Commonwealth Bank of Australia v Stellini

[2012] VCC 41

IN THE COUNTY COURT OF VICTORIA Revised
(Not) Restricted

AT MELBOURNE

COMMERCIAL LIST
BANKING AND FINANCE DIVISION

Case No. CI-10-06347

COMMONWEALTH BANK OF AUSTRALIA	Plaintiff
v.
EDWARD JAMES STELLINI & ANOR	Defendants

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JUDGE:	His Honour Judge Anderson
WHERE HELD:	Melbourne
DATE OF HEARING:	3 February 2012
DATE OF JUDGMENT:	3 February 2012 (revised 6 February 2012)
CASE MAY BE CITED AS:	Commonwealth Bank of Australia v. Stellini & Ors
MEDIUM NEUTRAL CITATION:	[2012] VCC 41

REASONS FOR JUDGMENT

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Catchwords:            Practice and procedure – Stay of execution – Judgment for possession – To enable defendants themselves to conduct an auction of the property.    

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr A. Sergi	Gadens Lawyers
For the Defendants	Mr J. McKay	Ascot Lawyers

HIS HONOUR:

1The plaintiff obtained judgment against the defendants on 2 March 2011 for possession of the property at 56 Domain Way, Taylors Hill. The judgment was obtained as a result of continued defaults by the defendants in the payment of monies advanced by the bank in 2008. The loan from the bank was $420,000. The current amount owing to the bank is apparently $446,981.57, which includes arrears of $27,262.

2The defendants have lived in the property since 2004, when they erected a house on vacant land. Since that time, they have suffered a number of misfortunes including loss of employment and severe injury. In order to keep their home, they have refinanced the property, on the last occasion in 2008, to the plaintiff. Notwithstanding the continued financial difficulties of the defendants, they have, apart from limited periods, continued to make regular payments to the bank of $600 each week. In addition, they have attempted to again refinance the property or to seek a further loan to pay off the arrears owing to the bank. They have kept the bank informed of their difficulties and, for a period of three months, the bank under its hardship policy, suspended the defendant’s obligations to make repayments.

3The most recent application for finance made by the defendants to another lender was rejected on 27 January 2012. The defendants then contacted a real estate agent and executed an authority for the sale of the property. They now seek a stay until 26 March 2012 to enable them to give an authority to the agent to sell the property at public auction on 17 March 2012. Following the auction, they would, after a further short period, agree to vacate the property. I have determined that, in the circumstances of this case, the stay of execution sought by the defendants should be granted.

4The significant factors which I have considered in reaching that decision are as follows:

a.The defendants were served with default notices with respect of the mortgage over the porperty in November 2010. The writ was issued in December 2010. Judgement was obtained on 2 March 2011.

b.The defendants have not contested the validity of the judgment or suggested that there are any matters which would entitled them to defend the proceeding.

c.The defendants defaulted in respect of the mortgage with the bank as a result of a series of misfortunes for which they were not responsible. They have attempted to cope with the resulting financial position in a responsible manner, by attempting to obtain finance to meet their indebtedness to the bank. They engaged a financial counsellor to communicate and negotiate with the bank and to seek finance on their behalf and, apart from the hardship period granted by the plaintiff, they have continued to make regular and substantial payments to the bank, although the payments were not sufficient to cover the arrears.

5    The defendants left the making of this application until the last possible moment, the Sherriff having indicated he would move to take possession today, in accordance with a warrant of execution. This failure by the defendants to recognise the perhaps inevitable course that would follow is relevant to my consideration of the application but should not, in my view, be determinative by reason of the other matters I have referred to.

6The agent who has undertaken to sell the property has advised the defendants that “he thought it would sell for up to $625,000 or perhaps more”. The defendants have at this stage indicated to the agent that they would wish to sell the property for a minimum price of $550,000. I am satisfied that the only reason the defendants are seeking a stay is in order for them to sell the property for the best possible price so that after the indebtedness to the bank is paid, there will be a balance to which they will be entitled.

7There is a possibility that an auction, particularly in the present depressed state of the market, may not achieve the price the defendants regard as the true value of their property. If the bank were required to sell the property by public auction as mortgagees, in the event that the defendants were unable to conduct a successful auction, it appears likely that there would be sufficient margin from the likely sale price, after the expenses of sale, for the amount owing to the bank to be fully repaid. In my view, there is little risk of there being a shortfall if the bank were required to sell the property. The bank would be able to conduct a second auction within a relatively short time, and only weeks after it would be able to conduct an auction if the Sheriff were permitted to take possession of the property next week. I do not consider that having two actions within a relatively short period would have an effect on the sale price sufficient to prejudice the bank’s recovery.

8The discretion of the Court is a general one and I have indicated the matters which have persuaded me to act in this case. I have been very much assisted by the submissions of counsel who have referred me to a number of relevant decisions, including:

a.ANZ Banking Group v Pearce [2003] VSC 49, a decision of Nettle J;

b.Tolston Pty Ltd v Daisley [2004] VSC 23, a decision of Kaye J; and

c.Komba v National Australia Bank Ltd [2010] VSCA 232, a decision of the Court of Appeal (Nettle JA and Emmerton AJA).

Certificate

I certify that these 3 pages are a true copy of the reasons for decision of His Honour Judge Anderson delivered on 3 February 2012 and revised on 6 February 2012.

Dated: 6 February 2012

Hannah Christensen

Associate to His Honour Judge Anderson