Bali v Sweeney
[2024] NSWSC 57
•06 February 2024
Supreme Court
New South Wales
Medium Neutral Citation: Bali v Sweeney [2024] NSWSC 57 Hearing dates: 1 February 2024; further written submissions 2 February 2024 Date of orders: 02 February 2024 Decision date: 06 February 2024 Jurisdiction: Equity - Duty List Before: Stevenson J Decision: Application for interlocutory injunction refused
Catchwords: EQUITY – equitable remedies – injunction – application for interlocutory injunction to restrain sale of land by mortgagee – where serious question to be tried that power of sale has arisen – where balance of convenience did not favour granting relief
Legislation Cited: Contracts Review Act 1980 (NSW)
Category: Procedural rulings Parties: Padma Bali (Plaintiff)
Kasey Maree Sweeney (First Defendant)
PFH Capital Pty Ltd (Second Defendant)Representation: Counsel:
Solicitors:
B Gallifuoco (Plaintiff)
M W Young SC (Defendants)
ABH Legal (Plaintiff)
Summer Lawyers (Defendants)
File Number(s): 2024/40485
JUDGMENT
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The plaintiff, Ms Padma Bali, approached me as Duty Judge on the afternoon of Thursday 1 February 2024 seeking an interlocutory injunction to restrain the defendants from conducting an auction of her property in Providence Road, Ryde on Saturday 3 February 2024.
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I declined to grant the injunction. That is because, although I was satisfied that there is a serious question to be tried as to whether the defendants’ power of sale could be impugned, the balance of convenience did not favour the granting of an injunction.
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The Providence Road property was, until last October, the plaintiff’s residence. The plaintiff also owns an investment property in Blaxland Road, Ryde.
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In August 2021 the plaintiff executed a mortgage in favour of the defendants over the Blaxland Road property as security for advances made by the defendants to a company associated with the plaintiff’s sister.
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Deep within that mortgage were provisions the black letter of which:
charged in favour of the defendants any other property the plaintiff might own, including the Providence Road property; and
appointed the defendants as the plaintiff’s attorneys under power with authority to execute documents to give effect to that charge.
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On 10 August 2021 the plaintiff also executed a separate document being a “Power of Attorney by the Guarantor” under which the plaintiff separately appointed the defendants as her attorneys under power “to do any act or thing which in the opinion of [the defendants] … is necessary or expedient to give effect to any right, power or remedy conferred on the [defendants] … under the [Blaxland Road mortgage].”
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There exist certificates of legal and financial advice given to the plaintiff.
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As to the legal advice the plaintiff obtained, she has deposed:
“7. During this process, I never had any direct dealings with the defendants or their solicitors. Sarita [Ms Sarita Sharma, the plaintiff’s sister] let me know that a courier would be bring me some documents, after which I will have a video call with a solicitor to execute the documents and the courier will return the signed documents to Summer Lawyers.
8. On 10 August 2021, I undertook a thirty-minute video conference with [Ms] Claudette Chua, who was appointed by Summer Lawyers, to provide independent legal advice in relation to the guarantor loan documents.
9. As I best recall, Ms Chua advised that the documents were the relevant loan documents between the lender and borrower and that I was the guarantor. She advised that the Blaxland Property was the security and that the Blaxland Property was at risk if the borrower defaults on the loan.
10. It was my understanding from this conference that my investment property, being [the Blaxland Road property], was the only form of security for the loan.
11. During my teleconference with Ms Chua, I was not advised on interest rates, default, events of default and the extent of exposure. I made it clear to Ms Chua that I would not sign any documents if it affected the [Providence Road property].
12. It was my understanding that the maximum amount I would be liable for was the amount of $466,489.55.
13. I did not receive any advice or understanding about the irrevocable power of attorney and believed this was standard process for the loan.”
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As to the financial advice received, the plaintiff has deposed:
“14. … On 10 August 2021, I received independent financial advice from [Mr] George Harris, accountant, in relation to the guarantee. Mr Harris advised briefly that ‘being a guarantor is not a good thing’.
15. Due to the urgency of the loan, Mr Harris did not provide much further advice and assisted me with signing the documents.
16. In the months following the advance of the loan to [Tiger Toner Pty Ltd], I had no knowledge of the loan, its status, repayments, interest or any defaults.”
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Almost a year later, on 11 July 2023, the defendants registered the power of attorney referred to at [6] above.
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On 6 October 2023, the defendants instructed their solicitors to draft a mortgage in their favour over the Providence Road property, caused their lawyers to execute the document “pursuant to the Registered Power of Attorney”, and caused the mortgage to be registered.
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Several weeks later, the defendants took possession of the Providence Road property.
