C and L Cameron Pty Limited v Chiciak
[2014] NSWSC 973
•27 June 2014
Supreme Court
New South Wales
Case Title: C & L Cameron Pty Limited v Chiciak Medium Neutral Citation: [2014] NSWSC 973 Hearing Date(s): 27/06/2014 Decision Date: 27 June 2014 Jurisdiction: Common Law Before: Garling J Decision: (1) I dismiss the Notice of Motion.
(2) I order the applicant to pay the respondent's costs of the Notice of Motion.
(3) I order that the costs be paid on an indemnity basis.
Catchwords: PROCEDURE - civil - judgments and orders - summary judgment for plaintiff mortgagee - leave to issue Writ of Possession granted - plaintiff in possession of land - auction campaign commenced - offers for purchase received - whether mortgagee's exercise of power of sale is lawful - whether reasonably arguable question as to whether service of Notice pursuant to s 57(2)(b) Real Property Act was effected - Conveyancing Act 1919; s 170 - two occasions of service asserted - service by post to property - service on occupiers of property - whether Court should exercise its residual discretion to restrain sale - delay likely to cause financial detriment to mortgagee - balance of convenience Legislation Cited: Conveyancing Act 1919
Real Property Act 1900Cases Cited: Inglis v Commonwealth Trading Bank of Australia (1972) 126 CLR 161 Category: Principal judgment Parties: C & L Cameron Pty Ltd (P)
Victor Chiciak (D)Representation - Counsel: Counsel:
M W Young SC (P)
Mr Simpson (D)- Solicitors: Solicitors:
Nugent Wallman & Carter (P)
Eakin McCaffery Cox (D)File Number(s): 2014/19717
EX TEMPORE JUDGMENT
This is an application by Notice of Motion filed on 26 June 2014 by the defendant, Victor Chiciak, for an order in the following terms:
"The plaintiff be restrained from auctioning the land contained in folio identifier 6/SP52155, namely 6/26 York Road Ingleburn NSW 2565, until further order of the court."
The proceedings in which this Notice of Motion has been brought were first commenced by Statement of Claim filed by the plaintiff, C & L Cameron Pty Limited on 21 January 2014. That Statement of Claim sought relief which included judgment for the possession of the land at Ingleburn, leave to issue a Writ of Possession forthwith, a monetary judgment against the defendants together with interest and, as well, costs on an indemnity basis.
The cause of action upon which the plaintiff claimed to be entitled to possession of the land and a monetary judgment was the failure by the defendants to repay a mortgage that was entered into on 16 September 2011. The mortgage is secured over the Ingleburn land.
The proceedings came before the Court on 9 May 2014 consequent upon the plaintiff filing a Motion on 29 April 2014 in which it sought judgment for possession and leave to issue the Writ by way of summary judgment. On 9 May 2014, Hall J, having heard submissions by counsel for the plaintiff and Mr Chiciak in person, for the reasons which he expressed on 9 May 2014, ordered that there be judgment in favour of the plaintiff for possession of the Ingleburn land and his Honour granted leave to issue a Writ of Possession forthwith. His Honour as well entered a monetary judgment against both defendants.
The plaintiff took possession of the Ingleburn land on 2 June 2014. It did so after making an arrangement with the then existing tenant.
On 2 June 2014, the agent retained by the plaintiff commenced an auction campaign preparatory to an auction of the property at 11.30am on Saturday 28 June 2014. The property has been advertised and, it appears, has attracted a number of interested parties. According to the latest information provided to the solicitor for the plaintiff, the agent has received a fixed offer to exchange contracts prior to the auction from a purchaser who or which is willing to pay $350,000 for the property. The agent has recommended to the solicitor for the plaintiff that such offer be accepted and has expressed his opinion as follows: "I feel this is great price for this property in the current industrial market".
The evidence provided by the solicitor for the plaintiff is that, on 19 June 2014, as part of the usual process which he follows when acting for a mortgagee in possession, he obtained a valuation of the property from CLT Property Valuations Pty Limited. The Certificate of Valuation for the Ingleburn property says that its current market value as at 16 June 2014, was $330,000 excluding GST.
