National Australia Bank v Bezeg
[2020] VSC 163
•31 March 2020
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
S CI 2015 03355
| NATIONAL AUSTRALIA BANK LIMITED (ACN 004 044 937) | Plaintiff |
| v | |
| ANDREW JOSEPH BEZEG, A BANKRUPT | Defendant |
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JUDGE: | ALMOND J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 31 March 2020 |
DATE OF JUDGMENT: | 31 March 2020 |
CASE MAY BE CITED AS: | National Australia Bank v Bezeg |
MEDIUM NEUTRAL CITATION: | [2020] VSC 163 |
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MORTGAGES – Where a possession order was granted in favour of a mortgagee – Where the mortgagee sold the subject land and placed chattels which remained on the land into storage – Where the mortgagee seeks to dispose of the chattels under the terms of the mortgage – Where the mortgagee seeks declaratory relief supplementary to judgment for possession – Declaratory relief granted but operative effect temporarily stayed to give the mortgagee an opportunity to collect the chattels.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | A J Purton | Thomson Geer |
| For the Defendant | The defendant appeared in person. | N/A |
HIS HONOUR:
By an amended summons filed 19 February 2020, National Australia Bank Limited (‘NAB’) (the plaintiff) seeks, among other things, a declaration that having taken possession of property situated at 75 Allumba Way, Wollert in the State of Victoria (‘Land’) pursuant to mortgage of land AL099042K (‘Mortgage’) the plaintiff is entitled to:
(a) dispose of the personal possessions of Andrew Joseph Bezeg (the defendant); and
(b) use the proceeds of sale (if any) towards paying the amount owing by the defendant under the Mortgage (now discharged as to the Land)
There are affidavits in support of the application of Dean Andrew Adams, affirmed 15 November 2019[1] and Joshua Kyle Hawes, sworn on 12 March 2020.
[1]Which incorporates by reference an affidavit of Mr Adams sworn 16 June 2017 in support of the order for possession of the land.
There is an affidavit in opposition to the application of Andrew of the family Bezeg sworn by Mr Bezeg on 26 February 2020.
Both parties filed written submissions and made oral submissions to the Court at a hearing on 31 March 2020. On that day I disposed of the summons, made orders consistent with my ruling, and advised the parties that I would publish reasons in due course.
On 20 June 2017, the Federal Circuit Court ordered that the estate of Mr Bezeg be sequestrated under the Bankruptcy Act 1966 (Cth) (‘Bankruptcy Act’). As at the date of the hearing, Mr Bezeg was an undischarged bankrupt.[2] Matthew James Jess and Ivan Glavas of the accountancy firm Worrells, are Mr Bezeg’s trustees in Bankruptcy.
[2]Affidavit of Dean Andrew Adams, [4]; extract of National Personal Insolvency Index dated 31 March 2020.
The Court received a letter from Mr Glavas dated 26 March 2020. The letter informed the Court that the trustees do not intend to appear or be represented at the court hearing of the application and that Mr Bezeg had served on the trustees an application to the Federal Circuit Court to have his sequestration order set aside.
Briefly, the history of the matter is as follows. On 14 August 2017, Landsdowne AsJ of this Court made an order for possession of the Land pursuant to the Mortgage given by Mr Bezeg in favour of NAB. The Mortgage incorporated a Memorandum of Common Provisions.[3]
[3]Affidavit of Dean Andrew Adams, sworn 15 November 2019, [5]-[6].
On 15 November 2017, NAB issued a warrant of possession in reliance upon the order for possession. The warrant was executed and possession of the Land was secured on behalf of NAB. The Land was subsequently sold with settlement taking place on or about 5 April 2019. The proceeds of sale of the Land were sufficient to fully discharge the debt owing to NAB.[4]
[4]Affidavit of Dean Andrew Adams, 15 November 2019, [14]-[15].
At the time that NAB took possession, some of Mr Bezeg’s personal possessions (‘Chattels’) remained on the Land.
On 23 March 2018, the solicitors for NAB sent a letter to Mr Bezeg (copied to Mr Bezeg’s trustees in bankruptcy) which, among other things:
(a)invited Mr Bezeg to contact NAB’s possession agent to arrange for collection of the Chattels; and
(b)advised Mr Bezeg that if he failed to contact NAB’s possession agent or otherwise failed to remove the Chattels by a specific date, NAB would regard the Chattels as abandoned and may, without further notice, store, discard, or dispose of them.[5]
[5]Affidavit of Dean Andrew Adams, [10].
