CASE NOTES - King Investment Solutions Pty Ltd v Fahmi Mustafa Hussain & Meraj Ather Hussain [2010] NSWSC 821
Court: Supreme Court of NSW, Common Law Division
Judge: Hidden J
Hearing: 11 February 2010 | Reasons: 29 July 2010 | Judgment entered: 1 March 2011
Citation: [2010] NSWSC 821 (File 2009/295960)
Catchwords
Real property — proceedings for possession — second mortgage originally unregistered — earlier possession proceedings unsuccessful — fresh proceedings after registration — res judicata, issue estoppel, Anshun estoppel — whether s 60 Real Property Act 1900 confined to registered interests.
Facts
In December 2004 the plaintiff lent the defendants (joint owners of a Normanhurst property) $95,000 at a very high rate — 118.8% pa, reducible to 60% if paid within 7 days — repayable by 17 February 2005. The loan was secured by a second mortgage behind Perpetual Trustee's first registered mortgage. The mortgage was not registered until 18 February 2009. After two early interest payments and a $20,000 payment in 2005, the defendants paid nothing further and defaulted.
Procedural history
2005 (first proceedings, while unregistered): Macready AsJ gave summary judgment for possession, sale and $151,430 (principal plus interest).
On appeal — Campbell J [2005] NSWSC 1076: set aside the possession and sale orders (an unregistered second mortgagee seeking judicial sale had failed key prerequisites, chiefly non-joinder of the first mortgagee), but confirmed the $151,430 money judgment and rejected the argument that the 118.8% rate was a penalty.
2009 (present proceedings): Having now registered the mortgage, the plaintiff sued afresh for possession under s 60 of the Real Property Act 1900, plus expenses, costs and interest (including interest on the earlier judgment).
Issues
Were the fresh possession proceedings barred by res judicata or issue estoppel flowing from Campbell J's decision?
If not, did an Anshun estoppel arise because the plaintiff could have registered earlier and used s 60 the first time?
Was s 60 available only to a registered mortgagee?
Entitlement to expenses, costs and post-judgment interest under the mortgage.
Decision and reasoning
No res judicata / issue estoppel (paras 8–24). Applying Blair v Curran (via Meriton Apartments [2009] NSWCA 434), an estoppel covers only the actual ground on which the earlier claim failed. Campbell J's refusal turned on the plaintiff's status as an unregistered second mortgagee seeking judicial sale (and the defects in that remedy). The new claim rested on a different legal foundation — a registered second mortgagee's statutory right to possession on default under s 60, as in Zanzoul v Westpac (1995) 6 BPR 14,142. The existence of the prior mortgage was no defence: the first mortgagee was not seeking possession, and on taking possession the plaintiff could redeem it (Cronin v State Bank of SA).
No Anshun estoppel (paras 25–35). Applying Anshun (1981) 147 CLR 589 and Habib v Radio 2UE [2009] NSWCA 231, the test is reasonableness, and the estoppel typically guards against conflicting judgments — not engaged here. Hidden J rejected the submission that the plaintiff should have registered earlier: whether and when to register was the plaintiff's own commercial choice, and the principle cannot turn on a pre-litigation step that would have changed the very nature of the proceedings. He further held that s 60 is confined to registered interests: reading s 60 with the s 3 definition of "dealing" and s 41(1), a mortgage is only "effectual" to create an interest in land — and so enliven s 60 — on registration. The earlier unregistered proceedings were therefore the appropriate form at the time.
Possession granted (para 35). On registration the plaintiff acquired a statutory legal charge and a statutory right to possession on default, enforceable under s 60.
s 57(2)(b) notice (paras 36–37). Service of a default notice is a precondition to exercising the power of sale (s 58), but not to an order for possession. The validity dispute was left unresolved as unnecessary.
Expenses, costs and interest (paras 38–44). The monetary claim was unaffected by estoppel, arising from continuing default. Under the mortgage memorandum (cll 61–62, 106, 133, 145), costs/expenses were recoverable on an indemnity basis and, critically, the clauses created an independent contractual entitlement to interest at the higher mortgage rate that bypassed s 101 of the Civil Procedure Act 2005 — including interest on the earlier judgment sum.