In the course of the marketing campaign the property has been shown to and discussed with, eight interested parties. In addition to the offer to which I have earlier referred, two earlier offers have been submitted to purchase the property for $330,000 and $335,000. Five different interested parties have indicated that they propose to attend the auction, which is fixed for tomorrow.
Mr Simpson, who appears for the applicant on the Notice of Motion before the Court today, submits that the Court should make the orders sought because there is a reasonably arguable issue as to whether service of the notice pursuant to s 57(2)(b) of the Real Property Act 1900 has occurred in accordance with the requirements of s 170 of the Conveyancing Act 1919. Mr Simpson submits that if service has not occurred in accordance with the Conveyancing Act requirements, then the power of sale under the mortgage has not yet arisen, and the plaintiff is not entitled to sell the property.
Mr Simpson submits that the balance of convenience favours the making of the order because the likelihood is that if the auction or sale goes ahead, the mortgagee will not be paid out in full, whereas if alternative financing arrangements are permitted to be made in an orderly way, there is every likelihood that the mortgagee will be paid out in full and that his client will be able to retain the benefit of the property.
It is therefore necessary to consider whether there is a reasonably arguable question as to whether the Notice under s 57(2)(b) of the Real Property Act has been sufficiently served.
The plaintiff relies upon two occasions of service of the s 57(2)(b) Notice. The first occasion is in September 2013. There seems to be no doubt as a matter of fact that on 23 September 2013 the solicitor for the plaintiff prepared a Notice pursuant to s 57(2)(b) of the Real Property Act and on 23 September 2013 sent it by post to the Ingleburn property. He also had it served on the then occupiers of the Ingleburn property on 2 October 2013. It seems clear that at that stage the property was occupied, whether pursuant to a lease or not is uncertain, by a business with which Mr Chiciak had no involvement.
Senior counsel for the plaintiff submits that service by post in this way, or else by delivery to those in occupation, was sufficient to comply with s 170 of the Conveyancing Act. He says that it was sent by post to the last known business address of the person to be served. As well, Mr Young SC submits that it was left at the last known business address, because the Court should conclude that the Ingleburn property was the business address of Mr Chiciak. In addition, Mr Young SC submits that delivery of the notice as occurred by post was sufficient to comply with s 170(1)(b1); namely, that in the case of a mortgagor in possession, it was sent by post to any occupied house or building comprised in the mortgage.
Mr Simpson, on the other hand, submits that the Ingleburn property was never the business address of Mr Chiciak and therefore service in accordance with s 170(1)(b1) could not be achieved; and, further, that his client was not in possession of the property at the time in September because there was a tenant or occupier in possession.
Whatever be the merits of each of these arguments, I am satisfied that there is a reasonably arguable case on the question of whether the service by post on 23 September 2013, complied with s 170 of the Conveyancing Act.
The plaintiff relied upon a second occasion of service on 29 April 2014 as an alternative to service in September 2013.
I am satisfied that, on 29 April 2014, the affidavit of Mr James Barton Carter dated 28 April 2014, and a bundle of documents contained within a folder, Exhibit JBC1, was personally served by Mr Mervin Fine on Mr Chiciak by leaving it at the front door of 27 Ostend Street, Lidcombe. In April 2014, Mr Chiciak lived at 27 Ostend Street, Lidcombe; and, as it appears from his present affidavit in this Court, continues to live there. Mr Chiciak says in his affidavit that he became aware of the s 57(2)(b) Notice "when I was served with the exhibit to Mr Carter's affidavit".
I am, accordingly, satisfied that the service of the s 57(2)(b) Notice in April 2014 complied with s 170 of the Conveyancing Act because it was left at the defendant's last known residential address, which was his actual address.
Accordingly, I cannot be satisfied that there is any reasonably arguable case with respect to service of the s 57(2)(b) Notice in April 2014. Even if service had not been effected in September 2013, about which I am not obliged now to make a decision, the fact that proper service in accordance with the Conveyancing Act occurred on 29 April 2014, means that the mortgagee is lawfully exercising its power of sale under the mortgage.
