National Australia Bank v Hookham

[2015] NSWSC 763

Supreme Court

New South Wales

Medium Neutral Citation:	National Australia Bank v Hookham [2015] NSWSC 763
Hearing dates:	12 June 2015
Date of orders:	12 June 2015
Decision date:	12 June 2015
Before:	Garling J
Decision:	(1)Order 1 in the Notice of Motion filed 12 June 2015 is refused. (2)Stand over the balance of the Motion to 9.00am on Monday 22 June 2015 before the Registrar.
Catchwords:	PROCEDURE – civil – application to restrain sale of property – applicant not registered proprietor of property – applicant claims equitable interest in property – no prima facie case that bank not entitled to exercise power of sale – balance of convenience favours sale of property
Legislation Cited:	Real Property Act 1900
Cases Cited:	Not Applicable
Texts Cited:	Not Applicable
Category:	Procedural and other rulings
Parties:	National Australia Bank (P) Sheryl Robyn Hookham (D)
Representation:	Counsel: N Cosgrove (P) In person (D)
File Number(s):	2014/272975
Publication restriction:	Not Applicable

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ex tempore Judgment

An Urgent Application

1. This is an application made urgently by Sheryl Robyn Hookham, who is the second defendant and cross claimant in proceedings brought in this court by the National Australia Bank (“the Bank”) seeking an order that an auction sale of a property at Halcrows Road, Glenorie, scheduled for 6pm this evening, not proceed.

The Proceedings

2. The proceedings, brought in this Court against Mr and Mrs Hookham, assert default by Mr and Mrs Hookham under the terms of two loans and two mortgages. The Statement of Claim claims that the total of the default is about $2.6 million. The Bank claims an entitlement to possession of two properties owned by Mr and Mrs Hookham on Old Northern Road, Glenorie.

3. On 5 June 2015, the defendants filed a Defence to the proceedings and a Cross-Claim. In the Cross-Claim, Mrs Hookham asserts that the conduct of the Bank has been such as to give rise to a cause of action, or causes of action, which will result in significant damages in her favour. The total sum of damages claimed, at this very early stage of the Cross-Claim, appears to be a sum a little less than $20 million.

4. There is no question in these proceedings, and Mrs Hookham accepts, that if the Cross-Claim proceeds and the Bank is ordered to pay damages to Mr and Mrs Hookham, that it has the financial capacity to meet any judgment likely to be given.

The Halcrows Road Property

5. Mr and Mrs Hookham's two daughters, Janet and Catherine, together with their former partners, Mr Robert Doyle and Mr Kane Lintern, are jointly the registered proprietors of a property in Halcrows Road, Glenorie. It will be convenient to refer to these four individuals as the registered proprietors. That property consists of about 50 acres of land upon which there is no house constructed, although there is a shed upon it. I am informed, and accept, that no farming, grazing or other rural activity presently takes place on the land. I am told that the land is zoned RU2, which means it has a wide range of potential use and some development potential. It is this property which is scheduled to be auctioned this evening.

6. Mrs Hookham, the applicant today, is not a registered proprietor of the land. However she informs me orally that the land was purchased somewhere around 2005, or perhaps a little later, for the sum of $800,000. A loan was taken out by the registered proprietors of about 70 % of the value of that land. The loan was advanced by the Bank. Mr and Mrs Hookham are guarantors of the obligations of the registered proprietors under the mortgage which secures the loan from the Bank.

7. Mrs Hookham says she has an agreement from Mr Doyle and her daughter Janet Doyle Hookham to transfer their 50 per cent share in the Halcrows Road property to her. She says that that agreement is constituted by a Deed and an executed Memorandum of Transfer which has not yet been registered. No caveat exists on the title recording the nature of that transfer or else recording the nature of an equitable interest which Mrs Hookham asserts she has as a consequence of the Deed. Neither a copy of the Deed, nor of the executed Memorandum of Transfer, was provided to the Court.

8. As well, Mrs Hookham asserts that Mr Lintern, who was, but no longer is, the partner of her daughter, Catherine, failed to make the relevant necessary monetary contributions towards the loan from the Bank with respect to the Halcrows Road property and that she, Mrs Hookham, at the request of the Bank, made those payments. The payments totalled something in the order of $80,000 for which Mrs Hookham informs the Court, she has obtained a judgment against Mr Lintern in the Windsor Local Court. That judgment has not been registered over the Halcrows Road property.

The Bank’s Entitlement to Possession

9. The Bank asserts that the borrowers, who are the registered proprietors of the land, fell into default in 2012 with respect to their loan. Notices have been provided to the Court which indicate that in 2012 the Bank served each of the registered proprietors in accordance with its ordinary business practice, and Mr and Mrs Hookham as the guarantors, with Notice of Default under the particular loan facility.

10. The Notice which was given on 7 November 2012, also constituted evidence of compliance by the Bank with s 57(2)(b) of the Real Property Act 1900. Accordingly, the Bank has indicated, with sufficient notice as required by legislation, its intention to sell the property.

