National Australia Bank Limited v RMW Services Pty Ltd
[2014] NSWSC 1621
•11 November 2014
Supreme Court
New South Wales
Case Title: National Australia Bank Limited v RMW Services Pty Ltd Medium Neutral Citation: [2014] NSWSC 1621 Hearing Date(s): 11/11/2014 Decision Date: 11 November 2014 Jurisdiction: Common Law Before: Campbell J Decision: The application for a stay of the writs of possession is dismissed.
Catchwords: PROPERTY LAW - application for stay of a writ of possession - where investment properties - where applicant attempting to refinance Legislation Cited: Residential Tenancies Act 2010 (NSW), s 122 Category: Interlocutory applications Parties: National Australia Bank Limited (Plaintiff)
RMW Services Pty Ltd (First Defendant)
A1 Catering Services Pty Ltd (Second Defendant)
Botany Auto Panel Beating Pty Ltd (Third Defendant)
Roger Michael Whalebone (Fourth Defendant)Representation - Counsel: Counsel: R Lewin (Solicitor) (Plaintiff) - Solicitors: Solicitors:
Gadens Lawyers (Plaintiff)File Number(s): 2014/ 00109585
JUDGMENT
This matter has been referred to me by the Registrar in my capacity as duty judge. Mr Lewin, solicitor, appears for the plaintiff and Mr Whalebone, who is an officer of the corporate defendants and seems to be the guiding mind of the businesses that are conducted by those entities, including that of property investments, appears more or less in the capacity of a self-represented person.
I should record that the bank has mortgages over seven properties in respect of five loan agreements, or facilities. The registered proprietors of seven properties which are the security for the loans are RMW Services Pty Limited and A1 Catering Services Pty Limited. RMW Services Pty Limited was the registered proprietor of two of those properties, situated at Pagewood, the other five properties are owned by A1 Catering Services Pty Limited.
The bank obtained the judgment in default of a defence on 30 June 2014 and obtained a writ of possession in respect of each property. Only four are currently pressed; three have been, at the request of the bank, "postponed".
A writ in respect of two of the properties, being the Pagewood properties, was due for execution today at 11:30 am. This matter was referred to me this morning at 10 am but due to other work in the list I was unable to commence the hearing of it until about 10:50 am, at which time the plaintiff agreed to request that the Sheriff hold off on execution of the writ. It is as well to say that in respect of those two Pagewood properties, I am informed that the Sheriff did not hold off. When the Sheriff's officer attended the properties he found them to be unoccupied and vacant.
The plaintiff, in accordance with its usual co-operation with the Court in these matters has had its commercial agent stands by. The locks have not been changed nor have other steps been taken to secure possession for the plaintiff pending my decision. But the Sheriff has taken the view, apparently, that the writ has been executed. So that is a difficulty in the way of Mr Whalebone today as I cannot stay a writ that has been discharged by its execution.
That still leaves two properties at Broome Street, Maroubra. Those writs are to be executed tomorrow. Mr Whalebone tells me that they are investment properties. They are, apparently, home units and he believes them to be occupied by tenants. I have to say the material suggests that he was erroneous in his understanding of the occupation of the Pagewood properties but I put that to one side.
In any event, in accordance with the provisions of the Residential Tenancies Act 2010 (NSW) and s 7A of the Sheriff Act 2005 (NSW), those tenants, if they still live there, would have been given thirty days' notice of the intention of the Sheriff to perform his duty in executing the writ of possession issued by this Court. I might observe it seems extremely unlikely that those persons would ignore that notice of their eviction.
In any event, the motions filed by Mr Whalebone are a little hard to decipher; I say that with no disrespect, he is no lawyer although he is a successful man of business. There are two motions; one was filed on 3rd November and as best I can tell it might be understood as applying to set aside the default judgment as well as staying the writs. There is also, I think, an application for leave to file a cross-claim against the bank's lawyer personally. There is a second motion which was filed yesterday which is seeking a review of the orders of the Registrar.