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The plaintiff described the process whereby that occurred as follows:
“23. On 24 October 2023, I received a telephone call from my brother, who lived with me at the time at [the Providence Road property].
24. My brother said that two locksmiths and a representative from Summer Lawyers attended the [Providence Road property] and told him that we had to vacate the premises and they were going to change the locks.
25. Upon my arrival at the [Providence Road property], I was told by a gentleman from Summer Lawyers that I owed money to the defendants and that they were taking possession of the [Providence Road property]. I said that the only security was the Blaxland Property, in which they told me that it is irrelevant which property was listed as security and to seek legal advice.
26. Currently, I am a pensioner who is now homeless due to the repossession of the [Providence Road property]. I have no residence and have been moving between family members and friends.”
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On 10 January 2024, the plaintiff became aware that the defendants had listed the Providence Road property for auction on 3 February 2024. On 18 January 2024 she retained her current solicitors. Those solicitors investigated the background and called on the defendants to not proceed with the auction. The defendants refused to do so.
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In those circumstances, I was satisfied that there was a serious question to be tried as to whether the defendants’ power of sale is exercisable in that there is a serious question to be tried that the plaintiff may be entitled to relief, whether under the Contracts Review Act 1980 (NSW), or otherwise to be relieved from the consequences which would otherwise flow from the black letter of the documents that she has executed.
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So much was accepted by Mr Young SC, who appeared for the defendants.
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However, as Mr Young has submitted, the balance of convenience did not favour the granting of an injunction restraining the auction. Indeed, the balance of convenience strongly pointed to the conclusion that no injunction should be granted.
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That is because the defendants’ mortgage is a second mortgage over the Providence Road property.
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There is a first mortgagee, BNY Trust Company of Australia Ltd. On 9 November 2023, BNY obtained judgment for possession against the plaintiff. It also obtained a monetary judgment in the sum of $2,077,595.85.
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On 15 November 2023, the solicitors for BNY wrote to the solicitors for the defendants enquiring as to the steps the defendants proposed to take to sell the Providence Road property.
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On 21 November 2023, the solicitors for the defendants wrote to the solicitors for BNY:
“Our client is in possession of [the Providence Road property].
The property was in an unsatisfactory condition at the time that we took possession and as such, the mortgagee is presently taking steps to repair and clean up the property for sale.
We expect works to be completed by 7 December 2023, and the property to be listed for sale in the new year, on 9 January 2024. This is on advice from the selling agent, given how close we are to the Christmas break.
We expect the property to go to auction on 3 February 2024.
With respect, there is no utility in your client taking over from the second mortgagee given we are well progressed with this sale and a selling agent has been appointed.
In circumstances where your client will, in any event, be paid in priority to the second mortgagee, it seems counterproductive and prejudicial to the second mortgagee for your client to take possession of the property from the second mortgagee and incur further unnecessary costs in its recovery.”
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It thus seemed inevitable that, were I to restrain the defendants from conducting the auction on 3 February 2024, the defendants would notify BNY of that fact, causing the latter company to itself cause the Providence Road property to be sold.
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There was no evidence before me to suggest that there is any dispute about the amounts owing by the plaintiff to BNY, nor as to BNY’s entitlement to possession of the Providence Road property.
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Thus, were the auction to be delayed, interest would continue to accrue on the plaintiff’s indebtedness to BNY until what, on the evidence before me, is the inevitability of the sale of the property.
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Further, and just as importantly, the existence of the first mortgage, and BNY’s judgment of possession and debt against the plaintiff, was clearly a matter that was relevant for the plaintiff to disclose to me as Duty Judge. This only arose from the evidence adduced by the defendants.
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I am confident that these matters were not known to Ms Gallifuoco, who appeared for the plaintiff, until she was shown the relevant material in the defendants’ evidence immediately prior to the commencement of the hearing. However, the matters were obviously known to the plaintiff.
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Following conclusion of the hearing late in the afternoon on Thursday 1 February 2024, I granted Ms Gallifuoco liberty to make any further submissions by 8am Friday 2 February 2024.
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Ms Gallifuoco sought leave to adduce evidence of correspondence between BNY’s solicitor and the plaintiff’s solicitor on 1 February 2024, in which BNY’s solicitor said:
“Should the second mortgagee be injuncted from completing the sale, we would expect to be instructed to file the writ of possession as soon as possible unless your client is able to put forward a proposal to exit the loan which is acceptable to our client and a forbearance deed on suitable terms is agreed and entered”.
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As there is no evidence that the plaintiff has any ability to put forward, let alone perform, any “proposal to exit the loan”, I saw this as taking matters no further.
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I declined to grant the plaintiff the interlocutory relief she sought.
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I then stood the matter over to the Equity Registrar on 5 February 2024 for directions.
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Decision last updated: 06 February 2024
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