On or about 10 May 2018, NAB placed the Chattels into storage with Fragile Removals & Storage at 635 Waverley Road, Glen Waverley in the State of Victoria (‘Fragile Removals’). Fragile Removals prepared an inventory.[6]
[6]The inventory is Exhibit DA50 to the affidavit of Dean Andrew Adams of 15 November 2019.
On 14 November 2018, the solicitors for sent a further letter to Mr Bezeg. In this letter, Mr Bezeg was invited to contact NAB’s possession agent to arrange for collection of the Chattels by a specific date and was advised that if he failed to collect the Chattels NAB may, without further notice, discard or dispose of the Chattels.[7]
[7]Affidavit of Dean Andrew Adams, [12].
Between November 2018 and January 2019, Mr Bezeg sent three letters to NAB’s solicitors in which he stated, among other things:
(a)that the Chattels had not been abandoned but had been unlawfully removed from the family home at 75 Allumba Way, Wollert;
(b)that any disposal of the Chattels would be considered ‘unlawful conversion’ and would be ‘prosecuted’; and
(c)that the Chattels contained ‘priceless family heirlooms and intellectual property worth millions ’.[8]
[8]Affidavit of Dean Andrew Adams, [13], Exhibit DA52; Exhibit AB4 to the affidavit of Andrew of the family Bezeg dated 26 February 2020.
On 10 May 2019, the solicitors for NAB sent a further letter to Mr Bezeg which stated, among other things that:
(a)NAB held approximately $13,640.28 in surplus as at 3 May 2019 subject to reduction by reason of NAB’s ongoing costs, including for storage and disposal of the Chattels and its legal costs under the terms of the Mortgage;
(b)Mr Bezeg’s trustees in bankruptcy did not claim any interest in the Chattels or make any proposal for the housing/storage of the Chattels to alleviate the storage expense;
(c)Mr Bezeg had been on notice for over twelve months of NAB’s requests for him to either collect the Chattels or nominate an address for delivery of the Chattels; and
(d)NAB had resolved to dispose of the Chattels after 4.00pm on 10 June 2019 without further notice and invited Mr Bezeg to contact the solicitors for NAB prior to that date to either arrange a time for collection of the Chattels or to nominate an address for delivery of the Chattels.
On or about 27 May 2019, Mr Bezeg sent a further letter to the solicitors for NAB stating, among other things, that the Chattels had not been abandoned but were unlawfully removed from the family home.
On or about 5 June 2019, NAB instructed All Asset Appraisals Pty Ltd to prepare a valuation of the Chattels. All Asset Appraisals produced a valuation report for the Chattels estimating an auction value in the sum of $1,970.[9]
[9]Affidavit of Dean Andrew Adams dated 15 November 2019, [18]-19]; Exhibits DA55 and DA56.
In his affidavit, Mr Adams deposes that as at 8 November 2019 there is a shortfall to NAB of approximately $1,070.05 and that that amount remains subject to increase by reason of NAB’s ongoing costs, including storage costs (which continue to accrue at the rate of approximately $500 per month), disposal costs and legal costs.
Mr Adams deposes that in light of the correspondence received from Mr Bezeg, NAB is presently unwilling to exercise its contractual rights pursuant to cl 16(1) of the Mortgage to dispose of the Chattels without a declaration from the Court to the effect that it is authorised to do so.
On 25 February 2020, the solicitors for NAB sent an email to Mr Bezeg (copied to Mr Bezeg’s bankruptcy trustees) which, among other things:
(a)confirmed NAB’s preference to resolve the proceeding without the need for further litigation; and
(b)invited Mr Bezeg to contact the solicitors for the bank by 4.00pm on 2 March 2020 to either:
(i)make arrangements to collect any Chattels he wished to keep on the basis that the balance of the Chattels that are not collected would then be deemed abandoned; or
(ii)put forward any alternative proposal for the collection, delivery or storage of the Chattels for NAB’s consideration.[10]
[10]Affidavit of Joshua Kyle Hawes sworn 12 March 2020, [3]; Exhibit JKH1 thereto.
