Attika Investments Pty Ltd v Westpac Savings Bank Ltd

[1991] FCA 628

IN'THE FEDERAL COURT OF AUSTRALIA )

1

NEW SOUTH WALES DISTRICT REGISTRY ) No. NG 464 of 1991

1

GENERAL DIVISION )

BETWEEN:  ATTIKA INVESTMENTS PTY
LIMITED

First Applicant

CON MARGARITIS

Second Applicant

ANASTASSIA MARGARITIS

Third Applicant

AND :  WESTPAC SAVINGS BANK LIMITED

Respondent

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JUDGE MAKING ORDER:  LOCKHART J.

2 8 OCT 1991	WHERE ORDER MADE:	SYDNEY
FEDERAL COURT OF

AUSTRALIA

PRINCIPAL DATE ORDER MADE: 18 OCTOBER 1991

REGISTRY - .

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MINUTEOF ORDER

1.   Upon the applicants by their counsel giving the usual undertakings to damages, the Court orders that, until the final hearing of the proceeding or further order, the respondent be restrained from exercising or taking any step in the exercise of any right of sale or foreclosure said to arise out of any of -

Units, known as 311, 503, 908 and 1,ll-0/61-63 Whelan	Street, Surfers Paradise, Queensland, being the bill
of mortgage a copy of which forms the annexure marked
"H" to the affidavit sworn on 15 August 1991, by the
second applicant;

(a) the Bill of Mortgage granted by the first applicant to the respondent on 25 August 1989 in relation to the

(b) the Bill of Mortgage granted by the second and third applicants to the respondent on 25 August 1989 in relation to the Unit, known as 611, 61-63 Whelan Street, Surfers Paradise, Queensland, being the bill of mortgage a copy of which forms the annexure marked

"D" to the affidavit sworn on 15 August 1991, by the

second applicant; and

(c) the Mortgage granted by the second and third

applicants to the respondent on 25 August 1989 over

the land known as 80 Simpson Street, Bondi, New South

Wales, being the mortgage a copy of which forms the

annexure marked "E" to the affidavit sworn on 15

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-August 1991, by the second applicant.

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2.   The Court orders that the costs of the interlocutory

proceeding be the applicants' costs in the proceeding.

NOTE:  Settlement and entry of orders is dealt with in Order
36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA )

NEW SOUTH WALES DISTRICT REGISTRY )	No. NG 464 of 1991
GENERAL DIVISION

BETWEEN:  ATTIKA INVESTMENTS PTY
LIMITED

First Applicant

CON MARGARITIS

Second Applicant

ANASTASSIA MARGARITIS

Third Applicant

AND:  WESTPAC SAVINGS BANK LIMITED

Respondent

18 October 1991

REASONS FOR JUDGMENT

LOCKHART J.

This-is a motion for interlocutory injunctions restraining
the responhent, Westpac savings-~ank Limited from exercising its

powers as mortgagee under certain bills of mortgages over home

units at Surfers-Paradise and a mortgage over a house at Bondi, New South Wales.

The matter has been the subject of a number of directions hearings designed to prepare the case for final hearing. It is not yet clear when the final hearing will take place but it appears on the material before the court that it will be sometime in the first half of next year.

The facts that are relevant may be briefly stated but I should preface what I say by making it clear that any facts to which I refer are of course stated solely for the purpose of this interlocutory hearing and express no firm or final view at all with respect to their truth. Obviously that is a matter that must abide the final hearing.

The evidence has consisted of affidavits from the applicants and the respondents and there has been no cross-examination.

