortgage, and the first defendant’s entitlement to interest, in my view amply warrants the epithet “shadowy”. I consider that any further challenge should attract appropriate conditions, such as payment of costs already ordered against the plaintiff, although such questions would be for others to determine. It is important the property be sold and the first defendant’s apparently plain entitlement discharged.

Orders on plaintiff’s application

[22] There will, on the plaintiff’s application filed 4 June 2010 (as amended), be orders:

1. that the plaintiff’s application be dismissed; and

2. that the plaintiff pay the defendants’ costs of and incidental to the application, including reserved costs, to be assessed on the standard basis.

[23] I reserve the defendants’ entitlement to urge that the costs should be assessed differently. Any submissions on that should be forwarded in writing within seven days.

Defendants’ cross-application

[24] The defendants have cross applied for the appointment of statutory trustees for sale, and for the recovery of possession. The Magistrates Court is seized of the latter matter, which has been referred for mediation which has not yet occurred. This court should not now intrude in that proceeding.

[25] The defendants also seek leave to amend their defence, but because the plaintiff only saw the proposed amendment today, he should be allowed the further time he seeks, to consider it.

Whether trustees for sale should be appointed

[26] The plaintiff and the second defendant are co-owners of the land. The second defendant is prima facie entitled to the appointment of statutory trustees for sale, under s 38(1) of the Property Law Act.

[27] There is no discretionary reason why such an order should not be made. It appears the present occupants are unlawfully there, because of the operation of the attornment clause in the mortgage (cl 25) and the termination of the tenancy on 18 December 2009. (It is difficult to see how the continued occupancy of the land can conceivably be lawful.)  Further, it is proposed the trustees hold the proceeds of sale “pending further order of the court or agreement between the parties”. An order has potential utility in hastening an overall resolution.

[28] The plaintiff expressed concern about the cost of trustees and the sale. They are regrettably unavoidable in situations like this where disharmony apparently precludes cooperative resolution.

[29] Patrick Gavin Lynch and Richard Brown Glacken should be appointed trustees.

[30] The plaintiff sought an order staying the order appointing the trustees for sale until after the mediation in the Magistrates Court proceeding. I assume that in ordering mediation, that Court hoped for a resolution not confined to the right to possession, which appears to be clear, but extending to a broader resolution of the overall conflict besetting the parties. The sale by the trustees should not be stayed:  they should be put into a position to proceed to a sale forthwith.

[31] There should be no order as to the separate costs of the application for the appointment of trustees, because of the late stage at which it was brought. The additional costs would not in any case be substantial.

Orders on defendants’ cross-application

[32] There will be orders in terms of para 2(a), (b) and (c) of the defendants’ application amended by leave today.


Editorial Notes

  • Published Case Name:

    Haddow v Simala & Anor

  • Shortened Case Name:

    Haddow v Simala

  • MNC:

    [2010] QSC 245

  • Court:


  • Judge(s):

    de Jersey CJ

  • Date:

    09 Jul 2010

  • White Star Case:


Litigation History

No Litigation History

Appeal Status

No Status