N and M Investments/Properties v Bao

[2020] NSWSC 202

Supreme Court

New South Wales

Medium Neutral Citation:

N & M Investments/Properties v Bao [2020] NSWSC 202

Hearing dates:

5 March 2020

Date of orders:

05 March 2020

Decision date:

05 March 2020

Jurisdiction:

Common Law

Before:

Lonergan J

Decision:

1. Judgment is entered in favour of the Plaintiff for possession of the whole of the land described in folio identifier 12/SP936 being the land situated at and known as Unit 12, 55 Wolseley Road, Point Piper in the State of New South Wales (“the Land”).

 2. The Plaintiff is granted leave to issue a writ for possession of the Land forthwith.

Catchwords:

JUDGMENTS AND ORDERS – self-executing order – self-executing order allowing for consent judgment if non-compliance with another order – where time has expired

 

MORTGAGES AND SECURITIES – mortgages – duties, rights and remedies of a mortgagor – possession – default notice – where plaintiff defaulted on interest payments – condition of mortgage whereby plaintiff could take possession of, and eject, any occupants from the property

  CIVIL PROCEDURE – representation – unrepresented litigants

Category:

Procedural and other rulings

Parties:

N & M Investments/Properties (Plaintiff)
Yufei Bao (Defendant)

Representation:

Counsel:
Mr A W Smith (Plaintiff)
Nil appearance (Defendant)

  Solicitors:
Summer Lawyers Pty Limited (Plaintiff)
Nil appearance (Defendant)

File Number(s):

2019/161449

Publication restriction:

Nil

EX TEMPORE Judgment

1. On 4 November 2019, these proceedings were listed for hearing of the plaintiff's notice of motion for summary judgment for possession. The matter had at that stage had a complex history and is back before me today as part of further complex events.

2. The background to the dispute between the plaintiff and the defendant arises from a mortgage executed in November 2018. The arrangement between the plaintiff organisation and the defendant had, as part of it, a registered mortgage that secured, by guarantee, against certain property, a sum advanced of $1.725 million. The property was a unit at 12/55-57 Wolseley Road, Point Piper.

3. It seems that fairly early in the arrangement, the defendant defaulted on interest payments and, in February 2019, a default notice was issued drawing attention to the defendant that she had failed to pay the necessary amounts required under the mortgage.

4. It was a condition of the mortgage that if there is a failure to make interest payments owing, the plaintiff was entitled to, amongst other things, take possession of, and eject, any occupants from the property; condition 18.1.

5. It seems that the default notice prompted a response via an email address held by the defendant's husband Zion Chan suggesting a discussion; advising that the property is being painted, and it is to be listed for sale, and that the initial capital will be repaid plus any interest owing at settlement. It appears not much else was said by the defendant, and a statement of claim was filed on 23 May 2019 seeking orders for possession and leave to issue a writ of possession.

6. I understand that on 12 July 2019 orders were made granting a writ of possession to the plaintiff, but on 18 July 2019 the defendant filed a notice of motion to set aside those orders.

7. On 2 September 2019, Hamill J, acting as duty judge, stayed the execution of the writ of possession until resolution of the defendant's notice of motion to set aside the default judgment.

8. On 17 September 2019, Harrison AsJ set aside the default judgment and set aside the writ of possession for the property. She also set out a timetable for the service of evidence, noting that on 1 October 2019 the defendant had filed a defence which on the face of it raised substantive matters for consideration by this Court at a trial.

9. On 4 November 2019 when the matter came before me, the parties who were both represented at that time by counsel took some time to further negotiate an outcome, and, at the end of that process, provided to me a form of consent orders that brought an end to the proceedings. These consent orders had within them self-executing arrangements that provided further time to the defendant to try and sell the property and or refinance it by 29 February 2020, and in consideration for that, the plaintiff indicated a willingness to accept what I understand to be a lesser sum than that owed at the time, and the plaintiff would provide a discharge of mortgage if that sum was provided. If the property was not sold and the sum not able to be repaid, self-executing orders would allow a consent judgment to be filed,

10. The Consent Judgment provided for judgment to be entered in favour of the plaintiff for possession of the whole property described as Unit 12/55-57 Wolseley Road, Point Piper, as well as leave to the plaintiff to issue a writ for possession of that land forthwith.

11. That seemed to me an entirely appropriate and satisfactory resolution of the issues between the parties providing, as it did, further time for the defendant to pursue sale (about which there was some evidence available that efforts had been made to place the property with an agent at the very least) and which also provided for an outcome for the plaintiff, should the defendant not be able to secure sale or refinance.