In 1988 the second and third applicants, Mrs and Mrs Margaritis, purchased a home unit known as unit 611 at number 61- 63 Whelan Street, Surfers Paradise, from the developers of the block. A company, being the first applicant, Attika Investments Pty Limited ("Attika") purchased four units in the same block . . also from-the developer. It should be noted that Mr Margaritis is a diregtor of Attika and thi-ie is no dispute, a< least for the purposes of this interlocutory hearing, that he is entitled to

made by Macquarie Bank Limited. In June 1989 Mr Margaritis	speak on behalf of Attika. The purchase of five units was funded by short term advances
sought to obtain alternative finance to pay out the Macquarie Bank. He approached a finance broker, a Mr Tomazin, to procure a loan for him to repay the Macquarie Bank loan and substitute for it other finance which would make provision for the capitalisation of interest for a period of some 12 months or thereabouts.
In due course the respondent agreed to refinance the initial purchase of the five home units and on 25 August 1989 Mr Margaritis attended the Merrylands branch of the respondent to sign the relevant loan documents. It is not necessary that I recount the whole of the conversation which Mr Margaritis asserts occurred then but I shall recount certain of it. Mr Margaritis says that in the course of discussing the respondent's offer to capitalise interest for the period of the loan, he said words to the following effect to the bank officer concerned: "I see from the loan agreement that you have given me that the capitalisation of interest is limited to 12 months. What happens if the units have not sold and I am unable to repay the loan by then?" - to which the bank officer responded: "Don't worry about that Con. The bank are going to look after you until you sell the units. Even if the debt exceeds the $900,000 approval, the bank will stick with you until you sell all the units. " Mr Margaritis
said: "ean we have the period of the loan extended to 24 months?" The bank officer replied: "That extension would take
this loan approval over the Merrylands approval limited (sic) of
$1 million. We therefore have to stick to the 12 months terms, The $900,000 approval referred to was as to $600,000 for the purchase of the four units by Attika and $300,000 for the purchase of the one unit by Mr and Mrs Margaritis. initially. "
Mr and Mrs Margaritis then signed the relevant loan agreements and mortgages securing the five Queensland home units to the respondent, together with the home at Bondi of Mr and Mrs Margaritis which was added as collateral security. On 6 September 1990, the respondent sent notices of demand to each of Mr and Mrs Margaritis for the payment of the moneys then said to be outstanding under the mortgage to it. On 11 September, 1990 Mr Margaritis wrote to the respondent explaining his difficulties in complying with the demands and that he was then in the process of selling the relevant units. On 15 October 1990, the respondent served notices under S. 57(2)(b) of the Real Property
Act 1900 (NSW) on each of Mr and Mrs Margaritis with respect to
the Bondi property. A second notice under that statutory provision was served on 25 July 1991 on each of Mr and Mrs Margaritis. Mr Margaritis had written in the meantime to Westpac
again setting out his efforts to sell the units. On 26 June 1991
the respondent served a notice under the relevant provision of
the Property Law Act 1974 (Qld) with respect to the units owned

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by Attika. These notices neednot be referred to in any detail. In short, they assert the amount of money which is said to be due

mortgages and bills of mortgage, requires them to pay the total	default in payment of their obligations under the respective by the applicants to the respondent, that the applicants are in
amount outstanding and provides that unless the requirements of the notice are complied with within a stipulated time after service of the notices, the respondent proposes to exercise its powers of sale in respect of the land the subject of the mortgages and bills of mortgage.
Whether the respondent will deny the conversation deposed to by Mr Margaritis in paragraph 8 of the affidavit of
Mx Margaritis of 15 August 1991 is a matter, of course, on which
I have no knowledge. But at this stage the evidence stands
uncontradicted. It seems to me that, in these circumstances, the applicant has discharged the first requirement that it must discharge in order to obtain interlocutory relief, namely that there is a serious question to be tried at the final hearing of the matter or, to put it another way, that it has made out a prima facie case in the sense that if the evidence remains as it is at the trial, there is a probability that the applicants would then be held entitled to relief.
It was submitted by counsel for the respondent that the case made out by the applicants is a weak case. All I will say at
this stage of this case, being an interlocutory stage, is that
the conversation to which I have referred seems to me to

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establishAplainly enough a facie case.

