Nationwide Capital Pty Limited v Boutros Constructions Pty Limited
[2012] NSWSC 1472
•30 November 2012
Supreme Court
New South Wales
Medium Neutral Citation: Nationwide Capital Pty Limited -v- Boutros Constructions Pty Limited [2012] NSWSC 1472 Hearing dates: 13 November 2012 Decision date: 30 November 2012 Jurisdiction: Equity Division Before: Acting Justice Windeyer Decision: Money judgment against first, second and third defendants. Order for judicial sale against third defendant
Catchwords: CONTRACTS - Loan agreement - events of default - whether default established another contract - whether binding agreement reached
GUARANTEE - Indemnity - variation of main loan agreement or variation of collateral arrangementLegislation Cited: Real Property Act 1900 (NSW)
Conveyancing Act 1919 (NSW)Cases Cited: Masters v Cameron (1954) 81 CLR 353 Category: Principal judgment Parties: Nationwide Capital Pty Limited - Plaintiff
Boutros Constructions Pty Limited - First Defendant
Chalita Boutros - Second Defendant
Malke Boutros - Third Defendant
Westpac Banking Corporation - Fourth Defendant
Credit Corp Service Pty Ltd - Fifth Defendant
Now Studio Pty Ltd - Sixth DefendantRepresentation: Counsel:
A.G. Martin - Plaintiff
G.D. McDonald - First to Third Defendants
K. Wentworth - Sixth Defendant - Self-Represented
Solicitors:
ERA Legal - Plaintiff
Russo & Co. - First to Third Defendants
File Number(s): 2011/198240
Judgment
HIS HONOUR: The plaintiff, Nationwide Capital Pty Limited ("Nationwide"), lent to the first defendant, Boutros Constructions Pty Limited ("Constructions"), the sum of $965,000 pursuant to a Deed of Loan and a Deed of Charge. The loan was for a period of four months from 12 November 2010. Interest was payable monthly in advance at the higher rate of eight per cent per month, reducible to four per cent per month on prompt payment. The loan was guaranteed by the second defendant, Chalita Boutros ("Boutros"), and the third defendant, Malke Boutros ("Malke"), who is the daughter of Boutros. Malke agreed to give a mortgage over any real estate she might own. She is the registered proprietor of a property at 23 Beaufort Street, Croydon Park.
The loan was due to be repaid on 12 March 2011. Apart from payment of interest for the first month, which was deducted from the loan advance, no payments have been made other than from the sale of a property owned by Boutros mortgaged to Nationwide to secure his guarantee and the proceeds of sale by receivers of Constructions of a truck owned by that company.
The question for decision is whether Nationwide is entitled to judgment against Constructions, Boutros and Malke and an order for sale of the Beaufort Street property.
It is difficult to understand why three days was spent on the case. Most of the time was spent as a result of first, defective pleadings; secondly, through the plaintiff making premature demands for repayment; and thirdly, the defendants doing their best to take advantage of these matters perhaps hoping that some unexpected advantage would come their way.
Defendants
The first defendant, Constructions, had borrowed money from the Arab Bank and it was being pressed for repayment. It was for that reason the Deed of Loan the subject of this action was entered into. The second defendant Boutros is the sole director of Constructions. He was the owner of a property at 78-80 Cosgrove Road, Strathfield South. That property has been now sold and the proceeds applied towards reduction of the amount outstanding under the Deed of Loan.
The third defendant, Malke, is the owner of a property at 23 Beaufort Street, Croydon Park. That property is subject to a first mortgage to Westpac Banking Corporation, the fourth defendant. The fifth defendant, Credit Corp Service Pty Ltd is the judgment creditor pursuant to a Writ of Execution issued against Malke which is entered against the title to the Beaufort Street property. The sixth defendant, Now Studio Pty Ltd, has entered a caveat against the title of the Beaufort Street property claiming an interest under a Deed of Acknowledgement of Debt dated 9 June 2010. According to that Deed Now Studio is the trustee of the K Wentworth Family Trust. Ms Wentworth appeared for that company for part of the hearing.
Orders Sought
Money judgments are sought against the first, second and third defendant. An order for judicial sale in respect of the Beaufort Street property, with provision for consultation with Westpac as to the sale price, is sought upon the basis that the proceeds of sale would be applied, after deduction of costs of sale, first to discharge the mortgage to Westpac; second to pay the judgment debt under the Writ of Execution; third to pay out Nationwide; and fourth to pay out Now Studio with any surplus going to Malke.
The interest of Now Studio - if it exists - is prior in time to that of Nationwide. However, the notification of that interest was placed on the title by caveat no. AG140937 subsequent to the Nationwide Advance and subsequent to a caveat, no. AF953020, entered by Nationwide. Nationwide, of course, obtains no priority by its caveat but there may be an argument on priority between Nationwide and Now Studio. In addition, the Writ may have lapsed.
No party came prepared to argue the question of priority. It was agreed that in the event an order was made for the sale of the Beaufort Street property and sale took place, the proceeds of sale would, after payment to Westpac, be paid into Court when an issue as to priority could be formulated and if necessary, determined.
I should state that Ms Wentworth by cross-examination of Boutros and Malke was seeking to establish that the signature of Malke on the Deed of Acknowledgement was a forgery. While that would seem to have been against her interest, she said that if she was satisfied that the signature of Malke was forged she would withdraw the caveat. It is not necessary to pursue this further. That question was not before the Court to decide.
Loan documents
The following documents are dated 12 November 2010.
