Dabboussi v Ilend Capital Pty Ltd

[2024] NSWSC 1055

Supreme Court

New South Wales

Medium Neutral Citation:

Dabboussi v Ilend Capital Pty Ltd [2024] NSWSC 1055

Hearing dates:

On the papers

Decision date:

21 August 2024

Jurisdiction:

Equity - Real Property List

Before:

Peden J

Decision:

See [33]

Catchwords:

CIVIL PROCEDURE — Default judgment — Where proceedings commenced by summons — Where defendant failed to file responsive evidence — Whether default judgment should be entered for relief under s 74MA Real Property Act 1900 (NSW), relief under the Personal Property Securities Act 2009 (Cth) or declaratory relief.

Legislation Cited:

Civil Procedure Act 2005 (NSW) ss 26, 61

Personal Property Securities Act 2009 (Cth) ss 178, 182

Real Property Act 1900 (NSW) s 74MA

Uniform Civil Procedure Rules 2005 (NSW) rr 13.1, 16.1, 16.2, 16.10

Cases Cited:

Abraham v Abraham [2012] NSWSC 254

Ainsworth v Criminal Justice Commission (1992) 175 CLR 562

Australia Capital Financial Management Pty Ltd v Australian Financial Complaints Authority Ltd [2022] NSWCA 204

CIMIC Group Limited v AIG Group Limited [2022] NSWSC 999

Dandaloo Pty Ltd v Iali [2017] NSWSC 1738

GPI Leisure Corporation Ltd (in liq) v Yuill [1997] NSWSC 292

In the matter of Bleecker Property Group Pty Ltd (In Liquidation) [2023] NSWSC 1071

QBE Insurance (Aust) Ltd v Thornton [2012] NSWSC 217

Termijtelen v Van Arkel [1974] 1 NSWLR 525

Category:

Procedural rulings

Parties:

Ghina Dabboussi (First Plaintiff)
CoreAssist Pty Ltd (Second Plaintiff)
Ilend Capital Pty Ltd (Defendant)

Representation:

Counsel:
T Wong (Plaintiffs)

Solicitors:
Skaf Lawyers (Plaintiffs)
Juris League (Defendant)

File Number(s):

2024/00082704

Publication restriction:

Nil

JUDGMENT

1. Ms Ghina Dabboussi, the first plaintiff, is the sole director of CoreAssist Pty Ltd, the second plaintiff. By amended summons filed on 19 July 2024, the plaintiffs seek an order under s 74MA Real Property Act 1900 (NSW) for the removal of a caveat lodged by the defendant, Ilend Capital Pty Ltd, over a property in Bass Hill, owned by Ms Dabboussi, as sole proprietor (Bass Hill Property).

2. The plaintiffs also seek:

1. An order removing “any security interest” registered by the defendant against the plaintiffs on the Personal Property Securities Register;

2. A declaration that the plaintiffs are not liable to the defendant under a “Brokerage Agreement” dated 15 June 2022; and

3. An order that the defendant pay the plaintiffs’ costs.

3. The defendant has filed a notice of appointment of solicitor and has appeared, through its solicitor, at directions hearings. However, the defendant has failed to comply with the Court’s orders for the filing of responsive evidence.

4. On 3 April 2024, the matter was referred to court-annexed mediation pursuant to s 26 Civil Procedure Act 2005 (NSW). A mediation date of 13 June 2024 was fixed, but the mediation did not proceed, apparently because the defendant failed to attend, and its solicitors could not obtain instructions.

5. By amended notice of motion, the plaintiffs presently seek default judgment, pursuant to r 16.10 Uniform Civil Procedure Rules 2005 (NSW) (UCPR) and s 61(3)(g) Civil Procedure Act. In the alternative, the plaintiffs seek summary judgment pursuant to r 13.1 UCPR. Default and/or summary judgment is sought in respect of the above prayers for relief.

Background

6. Filed in support of the original summons is an affidavit of Ms Dabboussi, sworn 4 March 2024. Ms Dabboussi’s unchallenged evidence includes the following.

7. On 11 January 2022, Ms Dabboussi entered into a contract to purchase a property in Rossmore, for $2,090,000. She paid a deposit of $209,000 but required finance to meet the balance of the purchase price.

8. In April 2022, Ms Dabboussi and her husband engaged in correspondence with the defendant, whom Ms Dabboussi understood could assist procuring finance.

9. On 27 April and 30 May 2022, the defendant issued invoices to Ms Dabboussi totalling $8,250, said to represent due diligence and valuation fees. These invoices were paid by CoreAssist.

10. On 17 June 2022, the defendant sent an email to Ms Dabboussi, stating:

Hi Ghina, Your loan has been conditionally approved, please review and sign the attached mandate. Once signed we will send you the final loan document.