The amount of debt owing by the applicants to the respondent as at 5 September 1991 was approximately $1,170,000. Interest

is accruing at the rate of a little over $14,000 per month. Not surprisingly, at this stage of the case the evidence is not particularly precise as to the value of the units in question or the Bondi home. The applicants place a value of approximately $1.5 million on the five units but no figure on the Bondi home. The respondent places a figure of between $1.045 million and $1.140 million on the value of the five units plus the Bondi home. So, counsel for the respondent says, if his client's

figures are correct, that there will already be a deficiency to the bank if the properties were all sold now and the deficiency, he says, is increasing daily in the order of the monthly interest bill which I have already referred to. The longer the matter proceeds without the bank being able to exercise its powers under the mortgages, then the greater will become the deficiency of the applicants to the bank.

The applicants say that the balance of convenience lies in their favour because they have done all in their power since 1 August 1989 reasonably to sell the units at Surfers Paradise. Indeed there is no dispute about that. It is common ground that strenuous efforts have been made by the applicant to dispose of the home units.

It is said by counsel for the respondent that damages are

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an adequaze remedy in this c ; : and that therefore injunctive

relief should not be granted on an interlocutory footing.	I am
not persuaded that that is so, especially as one of the pieces

of real estate is the home of Mrand W s Margaritis and the sale

of a family home is not generally compensable solely in terms of
money.

This is a case where the very assertion which has founded the applicant's case is the alleged representation by the respondent that the respondent will not take steps to enforce its debts until after the units have been sold. Whether that has some temporal constraint upon it and is not open ended is of course an interesting question and no doubt will be the subject of argument at the final hearing but bearing in mind that the applicants have taken all reasonable steps and still are taking all reasonable steps to sell the units in the current somewhat depressed state of the property market in the relevant area.

It seems to me that to deny the applicants the relief that
they seek would be in effect to deprive them of the very

substratum of the case on which they rely. Accordingly it seems

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!	to me that the balance of convenience is strongly in favour of
I
I	the grant of interlocutory belief. I indeed see little that will
i	be achieved by the respondent if interlocutory relief is refused. The units will have to be sold and the applicants are trying to
sell them. Obviously the sooner that they are sold the better.
The applicants offer the usual undertakings to damages. They alsoaoffer a further undertaking to the court in these terms, namely to take whatever reasonable steps required by the
hearing which does not involve the expenditure of more than respondent to facilitate the sale of the units prior to the final
$10,000 in the aggregate. Although that is offered as an undertaking to the court I do not feel disposed to accept it. It raises in itself the slightly uncertain question of what is meant by a reasonable step as required by the respondent. I think it would be unfortunate if this matter comes back before the final hearing to have that question determined.
I think it is sufficient to note that the respondents have proffered the undertaking and if pending the final hearing the respondents seek to bring the matter back to the court to vary or rescind the interlocutory relief on the basis that the applicants are not in truth pursuing all reasonable steps to sell the property, that in itself coupled with the fact that the applicants were prepared to give that undertaking would I think be a strong point on which the respondent could rely to support its case for variation or recission of the injunction.
Accordingly, upon the applicants by their counsel giving to the Court the usual undertakings to damages the Court makes orders l(a), (b) and (c) stated on pages 3 and 4 of the application filed on 19 August 1991 until the final hearing of the proceeding or further order.

I think the proper order'zhr costs is that the costs of the

interlocutory proceedings should be the applicant's costs in the

proceedings. Accordingly the court makes that order.

I certify that this and the

preceding seven ( 7 ) pages are a true copy of the reasons for judgment herein of the Honourable Mr. Justice Lockhart.

Associate /&A~CH-
Dated: 18 October 1991

Counsel for the Applicants	D. Libling
Solicitors for the Applicants :	Gadens Ridgeway
Counsel for the Respondent	I M Khan
Solicitors for the Respondent:	Minter Ellison
Date of Hearing	18 October 1991
Date of Judgment	18 October 1991