There is no arguable basis to challenge the lawfulness of the mortgagee's conduct. Whether the mortgagee chooses to dispose of the property prior to the auction or after a public auction is a matter for the mortgagee and a matter upon which I express no opinion.
There always remains a residual discretion in the Court, assuming proceedings are properly constituted, to restrain a mortgagee lawfully exercising their power of sale. In such circumstances the general rule, which has been long established, is that, whether by injunction or other order, a Court will not interrupt the lawful exercise by a mortgagee of powers of sale given by a mortgage unless the amount of the mortgage debt, if this is not in dispute, is paid; or, to the extent that it is disputed, the amount is paid into court: see Inglis v Commonwealth Trading Bank of Australia (1972) 126 CLR 161 at 164. If payment is not made into Court, the Court can accept the debt owed to the mortgagee being secured in some way or another.
The present position about the efforts of Mr Chiciak to refinance the property seems to be this: first, he does not bring any money into court, nor does he offer any form of security with respect to the mortgage debt and, as well, the judgment debt which is owing.
Secondly, by reason of the death of Mr Chiciak's mother on 10 June 2014 and the time necessary to make appropriate arrangements with respect to the administration of the estate, there will be some delay before a new mortgage can be entered into for the purpose of securing any refinancing. Whether that delay is four weeks or more is unclear.
Notwithstanding that Mr Chiciak has known since October 2013, that the mortgage is required to be repaid, the most recent indication of the availability of a further loan is that contained in a document under the heading of Eastwood Securities, which is dated 25 June 2014. It is, at best, in my assessment, not an approval for finance but is an indicative loan offer. It is subject to many conditions.
In the immediate future, particularly, the time in which the current sale process would be concluded if the auction were to successfully proceed tomorrow or else if one of the three offers which have been made were accepted, there is no prospect that anything that Mr Chiciak has in contemplation would resolve the outstanding issues any more quickly than the process which the mortgagee presently has in place.
The offer received by the mortgagee is above the valuation that it has obtained. Mr Chiciak's counsel submits that the property is in fact worth considerably more. No doubt that is Mr Chiciak's belief. But there is simply no evidence which would suggest that that is so. The property in question is an investment property. It is not one in which Mr Chiciak lives.
In broad terms, on the present estimate of the solicitor for the plaintiff, the mortgagee is likely to be confronted with a small loss if the sale goes ahead at the presently existing price. Perhaps, if, after auction, a higher price is obtained, that loss would be non-existent, but that is mere speculation. What is certain is that if the property is not sold promptly, or else the mortgagee is not paid out promptly, the sums of money owing will continue to increase.
If I may attempt to summarise the real effect of this evidence it is this: the applicant contends that the property is more valuable than the mortgagee in possession believes. The applicant's contention is, no doubt, based upon his own genuine estimate. However, the only evidence before the Court, based upon a valuation from an expert valuer and three offers being made to the estate agent offering the property for sale, suggest that the applicant's estimate of valuation is unlikely to be made out in the current market. The value of the property and the monies owed to the mortgagee from the net proceeds of any sale are likely to result in a small loss to the mortgagee. Any further delay will increase that loss.
Whilst I accept that Mr Chiciak would prefer to keep the benefit of the property, which he regards as more valuable than the mortgagee, it is plain that he has had many, many months to organise for alternative financing and to repay the mortgage. He has not been able to successfully manage to refinance the property and obtain a new mortgagee at any time from October 2013 through to his late mother's demise on 10 June 2014. Indeed, that was a month after Hall J had given judgment.
Any delay of the sale of the property will cause financial detriment to the mortgagee. In my assessment, the mortgagee is exercising its power of sale lawfully and I am not persuaded that the balance of convenience falls in favour of a grant of the order which is sought.
I am not persuaded, therefore, that the applicant has a reasonably arguable case as to whether or not the service of the s 57(2)(b) Notice occurred in April 2014. Even if I was persuaded that there was a reasonably arguable case on that issue, I am not persuaded that the balance of convenience favours making the orders.
Accordingly,
(1)I dismiss the Notice of Motion.
(2)I order the applicant to pay the respondent's costs of the Notice of Motion.
(3)I order that the costs be paid on an indemnity basis.
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