National Australia Bank Ltd v Latin American Social & Sporting Club Inc
[2002] VSC 228
•11 April 2002
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
PRACTICE COURT
No. 5034 of 2000
| NATIONAL AUSTRALIA BANK LTD | Plaintiff |
| v. | |
| LATIN AMERICAN SOCIAL AND SPORTING CLUB INC AND OTHERS | Defendants |
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JUDGE: | BEACH, J. | J | ||
WHERE HELD: | MELBOURNE | Melbourne | ||
DATE OF HEARING: | 11 APRIL 2002 | |||
DATE OF JUDGMENT: | 11 APRIL 2002 | |||
CASE MAY BE CITED AS: | NATIONAL AUSTRALIA BANK LTD v. LATIN AMERICAN SOCIAL AND SPORTING CLUB INC AND OTHERS | |||
MEDIUM NEUTRAL CITATION: | [2002] VSC 228 | |||
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CATCHWORDS: Mortgagor-Mortgagee - Sale by mortgagor of property subject of mortgage - Sale below value - Duties of mortgagee.
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| APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr J. Tsalanidis | Russell Kennedy |
| For the Fourth Defendant | Mr G. Lucas | Macpherson & Kelly |
HIS HONOUR:
This matter has such a degree of urgency about it that regrettably I have not had the time available to me to deal with it in the depth that I would normally have wished to do so.
The first defendant, the Latin American Social and Sporting Club Incorporated, is the registered proprietor of land situated at the corner of Dandenong/Frankston and Boundary Roads, Carrum Downs, being the land more particularly described in certificate of title vol. 9105 folio 766. It apparently acquired the land in May of 1987. In October 1992 it gave a mortgage over the land to Westpac Banking Corporation.
The second defendant, Latin American Sporting Cooperative Limited (the Co-op), was incorporated pursuant to the Cooperation Act 1981 on 20 May 1992. In October 1992 an agreement was made between the plaintiff, the club and the Co-op that the plaintiff would advance moneys to the Co-op to pay out the Westpac mortgage and for improvements to be made to the land. The club would transfer the land to the Co-op and the Co-op would then execute a mortgage over the land to the plaintiff to secure the moneys to be advanced to it.
On 16 October of that year the Co-op executed a mortgage over the land in favour of the plaintiff to secure the moneys which had been advanced to it to pay out the Westpac mortgage. Between 1992 and 1995 attempts were made by the plaintiff to register a transfer of the land from the club to the Co-op and then a mortgage over the land to it, but the Titles Office rejected its applications on the ground, so the Registrar of Titles contended, that they were not in registrable form. Not surprisingly, on 6 November 1995 the plaintiff lodged a caveat over the land to protect its interest as mortgagee.
On 12 April 2000 the plaintiff filed an originating motion in the Court whereby it sought an order that the club and the Co-op execute an appropriate transfer of the land. On 31 May 2001 the proceeding was settled at mediation on terms that the club and the Co-op pay the plaintiff $340,000 by 30 September 2001 and that in the event that that was not paid the plaintiff would be then entitled to enforce a judgment for possession of the land and issue a warrant for possession.
On 26 July 2001 judgment was entered in this Court in favour of the plaintiff against the club and the Co-op for the sum of $409,367.56 and for possession of the land. On 1 October 2001 the solicitors for the club sent a fax to the solicitors for the plaintiff enclosing a contract of sale of the land to the fourth-named defendant, Koula Doumias, for the sum of $380,000 and a copy of a cheque for the deposit of $37,500 payable to the real estate agents for the club. The material would indicate that the cheque was for $37,500 rather than $38,000 because a preliminary deposit of $500 had previously been paid.
On 4 October the plaintiff's solicitors wrote to the club solicitors seeking clarification that the contract of sale was at arm's length and advising them that the bank required payment of an amount equivalent to the value of the deposit in reduction of the settlement sum by the next day, being 5 October 2001. Such a payment was never made to the bank.
On 9 October the solicitors for the club wrote to the plaintiff's solicitors advising them that the purchaser had agreed to increase the purchase price to $385,500. Being somewhat concerned about the proposed sale to the fourth defendant, the plaintiff then took steps to obtain a valuation of the property. On 24 October it received a valuation from Hay Property Consultants Pty Ltd in an amount of $875,000.
On 12 November 2001 the fourth defendant lodged caveat no. X873961T over the land. On 7 December the plaintiff's solicitors wrote to the club's solicitors informing them of the valuation it had obtained and that it proposed proceeding with the sale of the property for the highest price available.
On 8 December the club solicitors wrote to the plaintiff's solicitors now stating that the club required the property to be sold for the highest price available and, in any event, not less than the sworn valuation of $875,000.
Pausing at this moment, one wonders who it was on behalf of the club who entered into the contract in October 2001 to sell the property to the fourth defendant for the sum of $380,000 and was that proposed sale a bona fide one.
In mid March 2002 the plaintiff put the property up for auction. The auction is fixed for tomorrow, hence the urgency of the present application.
On 4 April the solicitors for the bank and the club signed minutes of consent orders in relation to the present application. The orders contain inter alia the following paragraphs.
"1.The land more particularly described in Certificate of Title Volume 9105 Folio 766 and situate at the Corner of Dandenong/Frankston and Boundary Roads, Carrum Downs (the land) be sold by the Plaintiff.
