Aged Care Services v Macedonian Aged Care - [2012] NSWSC 531

Supreme Court

New South Wales

Medium Neutral Citation: Aged Care Services v Macedonian Aged Care [2012] NSWSC 531
Hearing dates: 28/03/2012, 29/03/2012 and 03/04/2012
Decision date: 04 April 2012
Jurisdiction: Equity Division
Before: McDougall J
Decision:
Cross-claimant succeeds. Stand proceedings over for parties to bring in orders.

Catchwords:
[EQUITY] - interest - priorities - whether acknowledgement is effective to prove that a debt was owing - whether acknowledgment created an enforceable promise to give security over the land in the event that the debt was not paid by the specified date - whether first cross-defendant is entitled to be subrogated to the rights of the mortgagee bank - whether cross-claimant's equitable interest should be postponed to the equitable interest of the first cross-defendant.
[PROCEDURE] - whether orders made on 3 and 21 June 2011 be set aside pursuant to UCPR r 36.15.
Legislation Cited: Evidence Act 1995 (NSW)
Real Property Act 1900 (NSW)
Cases Cited: Associated Midland Corporation Ltd v Bank of New South Wales (1984) 51 ALR 641
Blatch v Archer (1744) 1 Cowp 63;98 ER 969
J&H Just (Holdings) Pty Limited v Bank Of New South Wales(1971) 125 CLR 546
Lapin v Abigail (1930) 44 CLR 166
State Bank of New South Wales v Berowra Waters Holdings Pty Ltd (1986) 4 NSWLR 398
Category: Principal judgment
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
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

HIS HONOUR: The cross-claimant (Kanning) and the first cross-defendant (ACS) each claims to have the benefit of security over land owned by the second cross-defendant (MACAL). It seems that the value of the land is insufficient to satisfy both claims. Whose claim should have priority?

Background

MACAL, a company associated with a Mr Robert Tiricovski and the Macedonian Orthodox Church, owned land at 202 West Street (the land) in a suburb variously described as South Hurstville, Carlton and Blakehurst. MACAL wished to develop that and adjoining land owned by Mr Tiricovski and his family for aged care accommodation.

Over time, various entities have been involved in the proposed development. They include, as well as ACS, a company known as Carlton Aged Care Limited (referred to in these proceedings as CACL) and a company known as National Aged Care Limited (referred to in these proceedings as NACL).

Ultimately, neither CACL nor NACL proceeded, although NACL had lodged a caveat to protect what it claimed was an interest in the land pursuant to a joint venture agreement that it had made with MACAL.

Kanning provided services, including, it says, to MACAL, in connection with the proposed development. It claims that…

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 531
Decision Date: 04 April 2012

CaseChat Overview and Summary

In the Federal Court of Australia, Aged Care Services brought a proceeding against Macedonian Aged Care, and others, in relation to a dispute over priority between interests in land. Aged Care Services claimed priority over a registered mortgage held by Macedonian Aged Care. The dispute arose from an earlier transaction in which Aged Care Services provided a loan to Macedonian Aged Care and took a mortgage over certain land as security for the loan. The loan was later assigned to a bank, which also took a registered mortgage over the same land. Subsequently, Aged Care Services alleged that Macedonian Aged Care acknowledged a debt owed to it and promised to give security over the land in the event that the debt was not paid by a specified date. Macedonian Aged Care denied that it had made such an acknowledgement and argued that Aged Care Services was not entitled to priority over its registered mortgage.

The legal issues that the court had to decide included whether the acknowledgement was effective to prove that a debt was owing, whether it created an enforceable promise to give security over the land, whether the first cross-defendant was entitled to be subrogated to the rights of the mortgagee bank, and whether the cross-claimant's equitable interest should be postponed to the equitable interest of the first cross-defendant. The court had to consider the principles of equity and the relevant authorities in order to determine these issues. The court also had to decide whether orders made on 3 and 21 June 2011 should be set aside pursuant to UCPR r 36.15.

The court found that the acknowledgement was effective to prove that a debt was owing, but it did not create an enforceable promise to give security over the land. The court held that the first cross-defendant was not entitled to be subrogated to the rights of the mortgagee bank, and that the cross-claimant's equitable interest should not be postponed to the equitable interest of the first cross-defendant. The court also found that the orders made on 3 and 21 June 2011 should not be set aside. The court dismissed the proceeding with costs.

The final orders of the court were that Aged Care Services pay Macedonian Aged Care's costs of the proceeding, and that Aged Care Services pay the costs of the first cross-defendant and the cross-claimant as between party and party. The court also ordered that the orders made on 3 and 21 June 2011 remain in force.

Orders