Commonwealth Bank of Australia v Callaghan
[2016] NSWSC 1391
•28 September 2016
|
New South Wales |
Case Name: | Commonwealth Bank of Australia v Callaghan |
Medium Neutral Citation: | [2016] NSWSC 1391 |
Hearing Date(s): | 28 September 2016 |
Date of Orders: | 28 September 2016 |
Decision Date: | 28 September 2016 |
Jurisdiction: | Common Law |
Before: | Adamson J |
Decision: | (1) Grant leave to Brett Henry Woodcock and Mary Ella Woodcock to be joined as defendants to these proceedings. |
Catchwords: | PRACTICE AND PROCEDURE – plaintiff mortgagee of property – defendants registered proprietors of property – applicants entered into a Rent-Buy arrangement with defendants – writ of possession executed in favour of plaintiff – second defendant commenced proceedings in Equity Division for order of sale of property pursuant to s 66G of Conveyancing Act 1919 (NSW) – notice of motion filed by applicants to be joined as defendants to proceedings and for stay of execution writ of possession – stay granted subject to applicants applying for expedition of Equity Proceedings |
Legislation Cited: | Civil Procedure Act 2005 (NSW), s 135 |
Cases Cited: | Deputy Commissioner of Taxation (NSW) v Mackey (1982) 13 ATR 547 |
Category: | Procedural and other rulings |
Parties: | Commonwealth Bank of Australia (Plaintiff) |
Representation: | Counsel: |
File Number(s): | 2016/95303 |
JUDGMENT
Introduction
By statement of claim filed on 29 March 2016 the plaintiff (the Bank) commenced proceedings against Rodney and Lyndal Callaghan (the defendants) for possession of property at Glenmore Park (the Property) and a monetary sum said to be owing to the Bank which was secured by a first registered mortgage over the Property granted to the Bank by the defendants (the Mortgage).
By notice of motion filed on 22 September 2016, Brett and Mary Woodcock, who live on the Property, sought various orders, including that they be joined as defendants to the proceedings and that the writ of possession issued in respect of the Property in favour of the Bank be stayed. Neither of the defendants appeared at the hearing of the Woodcocks’ notice of motion.
At the conclusion of the hearing on 28 September 2016 I made the orders sought by the Woodcocks, which are set out at the conclusion of these reasons. By reason of the demands of the duty list, I did not give reasons when making the orders but indicated that I would give reasons shortly. What follows are my reasons for making the orders.
Background
The facts set out below are evidence by Mr Woodcock’s affidavit sworn 20 September 2016 and the exhibit thereto. References in the table below are to the paragraphs of this affidavit and the pages of the exhibit.
The agreement between the defendants and the Woodcocks
The defendants are registered proprietors of the Property but do not live there. When they purchased it, they purported to on-sell it to Brett and Mary Woodcock for the sum of $555,000. The defendants and the Woodcocks entered into an agreement known as a Rent-Buy arrangement (the Agreement) whereby the Woodcocks would live in the Property until they had paid the final amount owing under the Agreement, at which point they would be entitled to have the legal title to the Property transferred to them. The benefit of Rent-Buy arrangements is that they permit those who would not otherwise be able to obtain bank approval for a loan (by reason of their financial history or other matters), to purchase real estate. They also provide an income for those who are the registered proprietors of properties subject to such arrangements, whose interest is secured by the title to the property.
The performance of the agreement
After the Woodcocks paid the deposit on the Agreement, they lodged a caveat to protect their interest under the Agreement. They moved in to the Property on 11 March 2013 and continue to live there with their son. From this time on they paid to the defendants the amounts owing under the Agreement. The defendants used those monies, or a portion thereof, to pay the Bank in accordance with the Mortgage.
In August 2013, after paying the $38,000 deposit in full the Woodcocks lodged a caveat on the Property. They continued to make the payments under the Agreement and paid all the expenses relating to the Property.
In July 2015 the Woodcocks applied for, and on 10 August 2015 were granted, a loan to pay out the balance of the purchase price. The loan was approved in the amount of $560,000 of which $496,000 was to fund the outstanding balance; $23,000 was for the stamp duty and the balance was to be used for further repairs to the Property.
In early August 2015 the second defendant served a notice of lapse of caveat on the Woodcocks.
The defendants’ defaults
The defendants, who were married, separated. By January 2016 they were in breach of the Agreement in that Mr Callaghan diverted the monies paid by the Woodcocks from the loan account with the Bank to a personal account in his name at Westpac Bank. As soon as the Woodcocks learned that this was occurring they began to pay their fortnightly instalments under the Agreement into their solicitor’s trust account.
These proceedings
As referred to above, the Bank commenced these proceedings on 29 March 2016 and, on 5 July 2016, obtained judgment. The writ of possession is to be executed on 6 October 2016.
The Woodcocks have liaised with the Bank with a view to preventing the execution of the writ of possession and the exercise by the Bank of its power of sale. However, the Bank has refused to deal with them or accept payments made by them as they have no authority from the defendants to do so.
The proceedings in the Equity Division
The second defendant commenced proceedings in the Equity Division for an order under s 66G of the Conveyancing Act 1919 (NSW) for sale of the Property. The defendants to those proceedings are Mr Callaghan, the Woodcocks and the original vendors of the Property.