12. On application of the solicitor for the plaintiff, the matter was listed before me on 17 February 2020. Counsel for the plaintiff, Mr Smith, outlined that there had been some problems with finalising the terms of settlement of the dispute. What also became evident is that the solicitor for the defendant, who had been engaged at the time the consent orders were agreed in November 2019, at midnight on 10 February filed a Notice of Intention of Ceasing to Act. Whilst a solicitor from that firm, Ms Li, appeared on 17 February as a courtesy to the Court, it was evident that she had not been able to secure co-operation from her client to finalise execution of the necessary documents and so had considered her instructions to be terminated and would cease to act from, in effect, the following day.

13. One matter that was clarified, however, as a result of an order I made about an affidavit needing to be filed by Ms Li, was that Ms Li had been given, by email, instructions that indicated that her client consented to the settlement arrangement and that she would sign the Consent Judgment upon her return from overseas. That information is contained in an email of 22 November 2019 sent from an iPhone to Ms Li by the defendant. Unfortunately, it seems that intention did not result in any such action being taken until 29 February 2020.

14. Upon being informed that this Court would deal with the plaintiff's notice of motion for summary judgment in the absence of the defendant if she did not take relevant steps, the defendant took some steps to indicate her position.

15. On 29 February 2020 at 10:53pm, an email from the defendant’s husband’s email address was sent to the plaintiff’s solicitor stating:

“Dear all,

Consent order as attached.

If we are unable to get refinance or get a sale, we request you to take possession on 30 April as we are stuck in China due to the virus issue and unable to return and move out her personal belongings.

If you disagree, then we have to go to Court again.”

16. On 2 March 2020, Mr Chrisp, the plaintiff’s solicitor forwarded an email to the defendant and her husband noting that the matter was listed before the Court on 3 March 2020, and that the defendant will be pressing that the Consent Judgment is entered forthwith and, in the event that the plaintiff is successful in that endeavour, the chattels of the property will be removed and placed into a storage facility and "the mortgagee will allow for you to arrange collection of your goods upon your return".

17. The next relevant step was that on 2 March 2020, an email was forwarded to the solicitor for the plaintiff enclosing a signed Consent Judgment with an email which had, in the subject line, “Re consent order signed as per agreement” and stated:

“Please give us at least time to move out and we are very happy for execution of the signed consent order to take place at end of April. We would have moved out if we were in Sydney. However, we were stuck in Shanghai due to the virus and unable to return due to cancelled flights. We will now come back early April to move out.

Also, in the next few days, I will also have refinance in place to resolve this and/or a buyer which the agent is engaging and interested in the property.

I request we resolve this peacefully and peaceful transition.

However, I am willing continue to go through court system if required.

But if you are not willing to agree, let's set the execution date then or let me know your option."

18. I interpret this correspondence as proposing that any formal execution of the writ of possession, apparently understood by the defendant to mean the day she would have to be out of the premises, should be pushed back until the end of April, not that there is any wish on the part of the defendant to agitate the grounds set out in her Defence filed in October 2019.

19. I should add that the relevance of the Consent Judgment document now, it seems, signed on 29 February 2020 by the defendant is that, amongst the self-executing orders organised on 4 November, there was a term that stated that the defendant had in fact already provided the plaintiff with a Consent Judgment for possession of the property, which the plaintiff will hold in escrow and undertake not to file until after 29 February 2020. Counsel for the plaintiff noted that the Consent Judgment in the plaintiff's possession on and from that day was actually signed by the solicitor for the defendant. There was a valid concern that a Consent Judgment signed by the defendant personally was more appropriate, and that is when the carefully constructed settlement terms went awry.

20. On 3 March 2020, counsel for the plaintiff filed in Court the affidavit of his instructing solicitor of 3 March 2020 updating the situation. In response to matters raised by me in terms of providing the defendant with some time to consider her position, the matter was adjourned to today, 5 March 2020. I wanted to ensure that the defendant understood that orders would be made in her absence should she not instruct lawyers to attend or attend herself.

21. For the reasons that follow, and the contents of the emails I will now deal with, I have no doubt at all that the defendant understands that it is the intention of the plaintiff to seek final orders from the Court today. Two emails from the defendant (and her husband whom I understand lives at the property) were directed to me via the Court email system. Another email was directed to the Supreme Court enquiries counter. The first in time is dated 4 March 2020 at 1:24pm, and that is directed to the Supreme Court and to me. After raising that it was “not the intention to disobey a Court order” or be in contempt of the order, the following is stated:

“However, at the time I went overseas, as I am very depressed, and stay with mum, and have attempted suicide twice, and my husband Zion didn't give me the order to sign as he was worried this will tip me over to suicide again, I was on medication, and I am a lot better and, hence, signed the order and provided to Summer Lawyer on 29 February.”

