Kathleen Lanphier v Westpac Banking Corporation [2015] NSWSC 292

Supreme Court New South Wales

Medium Neutral Citation: Kathleen Lanphier v Westpac Banking Corporation [2015] NSWSC 292 Hearing dates: 18 March 2015 Date of orders: 18 March 2015 Decision date: 18 March 2015 Jurisdiction: Equity Division - Duty List Before: Slattery J Decision: Order the release of funds in Court to the applicant. Catchwords: CIVIL PROCEDURE – motion for release of funds held in Court – proceeds of sale by first mortgagee of property – surplus proceeds of sale paid into Court – amount in Court less than amount due on second mortgage - allegation of forgery of second registered mortgage – allegation not maintained – adequate notice of proceedings given to former registered proprietor of property alleging forgery – no appearance from former registered proprietor – no other claimants on funds – funds paid out to applicant. Legislation Cited: Trustee Act 1925 (NSW), Part 4 Uniform Civil Procedure Rules 2005 (NSW) Cases Cited: Commonwealth Bank of Australia v The Estate of the Late Mahmoud Slieman [2010] NSWSC 661 Re C & L Cameron Pty Ltd [2012] NSWSC 676 Re La Trobe Capital & Mortgage Corp Ltd [2009] NSWSC 1118 Category: Consequential orders (other than Costs) Parties: Applicant: Kathleen Lanphier Respondent: Westpac Banking Corporation Representation: Counsel: Plaintiff: R Weaver

Solicitors:

Plaintiff: Ross Wentworth Higgins, Higgins Lawyers File Number(s): 2004/181745 Publication restriction: No