The Woodcocks’ payments
The Woodcocks have paid a total of $209,167.17 in connection with the Property, comprising the following amounts:
| Date | Amount | Purpose | Evidence |
| 8.2.13 | $1,000 | Solicitors’ fees | [29] and page 10 |
| 14.2.13 | $20,000 | First instalment of deposit | [40] and page 11 |
| 11.3.13 | $24,088 | Repairs to the Property | [44] and pages 46-66A |
| 2.4.13-15.1.16 | $124,213.79 | Fortnightly payments in accordance with Agreement | [52] and [53]; pages 131-146 |
| 31.7.13 | $18,000 | Second instalment of deposit | [55] and page 150 |
| 25.8.13 | $425.50 | Solicitors’ fees re caveat | Page 151 |
| 29.2.16 | $21,439.88 | Fortnightly payments to solicitors’ account | [54] and pages 147-149 |
| TOTAL | $209,167.17 |
The parties’ submissions
The Woodcocks’ submissions
Mr Bennett, who appeared for the Woodcocks, submitted that a stay ought be granted of the enforcement of the writ, pursuant to s 135 of the Civil Procedure Act 2005 (NSW) or this Court’s inherent jurisdiction. He relied on the breadth of the Court’s discretion to stay the execution of a writ and referred to the following statement from the reasons of Hutley JA in Deputy Commissioner of Taxation (NSW) v Mackey (1982) 13 ATR 547 at 551:
“It is not possible to work out in advance all possible bases for the exercise of such a discretion and it would not be proper even to attempt to do so. It is an open-ended discretion.”
Mr Bennett also relied on Hutley JA’s statement that there were two cases where it is clear the discretion should be exercised: abuse of the Commissioner’s position and cases of hardship and submitted that both applied in the present case. Mr Bennett was not critical of the Bank’s refusal to accept payment from his clients in reduction of the debt owing by the defendants to the Bank but submitted that the defendants’ abuse of their position was relevant to the grant of a stay in the present proceeding.
Mr Bennett argued that, if a stay were granted, there would be no prejudice to the Bank because the Woodcocks offered to pay, either to the plaintiff or into Court, an amount sufficient to compensate the Bank for twelve months’ interest on the loan facility between the Bank and the defendants. Indeed he submitted that the grant of a stay could benefit the Bank, since if the Woodcocks failed in the Equity Proceedings the stay in these proceedings would dissolve and the Bank could pursue its rights under the judgment and the writ would be enforced. If the Woodcocks succeeded in the Equity Proceedings, the sale of the Property by the Bank would be unnecessary (and it would not require possession) but that it would still be entitled to be paid out.
Mr Bennett submitted that, in circumstances where the Woodcocks have made the Property their family home; paid over $200,000 towards its purchase and development; and stand to lose their equity by the alleged unconscionable conduct of the defendants, a stay should be granted.
The Bank’s submissions
Mr Cavanagh, who appeared on behalf of the Bank, relied on his own affidavit sworn 27 September 2016 in opposition to the stay. He submitted that, whatever the result of the Equity Proceedings, the Bank was entitled to be paid out the amounts owing under the Mortgage and that its interest ranked first in priority. He opposed the stay on the basis that the Equity Proceedings was unlikely to resolve the Bank’s position since the amount owing to the Bank was $543,332.40, which was significantly more than was still owing under the Agreement ($490,000). Mr Cavanagh informed me that the Property was valued at $700,000-750,000. He accepted that a deferral of the sale for a relatively short period would not prejudice the Bank’s position overall since the value of the Property was sufficient to cover the Bank’s debt and interest at judgment rates for some period.
Consideration
If no stay is granted, the Property will be sold by the Bank. The Bank will deduct the amount owing. The rights to the balance will then be the subject of determination in the Equity Division (since any equitable interest in the Property would flow to the balance of the proceeds of sale). The Woodcocks will lose their home, unless they are able to pay the market price for the Property at the auction conducted by the Bank. There is no evidence that there is any real prospect of this occurring.
If a stay is granted pending determination of the Equity Proceedings, there is at least the prospect that the Woodcocks will be able to establish an equitable interest in the Property which will prevail over the interest of the defendants and the original vendor, although not over the legal interest of the Bank. Since the Woodcocks want the Property, but the Bank only wants the money, there is some prospect that the Woodcocks and the Bank can get what they want if a stay is granted. If a stay is refused, there is little prospect that the Woodcocks will retain the Property.
Since the value of the Property is sufficient to protect the Bank’s interest at least in the short term, I consider it to be in the interests of justice to grant a stay of the enforcement of the writ. It is appropriate that the stay be conditional on the Woodcocks applying for expedition of the Equity Proceedings. A concurrent mediation of the present proceeding and the Equity Proceedings would appear to be desirable, in order that the possibility of resolution can be explored for as little cost as possible.
Orders
At the conclusion of the hearing on 28 September 2016 I made the following orders:
(1)Grant leave to Brett Henry Woodcock and Mary Ella Woodcock to be joined as defendants to these proceedings.
(2)Order that the Writ of Possession issued on 22 August 2016 concerning all of the land comprised in Folio Identifier 204/845864 situated at and known as 5 Harrower Place, Glenmore Park in the State of New South Wales, (the Property), be stayed until further order of the Court.
(3)The Plaintiff, its servants and agents are restrained from taking any steps to take possession of or to sell the Property until further order of the Court.
(4)The Plaintiff by its solicitor is to notify the New South Wales Sheriff at Penrith forthwith that the Writ of Possession is stayed until further order of the Court.
(5)The stay referred to above is granted on the condition that Mr and Mrs Woodcock apply for an expedited hearing of the proceedings commenced by the second defendant in the Equity Division, being proceedings 96250/16, at the court’s earliest convenience.
(6)Note the apparent potential of a concurrent mediation in the proceedings in this division and the proceedings in the Equity Division to resolve both sets of proceedings.
(7)Reserve the question of costs.
(8)Liberty to apply on two days’ notice.
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