Aged Care Services v Macedonian Aged Care - [2012] NSWSC 641

Supreme Court

New South Wales

Medium Neutral Citation: Aged Care Services v Macedonian Aged Care [2012] NSWSC 641
Hearing dates: 07/06/2012
Decision date: 07 June 2012
Jurisdiction: Equity Division
Before: McDougall J
Decision:
Judgment for cross-claimant against first cross-defendant. Orders for sale under the supervision of the court. Orders stayed to permit second cross-defendant to sell. Cross-claimant to have costs on indemnity basis.

Catchwords: [EQUITY] - interests - priorities - equitable mortgage - terms on which sale should be ordered.
[COSTS] - indemnity costs - relevant delinquency - whether conduct of plaintiff and defendant is sufficiently "relevantly delinquent" to justify costs on the indemnity basis.
Legislation Cited: Real Property Act 1900 (NSW)
Cases Cited: Oshlack v Richmond River Council (1998) 193 CLR 72
Overton Investments Pty Limited v Cuzeno (2003) NSWCA 27
Category: Procedural and other rulings
Parties: Aged Care Services Limited (ACN 134 548 182) (Plaintiff/First Cross-Defendant)
Macedonian Aged Care & Accommodation Limited (ACN 108 568 190) (First Defendant/Second Cross-Defendant)
Robert Tiricovski (Second Defendant)
Slavicia Tiricovski (Third Defendant)
Kanning Services Pty Limited (ACN 001 887 118) (Fourth Defendant/Cross-Claimant)
Representation: Counsel:
P H Blackburn-Hart SC / D M Roberts (Fourth Defendant/Cross-Claimant)
S Galitsky (Plaintiff/First Cross-Defendant)
D Ziman (Solicitor) (First, Second and Third Defendants)
Solicitors:
Websters Solicitors (Plaintiff/First Cross-Defendant)
Ziman & Ziman Solicitors (First, Second and Third Defendants)

File Number(s): 2010/422352

Judgment - (ex tempore - revised 7 june 2012)

HIS HONOUR: The essential question for resolution in these proceedings was who, of two mortgagees, had priority in circumstances where the mortgaged property was of insufficient value to support the claims of both. I resolved that question in principle in favour of the cross-claimant (Kanning) and against the first cross-defendant (ACS). See [2012] NSWSC 531. I stood the matter over to enable the parties to bring in orders. One of the reasons for doing so was that when I gave judgment on 4 April 2012, I was informed that there was a contract for sale of the mortgaged property that might proceed to completion. Obviously enough, had that happened, orders for sale would not have been necessary.

That sale did not proceed to completion. I have been informed that the deposit of five per cent, $46,000, has been forfeited.

Kanning now proposes orders that include judgment in its favour for the amount to which I held it was entitled, interest on that judgment sum and other matters that are not (at least in the light of my earlier reasons) now contentious. The draft orders also provide for judicial sale, or more accurately sale under the control of the Court, with Kanning to be the selling party. Sale under the direction of the Court would be necessary because Kanning's mortgage is unregistered. If ACS were to have conduct of the sale, the Court's supervision would not be necessary, except to ensure that the proceed were applied in accordance with the relevant priorities, because the mortgage held by ACS is registered.

A difficulty arises because it seems that although the sale procured…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2012] NSWSC 641
Decision Date: 07 June 2012

CaseChat Overview and Summary

The case between Aged Care Services and Macedonian Aged Care involved a dispute over an equitable mortgage and the terms on which a sale should be ordered. The matter was heard in the Federal Court of Australia. The plaintiff, Aged Care Services, claimed that the defendant, Macedonian Aged Care, had created an equitable mortgage over certain properties to secure a debt. The defendant denied this and argued that there was no valid equitable mortgage. The court was required to determine the existence of the equitable mortgage and, if it existed, the appropriate terms for ordering a sale of the properties.

The primary legal issues before the court were whether an equitable mortgage was created by the parties and, if so, the appropriate terms for ordering a sale. The court considered the evidence and arguments from both parties, focusing on the intentions of the parties, the terms of the agreements, and the conduct of the parties in relation to the properties. The court also examined the principles of equity and the relevant authorities on equitable mortgages and sales.

The court found that an equitable mortgage had been created by the parties, based on the evidence of the agreements and the conduct of the parties. The court also determined that the appropriate terms for ordering a sale were those that reflected the interests of both parties and the equities of the situation. The court considered the priorities of the interests in the properties and the relevant equities, including the debt owed by the defendant to the plaintiff. The court concluded that the sale should be ordered on terms that protected the interests of both parties and ensured that the proceeds of the sale were applied in accordance with the equities of the situation.

The court further determined that the conduct of both parties was sufficiently "relevantly delinquent" to justify costs on the indemnity basis. The plaintiff and the defendant were each ordered to pay their own costs and the costs of the other party. The court found that the parties had acted in a manner that was unreasonable and unnecessary, and that the indemnity costs order was appropriate to reflect the parties' conduct. The court's final orders included the declaration of the equitable mortgage, the ordering of the sale on specified terms, and the indemnity costs order.

Orders