I am informed that the only order the Registrar made yesterday was "no order" and that information provided by Mr Lewin is borne out by the record of proceedings contained on the Court file which, in the hand of the Registrar, says "no order". It seems obvious but there can be no review of "no order" and I put the motion filed on 10 November 2014 to one side.
When I asked Mr Whalebone during the course of his final submissions what motion I was to consider, he referred me to both motions but, as I understood his argument, it was that he was seeking really a stay today, perhaps asking that the other relief be adjourned.
The ground of the stay is that he is confident of refinancing the loan within the next two weeks and in that regard he has called to give evidence before me Mr Mark Gall, an experienced mortgage broker, who has confirmed that he has received instructions to act on behalf of Mr Whalebone's interests to refinance the loans, but only received the file yesterday from the previous brokers.
Mr Gall said, from his review of the file of the previous brokers, it appeared to him that they had not done what they had been retained to do and, indeed, Mr Whalebone explained to me that the man handling the file at the previous brokers apparently had been sacked. In any event, since receiving the papers Mr Gall has diligently gone about trying to represent Mr Whalebone's interests by making preliminary enquiries from a number of lenders. He says that from what he knows of Mr Whalebone's affairs, the nature of the security and the income of the business, he is confident that he can organise finance but at this stage no formal application has been lodged with any one lender.
I imagine that the way these things work is that informal discussions are had with loans officials of various lenders and when one gets an indication which is favourable an application is lodged with the necessary paperwork to satisfy that lender's requirements. Mr Gall expects that he can have an application ready and lodged by the end of this week.
I have no reason to doubt that evidence and I accept it. He explained one difficulty is that his understanding of the amount of the indebtedness has changed. Currently, according to the affidavit of Mr Pringle, solicitor, made on his instructions from the bank, the amount of the indebtedness for all the facilities is $3,313,154.46. Three of the facilities are notionally in arrears of repayments, totalling $49,236.77. The expression "notional arrears" is to connote that the bank regards the facilities as at an end and is exercising its rights under the loan agreement and mortgage to enforce the judgment in its favour.
Mr Whalebone, in his affidavit, tells me that apart from having good prospects of re-financing, he is of the view that the current indebtedness, which he disputes, is much less than the total value of the security. He estimates the security to be worth $20 million. I accept the bona fides of Mr Whalebone in putting that forward but I have no way of assessing whether or not his bona fides are well founded.
It is not said on behalf of the bank that this is a case where its indebtedness is at risk in the sense that the value of the security is less than the total indebtedness. That is just not said, one way or another. Mr Whalebone disputes the total amount of the debt. He thinks that it is overstated and he also thinks that the bank has misplaced $60,000 he received by way of a refund from the ATO on GST payments he did not have to pay. Again, I have no evidence before me to show that belief of Mr Whalebone is well founded in fact and I have to put it to one side.
It seems that the situation is such that although he disputes the precise amount he seems to accept that it is over $3 million and if it is to be refinanced the practical reality may be, it is not for me to say, that he will have to accept the bank's figures and argue about them later. That is only my observation.
There is a difficulty in the application by dint of a deed of settlement executed by the bank and Mr Whalebone on 8 August 2014. Execution of the writ was put off to enable Mr Whalebone to refinance and a period totalling six weeks was allowed for that to be achieved with the interim requirement for Mr Whalebone to provide evidence of his progress.
I should interpolate that the bank asserted default as at 19 November 2013 because it said all facilities were in arrears. It also relied upon Mr Whalebone's bankruptcy, which occurred on 19 February 2013. That bankruptcy was annulled on 30 July 2014 because Mr Whalebone paid the debt that bankrupted him in full. It may be that bankruptcy between February 2013 and 30 July 2014 provides an explanation why no step was taken to defend the proceedings before 30 June 2014. A decision of that nature would have been in the hands of his trustee in bankruptcy and not Mr Whalebone. It must be assumed that the trustee took the view took the view that it was not worth defending the proceedings brought by a secured creditor in the circumstances. I digress.