3.These orders be produced as sufficient evidence of the Plaintiff's appointment as attorney, and the Land Registry is directed to accept these orders as evidence of the Plaintiff's appointment as attorney.
7.The Plaintiff and its duly appointed attorneys, as attorney of the registered proprietor, may execute all documentation required to give effect to the sale including (without limiting the generality of the foregoing) the contract of sale, vendors statement, appointment of selling agent and any declaration under the Duties Act 2000."
Later that day a summons was filed in the Court on behalf of the plaintiff, returnable on the following day, seeking orders in accordance with the minutes of consent to which I just referred.
When the matter came before me on the following day Koula Doumias was represented by counsel. Her counsel informed me that it would be the case for his client that the sale to her in October 2001 had been a bona fide sale and at arm's length and that given the opportunity to do so they would place material to that effect before the court, including two valuations in respect of the property, demonstrating that the price Doumias had agreed to pay for it was a realistic price. In that situation, I ordered that day that Koula Doumias be joined as a fourth defendant to the proceeding and that the application by the plaintiff be adjourned to this day. At the same time I provided that Doumias file and serve any affidavits upon which she intends to rely by 12 noon on 9 April 2002.
When I came into court this morning there were no affidavits on the court file filed on behalf of Doumias. However, I later ascertained that three affidavits had been filed on her behalf yesterday. Accordingly, it was necessary to stand the application down for some time whilst I considered those affidavits and an affidavit filed this morning on behalf of the plaintiff in reply.
Having considered the matter over the luncheon adjournment, I make the following findings:
1.The plaintiff had no part whatsoever in the sale of the property or, more accurately, the proposed sale of the property by the club to the fourth defendant, nor has it ever received any deposit in respect of any such sale.
2.The bank is now in possession of the property pursuant to the order of this Court of 26 July 2001 and pursuant to the terms of the consent orders signed by the plaintiff and the club on 4 April 2002. In my opinion the bank is entitled to sell the property, but in doing so is duty-bound to obtain the best price possible for the property.
3.The bank has a valuation of the property of $875,000. The club purported to sell the property to the fourth defendant for $385,000.
The fourth defendant now relies on a valuation of the property of $475,000 obtained on her behalf in December last, yet there is material in that valuation to the effect that the fourth defendant has already purported to on sell the property to another party for $650,000 (see Exhibit LT1 to the affidavit of Leon Theoropoulous sworn 9 April 2002).
One is given no further details of that sale. In my opinion one cannot but have the greatest of reservations concerning the accuracy of the valuation now relied upon by the fourth defendant. Indeed, when one looks at the events that have occurred in relation to this property since about October of 2001, one cannot but have grave doubts as to the arm's length nature of the proposed sale of the property by the club to the fourth defendant, all the more so since the fourth defendant has not chosen to swear an affidavit in relation to the matter, nor has any explanation for her failure in that regard been given to me.
In the circumstances, I consider the appropriate course to adopt is to now remove the caveat lodged by the fourth defendant thereby permitting the auction of the property to proceed tomorrow.
The judgment of the Court is that:
1.The land more particularly described in Certificate of Title Volume 9105 Folio 766 and situate at the corner of Dandenong/Frankston and Boundary Roads, Carrum Downs ("the land") be sold by the Plaintiff.
2.The plaintiff and its duly appointed attorney be appointed as the attorney of the First Defendant being the registered proprietor of the land for the purpose of effecting the sale in accordance with these orders.
3.These orders be produced as sufficient evidence of the Plaintiff's appointment as attorney, and the Land Registry is directed to accept these orders as evidence of the Plaintiff's appointment as attorney.
4. The Plaintiff apply the proceeds of the sale of in the following manner:
i)to pay all costs and expenses relating to the marketing and sale of the land;
ii)to pay the Judgment Debt due to the Plaintiff including interest and costs pursuant to the Judgment of His Honour Justice Byrne dated 26 July 2001 including the costs ordered under paragraph 9 below; and
iii)to pay the balance, if any, into the Senior Master's (funds in Court) office until further order.
5.The Plaintiff be empowered to execute a "T1" transfer on behalf of the first Defendant being the registered proprietor of the land in order to effect a transfer of land.
6.The Land Registry is directed to accept the proper execution by the Plaintiff of the T1 transfer on behalf of the registered proprietor as being sufficiently executed by the registered proprietor.
7.The Plaintiff and its duly appointed attorneys, as attorney of the registered proprietor, may execute all documentation required to give effect to the sale including (without limiting the generality of the foregoing) the contract of sale, vendors statement, appointment of selling agent and any declaration under the Duties Act 2000.
8.Koula Doumias forthwith withdraw and remove caveat no. X873961T from the land. If within seven days of this day Koula Doumias has not removed the said caveat from the land, the Registrar of Titles is ordered pursuant to s.93 of the Transfer of Land Act 1958 to remove caveat no. X873961T from the land in Certificate of Title Volume 9105 Folio 766.
9.The First and Second Defendants pay the Plaintiff's costs of and incidental to this application.
10.This order be prepared by the solicitors for the Plaintiff and authenticated signed by a Judge pursuant to Rule 60.04.
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