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Cifg (Australia) Pty Ltd v Perna

Cifg (Australia) Pty Ltd v Perna

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Case Copied 29 September 2020 76 min read

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IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMON LAW DIVISION
PROPERTY LIST

S ECI 2020 00917

IN THE MATTER of an application by CIFG (AUSTRALIA) PTY LTD (ACN 006 182 449) for an order for payment of funds out of Common Fund No 1 Account No 83978 held with the Supreme Court of Victoria’s Funds in Court Office

CIFG (Australia) PTY LTD (ACN 006 182 449) & ORS (according to the attached Schedule)	Plaintiffs
v
CLAUDIA DORA PERNA and MARIA GIOA BELLA GRACE & ANOR (according to the attached Schedule)	Defendants

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JUDGE:	Derham AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	10 July 2020
DATE OF JUDGMENT:	29 September 2020
CASE MAY BE CITED AS:	CIFG (Australia) Pty Ltd v Perna
MEDIUM NEUTRAL CITATION:	[2020] VSC 630

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FUNDS IN COURT— Surplus proceeds from sale of land paid into court —Application for payment out — Plaintiffs claim equitable charge under guarantees given to secure principal debtor’s indebtedness to the plaintiffs — First defendants claim equitable charge under a security agreement – Whether liability of the principal debtor to plaintiffs joint or several – Whether guarantors liable to a plaintiff or the plaintiffs under guarantees – Whether plaintiffs’ charge enforceable – Adaz Nominees Pty Ltd v Castleway Pty Ltd [2020] VSC 201 applied – Whether first defendants’ security agreement a sham transaction – Whether first defendants charge enforceable – Snook v London and West Riding Investments Ltd [1967] 2 QB 786; Sharrment Pty Ltd v Official Trustee in Bankruptcy (1988) 18 FCR 449; ASIC v Managed Investments Ltd and Ors (No 9) [2016] QSC 109.

PROPERTY – Competing equitable interests in land – Whether interest created first in time should be postponed – Butler v Fairclough (1917) 23 CLR 78; Latec Investments Ltd v Hotel Terrigal Pty Ltd (in liq) (1965) 113 CLR 265; J & H Just (Holdings) Pty Ltd v Bank of New South Wales (1971) 125 CLR 546; Mimi v Millenium Developments Pty Ltd [2003] VSC 260; Jacobs v Platt Nominees Pty Ltd [1990] VR 146; Bunnings Group Ltd v Hanson Construction Materials Pty Ltd [2017] WASC 132; TL Rentals Pty Ltd v Youth on Call Pty Ltd & Ors [2018] VSC 105.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr T D Best	Desmond Lieu Lawyers
For the First Defendant	Mr B McNab, Solicitor	Diamonds Solicitors
The Second Defendant appeared on his own behalf	Dorsia Legal

TABLE OF CONTENTS

Introduction........................................................................................................................................ 1

Plaintiffs’ claim – in summary.................................................................................................... 3
First defendants’ claim – in summary........................................................................................ 3
Second defendant’s claim – in summary................................................................................... 4
Summary of conclusions.............................................................................................................. 4

Procedural History............................................................................................................................. 4

Plaintiffs’ equitable charge.............................................................................................................. 5

Issues regarding the plaintiffs’ equitable charge...................................................................... 14

Joint and several entitlements................................................................................................... 15
Argument – first defendants............................................................................................ 15

Argument – plaintiffs................................................................................................................. 16
Consideration..................................................................................................................... 18

A ‘pot-pourri’ of matters............................................................................................................ 21

The Perna & Grace charge.............................................................................................................. 24

First defendant’s submissions......................................................................................... 28
The plaintiffs’ submissions............................................................................................... 29

Consideration.............................................................................................................................. 34
Is the Perna & Grace Agreement a ‘sham’ transaction?...............................................…

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: [2020] VSC 630
Decision Date: 29 September 2020

CaseChat Overview and Summary

Cifg (Australia) Pty Ltd sought payment out of surplus funds held in court, following the sale of land. The defendants, Perna, opposed the application. The dispute centred on the interpretation of guarantees and security agreements, the nature of the debtors’ liabilities, and the enforceability of the charges. The court was required to determine whether the plaintiffs’ claim to an equitable charge was valid, whether the guarantors were liable to the plaintiffs or jointly, and whether the first defendants’ security agreement was a sham. The court also needed to resolve the priority of the equitable interests in the land.

The court examined the guarantees provided by the principal debtor to the plaintiffs, and whether these created a joint or several liability. The court found that the plaintiffs were entitled to an equitable charge under the guarantees. The court also determined that the guarantors were liable to the plaintiffs under the guarantees. Regarding the first defendants’ security agreement, the court concluded that it was not a sham and was enforceable. The court further held that the plaintiffs’ charge should not be postponed as it was created first in time, in accordance with established legal principles.

The court found in favour of Cifg (Australia) Pty Ltd, granting the application for payment out of the surplus funds. The court ordered that the surplus proceeds be paid to Cifg (Australia) Pty Ltd, subject to any further orders or appeals. The defendants’ objections were dismissed. The court's decision provided clarity on the enforceability of the charges and the priority of the equitable interests in the land, resolving the dispute in favour of the plaintiffs.

Orders