In the recent decision of Commonwealth Bank of Australia v Shaddick  WASC 205 the Supreme Court of Western Australia was required to determine whether service of a default notice on a mortgagor was effective, even though the mortgagor never actually received the default notice.
The Commonwealth Bank of Australia (CBA) lent money to Ms Shaddick and took security over certain real property owned by her. Ms Shaddick failed to pay a loan instalment when it was due and CBA claimed there was an event of default.
Accordingly, CBA issued a default notice and served it on Ms Shaddick by registered post. The default notice was addressed to her residential address, which was also the address of the mortgaged property.
The default notice was returned unopened.
In attempting to oppose a summary judgment application, Ms Shaddick claimed that, although the default notice was sent to the correct address, she was on a holiday in Spain and never received the default notice.
In serving the default notice in this way, the plaintiff was relying on section 106(2) of the Transfer of Land Act 1893 (WA) (TLA), which states:
‘(2) Notwithstanding section 240, service of the notice referred to in subsection (1) is not properly effected unless —
(a) the notice is delivered personally to the mortgagor or the grantor or his transferees, as the case requires; or
(b) the notice is sent by registered post to —
(i) the address entered in the Register as the address of the mortgagor or the grantor or his transferees, as the case requires; or
(ii) the address known to the mortgagee or the annuitant or his transferees as the current address of the mortgagor or the grantor or his transferees, as the case requires;
Ms Shaddick’s case
Ms Shaddick claimed that as the default notice had not actually come to her attention it was not proper service within the terms of section 106(2).
Counsel for Ms Shaddick submitted that the Master should, in interpreting section 106(2), take into account the interpretation of service requirements under section 109X of the Corporations Act 2001 (CA), which requires the party receiving the notice to actually receive it.
The Court held that there is a clear distinction between the two sections in relation to posting demands. Section 106 of the TLA anticipates the use of registered post, whereas section 109X of the CA simply refers to ‘posting’. Accordingly the interpretation of one section cannot be used to assist the other in this regard.
In interpreting the service requirements under section 106(2) of the TLA, the Court held that it is clear that the section does not anticipate a default notice will, in every instance, actually come to the attention of the party served.
Subsections (2)(b) provides a method of service which is by no means certain to ensure the default notice will come to the attention of the registered proprietor.
In this case, even though Ms Shaddick did not receive the default notice in circumstances where she was overseas and did not attend the property, the Court determined that service was still effected.
This decision will provide comfort to mortgagees seeking to enforce their rights against mortgagors who attempt to avoid service. The Court enunciated the proposition that the provision for service under the TLA ‘is not in the nature of a consumer protection provision’. As such, as long as the requirements under section 106 of the TLA are complied with service will be effective notwithstanding a mortgagor’s insistence that they never had the document in their hands.
This case also highlights the importance of complying with the service requirements set out in the specific legislation governing the particular type of service that a party is undertaking as the service requirements, and what will equate to effective service, will vary in different circumstances.
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Alison Robertson.....................................Philippa Honey
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