NAB submitted that:
(a)in an appropriate case the Court has power to make a supplemental order after judgment has been entered;[11]
(b)the Court has unfettered discretionary power to grant declaratory relief provided that the relief sought relates to the determination of legal controversies and not to answering abstract or hypothetical questions;[12]
(c)the relief sought by NAB is in aid of enforcement of the possession order. The relief is supplemental to and does not disturb the judgment for possession made on 14 August 2017 and that in the circumstances it is appropriate for relief to be sought by way of summons;
(d)the possession order made in the proceeding on 14 August 2017 is made pursuant to a first registered mortgage that was given by Mr Bezeg over the property in favour of NAB, which incorporates common provisions AA1791,[13] which empower the bank to take possession and contain an obligation on the mortgagor to remove personal possessions left on the land within a reasonable time after NAB has taken possession. Failing such removal, the Mortgage provides that NAB may store or discard the possessions at the mortgagor’s cost (without being liable to the mortgagor), dispose of the possessions and use the proceeds towards paying the amount owing;[14]
(e)the bank has given Mr Bezeg a reasonable time to remove his personal possessions left at the Land; and
(f)the matters raised by Mr Bezeg in his correspondence and in his affidavit do not affect NAB’s contractual entitlement under cl 16(1) of the Mortgage.
[11]Utza Pty Ltd (in liquidation) v Ultra Tune Australia Pty Ltd (1999) 1 VR 204 [9]-[16].
[12]Ainsworth v Criminal Justice Commission (1992) 175 CLR 564, 582; Director of Consumer Affairs Victoria v Mekon Insurance Pty Ltd [2016] VSC 42 at [22].
[13]Affidavit of Dean Andrew Adams, [6].
[14]Clause 16.1(h) of the Mortgage.
Mr Bezeg submitted that:
(a)the bankruptcy was ‘hearsay and void ab initio’;
(b)the order for possession made on 14 August 2017 was tainted by the alleged bankruptcy;
(c)the bankruptcy was void as he was not insolvent at the time;
(d)he was stultified by the void bankruptcy in that he was denied a hearing and an adjournment of the hearing before Lansdowne AsJ on 14 August 2017 and in consequence, the decision made by Lansdowne AsJ, or by the trustees, were no decisions at all; and
(e)the reason he would not collect the Chattels was because he had no place to store them due to the unlawful conduct of the bank in taking possession of his family home.
In reply, counsel for NAB submitted that:
(a)the event of default relied upon at the hearing before Lansdowne AsJ was not an act of bankruptcy but on a failure to pay, which was current at the time of the filing of the summons;
(b)Mr Bezeg became a bankrupt after that time and before the hearing on 14 August 2017;
(c)if the bankruptcy were to be annulled pursuant to s 153B of the Bankruptcy Act, s 154(1)(a) of the Bankruptcy Act provides that all acts done before the annulment are validly made or done.
Analysis
In my view, NAB has made out a basis for the declarations sought. The terms of the Mortgage clearly permit the bank to store, discard or dispose of personal possessions left on land within a reasonable time after the bank takes possession of the land.[15]
[15]Clause 16.1(h) of the mortgage; Exhibit DA47.
In this case it is necessary for the Court to make orders supplemental or ancillary to the order made for possession of the Land as a consequence of the assertions by Mr Bezeg that the Chattels had not been abandoned, were unlawfully removed, and by reason of threatened ‘prosecution’ for conversion if the bank disposes of the chattels.
Mr Bezeg has been given numerous opportunities to collect the Chattels. He was invited by the bank to do so by letters dated 23 March 2018, 14 November 2018, 10 May 2019 and recently by letter dated 25 February 2020.
During the course of the hearing before this Court, Mr Bezeg informed the Court that until he received the letter of 25 February 2020 (which, among other things, invited Mr Bezeg to contact the solicitors for the bank to make arrangements to collect any Chattels he wished to keep, on the basis that the balance of the Chattels not collected would then be deemed abandoned) he was informed that he would have to collect the entire contents of the storage facility.
Mr Bezeg informed the Court that he would collect the Chattels that he was able to collect and wished to keep.
To that end, I propose to make orders which will give Mr Bezeg an opportunity to attend Fragile Removals to inspect to the Chattels and, on a separate occasion, attend Fragile Removals to collect any Chattels that he wishes to keep.
Declarations will be made to the effect sought but their operation will be stayed to permit the inspection and collection to occur in a timely fashion allowing for the constraints currently imposed by ministerial directions relating to the COVID-19 pandemic.
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