11. The 17 June 2022 email included a link to a document titled “Mandate, Brokerage Agreement and Irrevocable Authority to Pay on First Drawdown or Settlement”. Ms Dabboussi signed this document on behalf of CoreAssist, as the borrower, and personally, as guarantor of CoreAssist.

12. Ms Dabboussi did not receive the “final loan document” referred to in the 17 June 2022 correspondence. In evidence is a document dated 21 June 2022, entitled “Formal Letter of Offer For Mortgage Loan”, which bears a “VOID” watermark on every page. Ms Dabboussi’s evidence is that she did not become aware of the existence of this letter until 16 January 2023, when it was sent to her by a representative of the defendant.

13. Between 24 and 27 June 2022, Ms Dabboussi’s husband unsuccessfully attempted to contact the defendant. The plaintiffs thereafter formed the belief that the defendant was not able or willing to obtain financing.

14. On 13 July 2022, the plaintiffs engaged a different financial broker who, by 10 August 2022, had successfully secured financing for the plaintiffs. The contract for sale eventually completed on 19 August 2022.

15. On around 7 November 2022, Ms Dabboussi received a Notice of Caveat from NSW Land Registry Services, notifying her that the defendant had lodged a caveat against the Bass Hill Property. The defendant’s interest was described in the caveat in the following terms:

Caveator has a caveatable interest pursuant to Mandate, brokerage agreement and irrevocable authority dated 16/06/2022

16. On 21 December 2022, Ms Dabboussi was contacted by a representative of the defendant, who explained that his firm had been instructed “to recover a debt owed by Core Assist Pty Ltd with respect to the … Mandate Agreement”.

17. On 16 January 2023, the same representative sent email correspondence to the plaintiffs’ solicitor, attaching a tax invoice claiming $104,500 (comprising a $50,000 mandate fee, $18,000 interest fee and $27,000 in legal fees and additional costs). Also attached was a copy of the letter of offer dated 23 June 2022, marked “VOID”. Ms Dabboussi’s evidence is that the plaintiffs had not known of, nor received, this tax invoice prior to the email.

18. On 11 April 2023, the plaintiffs’ solicitor lodged a complaint with the Australian Financial Complaints Authority (AFCA), who subsequently issued a recommendation and then determination. The AFCA determination included:

If the complainants both accept this determination within 30 days of it being issued, then within a further 30 days of being notified of the complainants’ acceptance of this determination, the broker must:

…

- remove the caveat registered over [Ms Dabboussi’s] property

- waive the outstanding invoices for the costs it claims the complainants are liable to pay under the mandate agreement and notify the complainants of that waiver accordingly.

19. On 3 November 2023, AFCA sent a letter to the plaintiffs’ solicitor confirming that the plaintiffs had accepted the AFCA determination and explaining that the defendant had been notified of this fact.

20. Filed in support of the present motion are the affidavits of Hani Skaf, solicitor for the plaintiffs, sworn 19, 29 and 31 July and 9 August 2024. Mr Skaf’s evidence includes the following:

1. Between 15 April 2024 and 6 June 2024, Mr Skaf inquired with the defendant’s solicitors on four occasions whether the defendant intended to file a defence. The responses to this correspondence included attaching a draft defence and indicating an intention to file a cross-claim. However, no such documents were ever filed.

2. On 12 June 2024, Mr Skaf obtained “Grantor Search Certificates” from the Personal Property Securities Register (PPSR). These certificates demonstrate that no security interests have been registered on the PPSR as against Ms Dabboussi, but that a security interest for all present and after-acquired property has been registered in favour of the defendant against CoreAssist.

Principles and determination

21. Under r 16.10 UCPR, the Court may enter default judgment in proceedings, commenced by statement of claim, where the relief sought is other than that specified in rr 16.4-16.8 UCPR. Where default judgment is sought under r 16.10 UCPR, the Court retains a discretion as to whether or not to enter judgment: Dandaloo Pty Ltd v Iali [2017] NSWSC 1738 at [38], citing Termijtelen v Van Arkel [1974] 1 NSWLR 525 at 529-531 and 534-535.

22. Part 16 UCPR, including r 16.10, does not strictly apply to these proceedings, since they were commenced by summons, not statement of claim: r 16.1 UCPR. However, I accept that “Part 16 of the UCPR may be applied by analogy to proceedings commenced by summons … through orders made under s 61(3) of the Civil Procedure Act”: In the matter of Bleecker Property Group Pty Ltd (In Liquidation) [2023] NSWSC 1071 at [12] (Williams J), citing Property Investors Alliance Pty Ltd v C88 Project Pty Ltd [2021] NSWSC 1175 at [14] (Hammerschlag J, as his Honour then was).