11. I am told by the solicitor for the Bank that possession was entered into on 19 August 2014. I am presently unable to make any determination whether that was so because the details of how possession was entered are not fully before the Court. It cannot be doubted however that for some time this property has been advertised for sale. Mrs Hookham herself agrees that she has seen a notice advertising the property for sale, and that she has known for at least a little over a week that the property is to be sold at 6.00pm tonight by public auction. The first time that an approach was made to the Court seeking orders to restrain the auction was at about 2.30pm this afternoon.

The Applicable Legal Principles

12. In order for an applicant to restrain the exercise of a power of sale, whether by private treaty, or else by an auction, it is necessary for an applicant to persuade the Court of a number of matters. First, that there is a genuine dispute between the parties with respect to the land in question and that an applicant can show a prima facie case sufficient to prevent the Bank from exercising its power of sale.

13. Secondly, it is necessary for the applicant to show that the balance of convenience favours the making of an order restraining the sale by public auction.

14. Lastly, the Court needs to be satisfied that it is in the interests of justice to all affected people to make the relevant order.

Arguments

15. With respect to the first of the requirements, namely, the need for the applicant to demonstrate, at a prima facie level, that it has an arguable case that the Bank is not entitled to exercise its power of sale, Mrs Hookham asserts that the true position is that there has been no default under any of the loans involving her, her husband or members of her family. She says that she has been in genuine negotiations with the Bank for a period of some months, which negotiations include the property at Halcrows Road, Glenorie; that there has been some acceptance by the Bank that even if they have a prima facie case they should forebear from proceeding with it while those negotiations take place, and that in those circumstances she has shown a prima facie case for relief.

16. The submission is described in that way because it does not seem to me that there is anything in the pleadings in the present litigation which deals with, or affects directly, or at all, the Bank's claim that there has been a default under the loan for this property by the registered proprietors, and further, that the Bank has fulfilled all of the requirements for the proper exercise of its power of sale.

17. Putting it differently, as I understand the submissions put to me, they are that Mrs Hookham asserts that there is a significant dispute with respect to her and her husband's liability to the Bank encapsulated by the present proceedings. That dispute is the subject of ongoing negotiation. The Halcrows Road property, although in different ownership, is an integral part of that negotiation because of the contingent exposure of Mr and Mrs Hookham on the guarantee to support the borrowings by the registered proprietors, and because Mrs Hookham has an equitable interest in the property.

18. Ms Cosgrove, who has attended Court as the solicitor for the Bank, accepts that there have been some proposals put by Mrs Hookham and her family to the Bank, but says that they are not proposals that the Bank has accepted, and they are not within the broad parameters of proposals acceptable to the Bank.

Discernment

19. All I can conclude on this issue is that the material before me does not disclose a case even at a prima facie level for the Court to find that the Bank is not entitled to exercise its power of sale with respect to the Halcrows Road property.

20. But, even if I be wrong about this, I would not be disposed that the balance of convenience favours the grant of relief to Mr and Mrs Hookham. There are a number of features which compel me to this conclusion.

21. The first is that the land in question is not residential and no one lives there. The sale of the property will not interrupt anybody's residence or personal lives. At best, the property is being held as an investment. No order is necessary to prevent personal disruption or inconvenience.

22. The second is that it is clear that the nature of the Cross-Claim brought by Mr and Mrs Hookham is a claim for damages in a significant sum of money if that can be proved. There is no reason to think, and it is not in issue, that the Bank would be unable to pay such order for damages if one is made. Thus it is not necessary to prevent this sale in order to preserve the subject matter of a dispute, or so that any judgment can be satisfied.

23. Thirdly, the application is being made at a very late stage in the cycle of the auction sale. Mrs Hookham and, I infer, members of her family have known for over a week that the auction is fixed for 6.00pm tonight and no application was made to the Court until 2.30pm today, just three and a half hours before the auction was to take place. Expense has been incurred with respect to staging the auction, the orderly marketing of the property would be interrupted if the auction was prevented, and there is simply no reason, on the material put before the Court, to think that there has been anything wrong with the marketing, nor that the auction to be conducted tonight will not result in the obtaining of a bid at the best available price or else, putting it differently, a reasonable market price.

24. Finally, on the balance of convenience, it must be said that the Court needs to be positively satisfied that the interest that Mrs Hookham has is sufficient to restrain the sale. I have some doubts about this, but I am prepared to accept that Mrs Hookham is a party sufficiently interested in the land at Halcrows Road to make the application that she has made.

25. However, even if I accept that she has such an interest, as I do, it seems to me that the balance of convenience strongly favours allowing the auction to proceed tonight.

26. Accordingly, I refuse to make an order in terms of Order 1 of the Notice of Motion filed 12 June 2015 restraining the auction sale tonight.

27. The orders of the Court will be:

1. Order 1 in the Notice of Motion filed 12 June 2015 is refused.

2. I stand over the balance of the Motion to 9.00am on Monday 22 June 2015 before the Registrar.

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Decision last updated: 30 June 2015