As the deed of settlement recites that the facilities were in arrears as at 19 November 2013 it may not now be open to Mr Whalebone to dispute that fact.
In any event, I am satisfied from the evidence attached to the affidavit of Mr Pringle, to which I was taken by Mr Lewin, that there is evidence which shows the facilitaties were in arrears as at November 2013 even if I accept the force of Mr Whalebone's argument that plenty of money has been going through accounts controlled by him and that the facilities have not been continuously in arrears since that time.
However, it seems to me that the case of default made by the bank is complete as at the date Mr Whalebone and his associated companies failed to comply with the default notice issued to him. Although there is some explanation for the delay in defending the proceedings up until July 2014, there is no real explanation for a failure to take steps since then except the deed of settlement and the failure of the previous broker to do what he was asked to do. The deed of settlement presents an obstacle, though, because of the recitals it contains inasmuch as it proceeds on the basis that the bank was entitled to judgment when it was obtained because there was default and that the bank was allowing time to rectify the situation by refinancing. That did not occur. I am prepared to accept for the purpose of this interlocutory application that was not for want of trying on the part of Mr Whalebone.
As I have said, there is no point in granting any stay whatsoever in respect of the Pagewood properties and I do not need to make any stay in respect of those properties. There is just no practical utility in that proposed course.
I turn then to the Maroubra property. Giving full faith to Mr Whalebone's determined bona fides in seeking to re-finance, and accepting at its highest Mr Gall's evidence, I am not satisfied that the prospect of re-financing the debt is sufficiently close to realisation to justify the grant of even a short stay. Nor am I satisfied that hardship has been made out in this case.
The two properties at Maroubra are not the place of residence of either Mr Whalebone or his family. The evidence is they are investment properties. Although I cannot draw any inference from what has happened at the Pagewood property, it seems to me very likely that any tenant would have acted on the basis of the notice issued by the Sheriff pursuant to s 7A of the Sheriff Act. And indeed by virtue of s 122 of the Residential Tenancy Act the Sheriff's notice is sufficient to terminate the residential tenancy and the tenants are bound to vacate the premises in accordance with it although some relief from rent is provided by that provision.
In all probability on the material before me, given the absence of an application by the tenants for a stay on their own behalf, I am of the view that the likelihood is that they will have vacated the premises. One has to have regard to the practical realities of the situation.
I don't think it has been shown on the material before me that Mr Whalebone has a sufficiently arguable defence capable of making a difference to the claim for possession and for recovery of the debt, although I am satisfied that there is an explanation for the delay in making an application, to set aside the default judgment.
As I have said more than once, the practicalities in relation to the Pagewood property, although I suppose the bank could be ordered to restore the property, are such that I am satisfied that asked to decide whether I should set aside the default judgment today, although I am satisfied that there is an explanation for delay provided by the bankruptcy and by the neglect of the previous broker, there is no sufficient material before me from which I can infer that there is a defence which has prospects, even at the low level necessary, of making a difference to the outcome of this case and I would refuse it.
I think again having regard to the practical reality, although I am satisfied that there are reasonable prospects of Mr Gall being successful where the previous agent was not, it seems to me that if that can be done within a short period of time like two weeks then the bank would be happy to take the money and provide discharges of the mortgages. It seems to me having regard to the principles that would normally apply in relation to granting a stay of execution there is no suggestion that the premises can be sold at short notice by the application ( and he does not wish to); there is a prospect of re-financing but it is not sufficiently well developed at this stage to give the Court confidence that it will be successful although there is occasion for hope in that regard; and I do not think there is any hardship demonstrated on the evidence before me which would justify a stay on that ground alone.
Accordingly I reject an application for a stay of the writs of execution in respect of the Maroubra and Pagewood properties and my orders are:
(1)The application for a stay of the writs of possession is dismissed.
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