EX TEMPORE Judgment 1. The applicant in these proceedings, Kathleen Lanphier, seeks the payment out of Court under Uniform Civil Procedure Rules ("UCPR"), r 55.11 of $67,323.75 plus some accumulated interest. These monies have been in Court for ten years. The money is the surplus proceeds of a 2004 mortgagee sale of a property in Portland, New South Wales ("the Property"). Westpac Banking Corporation ("Westpac") exercised its power of sale as the first mortgagee over the Property. The applicant, Ms Lanphier, held a registered second mortgage over the Property at the time of sale. But Westpac paid the surplus into Court because of uncertainty as to who was entitled to the funds: Trustee Act 1925, Part 4 and UCPR, r 55.8 – r 55.10. 2. The short background is that Ms Lanphier sold a business to the registered proprietors of the Property, Mr Brett and Ms Roslyn Drinkwater. Ms Lanphier took her second mortgage over the Property to secure vendor finance related to the sale of the business. The amount secured under Ms Lanphier's mortgage is an amount of $80,000. Unfortunately Mr and Ms Drinkwater did not meet their obligations to the first mortgagee, resulting in the mortgagee sale. 3. The sale price of the Property was $90,000 of which all but $36,445.78 was used to satisfy the agent's expenses, council rates, Westpac's first mortgage and the fees of Westpac's solicitors, Messrs Henry Davis York. Other deposit moneys were paid into Court by early 2005, so the amount then in Court was $44,678.53. The figure given earlier in these reasons of $67,323.75 was the figure as at 17 November 2014. Since then a small amount of additional of additional interest has accumulated. 4. This matter is of some antiquity. But the evidence is sufficient to satisfy the Court, that the monies in Court should now be paid out to Ms Lanphier. 5. The sum of $80,000 is still outstanding on Ms Lanphier's second mortgage. Ms Lanphier is prima facie the person with the next best claim upon the moneys after the first mortgagee. 6. It is usual when applications are made for the payment of moneys out of Court for the applicant to establish: (1) the identity of the person who is primarily entitled to any funds paid into Court and the basis of the entitlement; (2) whether that person has a beneficial interest in the fund and is not merely an unsecured creditor; (3) whether there are any other potential claimants to the fund and their identity, and that those persons have been notified; and (4) the claimant's priority over other claimants to the fund. These principles are stated in Re La Trobe Capital & Mortgage Corp Ltd [2009] NSWSC 1118, Commonwealth Bank v Estate Slieman [2010] NSWSC 661, and Re C & L Cameron Pty Ltd [2012] NSWSC 676. 7. This is a case where it seems to me that the next priority of Ms Lanphier to the funds is obvious. At the time of the sale she was the next mortgagee behind Westpac. She is primarily entitled to the funds: Real Property Act, s 58(3). She has a beneficial interest in them. 8. It seems highly unlikely that there are any other potential claimants to the fund other than the registered proprietor. The evidence filed by Westpac ten years ago shows that the funds were paid into Court rather than paid directly to Ms Lanphier because one of the registered proprietors, Mrs Drinkwater, had alleged that her signature had been forged upon the mortgage given to Ms Lanphier. 9. That allegation was not pursued by Mrs Drinkwater. Following the sale of the Property, Mrs Drinkwater alleged that her signature had been procured on the mortgage by fraud. In November 2006, she made a formal complaint of this alleged fraud to the Lithgow Police. On 13 November 2006, both Ms Lanphier and her husband Mr Trevor Lanphier provided statements to the police denying any involvement in any such fraud, if there was one. Mrs Drinkwater did not allege to the police that she had not executed the agreement to purchase Ms Lanphier's business. The only allegation seems to have been that her signature was forged on the second mortgage. 10. It would be odd that Mrs Drinkwater might sign one of these two documents but not the other. Mr Drinkwater did not make a similar allegation and never disputed the validity of Mrs Lanphier's second mortgage. The police took no action against Mrs Lanphier in respect to Mrs Drinkwayer's allegation. Mrs Drinkwater made no claim for the moneys paid into Court by civil action alleging fraud the subject of her original complaint to the police. 11. Late last year, Ms Lanphier decided to apply to have the moneys paid out of Court to her. Upon the filing of this motion, her solicitors, Messrs Higgins Lawyers, wrote on 26 January 2015 to Mrs Drinkwater, setting out this history and giving notice that Ms Lanphier wished to pursue the present claim for payment out of the moneys held in Court. The solicitors notified Ms Drinkwater that if she wished to dispute Ms Lanphier's entitlement, she should advise them within 14 days of the date of that letter. 12. Mrs Drinkwater responded on 30 January 2015. She said she was in the process of seeking legal advice and asked for a delay of six weeks so that she could organise herself. 13. Higgins Lawyers wrote back on 5 February 2015 saying that the matter had been mentioned before Registrar Walton on 4 February 2015. It was deliberately set down more than six weeks ahead to 18 March 2015, that is today, to accommodate Mrs Drinkwater's request for time to get advice. The letter of 5 February 2015 concluded with the words, "In the event that we do not hear further from you or your solicitor, we will be seeking final orders on that date." 14. Mrs Drinkwater called Higgins Lawyers on 5 February 2015 advising that she had consulted with a solicitor, a Mr Mark Ireland, but was unsure whether she would retain his services. 15. Mrs Lanphier's affidavit on this application was also served by Higgins Lawyers on Mrs Drinkwater. The final step in this history is that at 9.40am yesterday, 17 March 2015, Mr Higgins telephoned Mrs Drinkwater who told him that she did not intend to engage a solicitor or to dispute Ms Lanphier's claim. He requested Mrs Drinkwater confirm by email her statement on the telephone. But at the time of Mr Higgins swearing his affidavit of this morning supporting the notice of motion, no such email had been received. 16. I propose to make the orders sought. I am satisfied that Ms Drinkwater has been given adequate notice of these proceedings and that there are no other claimants on the fund in Court to which Ms Drinkwater has first priority. Accordingly, I order that the sum of $67,323.75 plus any accumulated interest now in Court, being the product of funds Westpac paid into Court, be paid out to the applicant, Kathleen Lanphier. I make no order as to costs.

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