(Summer Lawyer is the plaintiff's solicitor)

22. The email then goes on to state that the defendant cannot travel back to Australia because of the Coronavirus, and asks whether I would consider the consent order not being entered until 30 April 2020 to allow her to move out all of her belongings. It also states: "Due to us not being in Australia, refinance is difficult. I am actively refinancing as well”. However there are no details about what refinance is involved. This email is “signed” by both Zion Chan and Yufei Bao.

23. The next email is dated 5 March 2020 at 12:35am directed to the Supreme Court Registry and requesting it be passed along to me stating: "Please pass this on to her Honour Lonergan as she is going to make a judgment today for our property at Point Piper". The email refers to a “breakthrough” with a property at Darling Point owned by the aunt of either the defendant or her husband stating: "She now agrees to sell her Darling Point home and give me 2 million cash. It will certainly help me to resolve the matter with NM Property".

24. I take the reference to NM Property to be a reference to the plaintiff in these proceedings. The email then requests whether I could reserve my judgment until the Darling Point property is sold and “cash realised to resolve the matter’”. The email goes on to state that the defendant and her husband are stuck in China and concludes "we thank you for whatever decision you make" and "the law must be respected and I know we have no representation tomorrow".

25. The next email also dated today but timed at 10:25am and directed to the Chambers of Lonergan J, says relevantly the following:

“I just want to write this email to you to apologise for the delayed signing of the consent order which was given to Summer Lawyer on 29 February. We never even dared to contempt the Court and disrespect the law in any way.”

26. The email then goes on to describe that the defendant had been sick, and had made suicide attempts, and that this should be considered to be "an apology email from afar".

27. This email does not raise anything regarding a wish to refinance, or any other basis upon which I should delay entering orders. I read this email as a courteous attempt to apologise if there has been any perception that the failure to sign the Consent Order was a deliberate contempt of Court.

28. I have read the affidavit of Nicholas Chrisp of 4 March 2020 which appends to it various real estate marketing appraisals of the unit in question, all of which indicate that the property is worth less than the current amount due under the mortgage. The mortgage amount due currently is said to be $2,130,439 exclusive of the plaintiff's legal costs and disbursements. I note there is a somewhat confusing email referring to a potential sale price of $2.1 to $2.3 million from J T Allen, Real Estate, but the actual appraisal document itself refers to appraisal price range of $1.7 to $2.1 million.

29. Although counsel for the plaintiff very responsibly went about preparing the matter for today on the basis of a fully supported application for summary judgment for possession, the developments earlier today, to my mind, satisfy me that the defendant had, in fact, executed the Consent Judgment document and was aware of its implications. This led me to the view that the proper course was to simply formalise the circumstances surrounding the Consent Judgment, and state the history of the matter and the basis for proceeding in this way to provide reasons and an explanation for this course of action should the defendant attempt to approach the Court again to try to set aside the finalisation of these proceedings.

30. I have taken into account that the delay since February last year without any repayment of interest or principal means that the plaintiff each month is in a worse position in terms of recovery of the principal and interest it is entitled to receive pursuant to the mortgage.

31. I also have taken into account that it now seems that the sum due under the mortgage will exceed the value of the property. It also seems that despite the property being on the market, perhaps not all of last year, but some of it, this has not resulted in its sale.

32. There is no evidence before me of how vigorous, if at all, the defendant was about pursuing the sale of the property.

33. There seems to be an informally expressed request, if not application, for me to consider staying the entry of the Judgment and/or asking for some sort of delay in terms of leave to issue the writ of possession. However, I do not see that application as having any merit. First, it seems to be premised purely on the basis that the defendant and her husband want to return and pack away their items in the property, but they cannot do so because they are in China and the Coronavirus is preventing travel back to Australia.

34. There is nothing placed before me to indicate why I should expect that travel circumstances from China to Australia will be improved over the next month. Indeed, it seems to me, based on current reports, the travel situation (entry to Australia from China) may be worse later this month and in April, than it is now.

35. The other matter raised is that I ought to consider postponing the finalisation of the matter because there is some prospect that the defendant will be given $2 million cash from a sale by a relative of a property in Darling Point. I am not prepared to conclude that the bare mention of this means there is any real prospect that the sale will happen, or that the money will be provided for the defendant to pay directly to the plaintiff. I have no information as to when that would happen, and in any event, it seems more delays would be involved and thus more delays to the plaintiff and more prejudice to the plaintiff and an increase in the sum which it is owed, which I am satisfied already most likely exceeds the value of the property.

36. In all those circumstances I see no reason not to enter the Consent Judgment that I am satisfied was signed by the defendant on or before 29 February 2020, but probably on 29 February 2020.

37. Accordingly I sign and seal the Consent Judgment and make orders for possession in accordance with that Consent Judgment.

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Decision last updated: 11 March 2020