The security was sold by the Commonwealth Bank as first mortgagee. The surplus proceeds, after the Bank’s mortgage had been satisfied, were paid into court. The second mortgagee and the liquidator then approached the court to get the money out. This required a “taking of accounts” to determine what was owing to the second mortgagee.
The court noted that in a taking of accounts:
- the onus lies with the accounting party to show what is owing;
- the lender is the accounting party, and the borrower (in this case the liquidator), is the non-accounting party;
The verified accounts filed by the lender were for $2.9 million. The lender also sought a large further amount on account of interest not included in the accounts. The judge was indignant commenting:
I cannot see how a large further retention would be justified. The lender has, in accordance with the procedures the court, filed their verified accounts and thereby made their claim. They cannot now maintain that there is some further hidden liability owed to them. The case before the court is one concerning the verified accounts they have produced.
The lender next submitted that there should be an interim payment to him on the basis that he must be owed something. The judge was indignant commenting:
The whole object of this exercise – is to find out, in a structured and definitive way, whether anything is owing to the lender on the security of the mortgage and, if so, how much. The concept of an interim payment out to the mortgagees is therefore quite inconsistent with the whole purpose and structure of the proceedings.