23. Here, the defendant has failed to comply with the Court’s orders of 3 April 2024, requiring it to file evidence in response by 12 April 2024. In so failing, and by analogy with r 16.2 UCPR, I consider the defendant is “in default” for the purposes of entering default judgment under s 61(3) Civil Procedure Act. By analogy with r 16.10 UCPR, however, I do not consider it follows as a matter of course that default judgment should be entered. The Court retains a discretion and must be satisfied the plaintiffs appear entitled to the relief they seek.

24. I am satisfied on the evidence before the Court that default judgment should be entered in respect of the plaintiffs’ claim for the removal of the defendant’s caveat under s 74MA Real Property Act. The relevant questions for the Court in determining whether a caveat should be removed under s 74MA were stated by Ball J at [8] in Abraham v Abraham [2012] NSWSC 254:

[T]he question is whether an interlocutory injunction would be granted to protect the interest claimed in the caveat. That, in turn, raises two questions. The first is whether there is a serious question to be tried concerning the interest claimed in the property that is sought to be protected. The second is whether the balance of convenience is in favour of maintaining the caveat …

25. Here, it is of primary significance that AFCA has made a determination, which the plaintiffs have accepted, requiring the defendant to remove the caveat over the Bass Hill Property. In Australia Capital Financial Management Pty Ltd v Australian Financial Complaints Authority Ltd [2022] NSWCA 204 at [7], Bell CJ and Meagher JA explained the effect of AFCA determinations as follows:

Once a complaint is made to AFCA, its Rules form a contract between the complainant, AFCA and the Financial Firm. AFCA’s determination of the complaint is “final”, and binding on both parties if accepted by the complainant within 30 days of receipt (r A.15.3).

26. It is clear that AFCA’s determination is binding on the defendant. In circumstances where the defendant is therefore already obliged to remove the caveat, I am satisfied that there is no serious question to be tried concerning the interest claimed in the property that is sought to be protected by the caveat. As such, the caveat should be removed.

27. However, I am not satisfied that default judgment should be entered in respect of the plaintiffs’ claim for the removal security interests registered by the defendant under the PPSA. No power of the Court has been identified by the plaintiffs pursuant to which this relief is sought. The relevant power would appear to be located in s 182 Personal Property Securities Act 2009 (Cth), the relevant parts of which read as follows:

(4) On an application under this section, a court may make the following orders:

(a) if the court considers the amendment demanded to be authorised under section 178 — an order requiring the Registrar to register a financing change statement amending the registration (including an amendment to remove the registration);

…

(c) any other order that the court thinks fit.

28. The power of the Court identified in s 182 is clearly premised on an “amendment demand” having been issued: s 178 Personal Property Securities Act. In circumstances where there is no evidence that an amendment demand has been issued, I am not satisfied the plaintiffs are entitled to relief under s 182. Default judgment will therefore not be entered in respect of this prayer for relief.

29. I also do not consider that it is appropriate to make the declaration sought by the plaintiffs, that they are “not liable to the defendant on the mandate, brokerage agreement dated 15 June 2022”.

30. Courts are reticent to grant declaratory relief on applications for default or summary judgment: QBE Insurance (Aust) Ltd v Thornton [2012] NSWSC 217 at [16] (Ball J), citing GPI Leisure Corporation Ltd (in liq) v Yuill [1997] NSWSC 292. Additionally, as the High Court explained in Ainsworth v Criminal Justice Commission (1992) 175 CLR 562 at 582, courts should not grant declarations where they would “produce no foreseeable consequences for the parties” (Mason CJ, Dawson, Toohey and Gaudron JJ): see also CIMIC Group Limited v AIG Group Limited [2022] NSWSC 999 at [624]-[634] (Peden J).

31. Here, the plaintiffs already have a binding AFCA determination, which finds that “there are no monies owing to” the defendant under the brokerage agreement and requires the defendant to “waive the outstanding invoices for the costs it claims [the plaintiffs] are liable to pay under” that agreement. In these circumstances, I do not consider that there is any utility in making the declaration sought.

Conclusion and orders

32. In light of the above, it is not necessary to consider the alternative claim for summary judgment under r 13.1 UCPR, save to note that, for the reasons given in respect of default judgment, I do not consider that summary judgment should be entered in respect of the prayers for PPSR and declaratory relief.

33. The appropriate orders are:

1. Judgment for the plaintiffs pursuant to s 61(3) Civil Procedure Act 2005 (NSW).

2. Order that pursuant to s 74MA of the Real Property Act 1900 (NSW), the caveat dealing AS596060 in relation to Lot 12 in DP 872771 with folio identifier 12/872771 be withdrawn by 5pm on 28 August 2024.

3. Amended summons and amended notice of motion otherwise dismissed.

4. Defendant to pay the plaintiffs’ costs as agreed or assessed.

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Decision last updated: 21 August 2024