(a) Loan Agreement between Nationwide as lender, Constructions as borrower and Boutros and Malke as guarantors. The sum advanced was $965,000; the loan term was four months; the interest rates were a higher rate of eight per cent per month and a lower rate of four per cent per month. The loan was to be secured by a fixed and floating charge over the assets of Constructions and by a mortgage from Boutros over the property at 78-80 Cosgrove Road, Strathfield of which he was a registered proprietor.
(b) Deed of Charge from Constructions to Nationwide over all the property of Constructions.
(c) Deed of Guarantee and Indemnity by Malke in favour of Nationwide pursuant to which Malke guaranteed "punctual payment of the guaranteed money" defined as all money the company "now or in the future owes to the lender" and as security for her guarantee Malke mortgaged her interest in any freehold estate she owned or acquired in favour of Nationwide, giving Nationwide all the powers of a mortgagee over such property, and in addition she covenanted to execute a mortgage over any such property if so required.
(d) Deed of Guarantee and Indemnity by Boutros in favour Nationwide in much the same form as the Malke document but also providing for a mortgage over specific property namely, Cosgrove Road.
(e) Mortgage from Boutros to Nationwide over Cosgrove Road as security for his guarantee.
Specific Provisions of Documents
Deed of Loan
Default and Termination
13.1 Consequences of Default
If any of the events described in clause 13.2 occurs, the Total Owing will, at the option of the Lender and notwithstanding any delay or previous waiver of the right to exercise that option, become immediately due and payable to the Lender. In addition the Security will become immediately enforceable without notice to the Borrower or the Guarantor.
13.2 Events of Default
Each of the following events is an Event of Default:-
(a) Payment Default: if the Borrower fails to repay the Total Owing on the Repayment Date or fails to pay any instalment of interest when due or fails to pay any other money payable under this agreement on the due date for payment of that money and such failure continues for more than five Business Days; or
...
(f) Winding Up: if an application for the winding up or bankruptcy of the Borrower or any Related body Corporate or Guarantor is presented or an order is made for the winding up or bankruptcy, or any resolution is passed for the winding up of the Borrower or any Related Body Corporate or Guarantor, other than for the purpose of reconstruction or amalgamation with the Lender's prior written consent (which consent will not be unreasonably withheld); or
(g) Receiver, etc: if a receiver or receiver and manager or provisional liquidator or administrator of the assets and undertaking or any part of the assets and undertaking of the Borrower or any Related body Corporate or Guarantor is appointed;
24 Whole Agreement
This agreement records the entire agreement between the Parties and supersedes all previous negotiations, letters of conditional approval and undertakings in relation to its subject matter
Deed of Charge
Payment of Monies Owing
3.1 The Chargor covenants to pay the Secured Monies to the Chargee, without any deduction, at such times and on such dates and in such manner as provided for in the Relevant Agreements, provided that, if no times or dates are provided for in the Relevant Agreements then the monies shall be payable on demand, and if no manner of payment is specified in the Relevant Agreements then the monies shall be payable to the Chargee in such manner as the Chargee may direct.
Events of Enforceability
8.1 The security granted by this deed shall immediately become enforceable if any of the following events occurs without the specific prior written consent of the Chargee:
(a) If any Event of Default occurs under the Relevant Agreements;
(b) If the Chargor does not pay any part of the Secured Monies which has become payable;
Malke Guarantee
Definitions
1.1 Guaranteed Money means all money which the Borrower (personally or as a trustee, alone or with another person) now or in the future owes or may contingently owe, whether as principal debtor or as a surety, to the Lender, wether (sic) pursuant to the Loan Agreement or otherwise
Guarantee
5.1 The Guarantor guarantees to the Lender:
(a) punctual payment of the Guaranteed Money; and
(b) punctual performance of the Guarantee Obligations.
Mortgage and Security
8.1 As security for the performance of the Guarantor's obligations pursuant to this deed, the Guarantor hereby:
(a) mortgages and charges in favour of the Lender all of its interest in any freehold land in Australia both present and future and agrees that the Lender shall have in respect of such land those powers given to a mortgagee by the Real Property Act 1900 (NSW) and the Conveyancing Act 1919 (NSW where the mortgage is by deed;
(b) mortgages and charges in favour of the Lender all other assets of the Guarantor both present and future. Such charge will be fixed and specific charge on property now or in the future belonging to the Guarantor.
8.2 The Guarantor covenants that it will when required by the Lender immediately at its own cost execute a mortgage, charge or caveat in registrable and proper form of such freehold property, leasehold property, fixtures, plant and machinery and other chattels containing such covenants and provisions as the Lender considers necessary to give effect to the charge created and will arrange registration of such mortgage or caveat.
Unconditional Liability
14.1 The Guarantor's liability is unconditional and is not affected by anything including:
(b) an arrangement, composition or compromise between the Lender and the Borrower, Guarantor, Co-Surety or other person;
(c) variation (including material variation) or replacement of an arrangement (present or future) between the Lender and the Borrower, Guarantor, Co-Surety or other person
Outline Facts
Mr Sal Russo, the solicitor for the Boutros parties, had entered a caveat against the Cosgrove Street property claiming an interest pursuant to a charge for outstanding costs of over $50,000. He had expected to receive the monies owing to him out of the surplus monies available from the Nationwide loan after payment out of the Arab Bank, this surplus being about $70,240. He signed a withdrawal of caveat, dated 26 October 2010, and sent it to the solicitors for Nationwide prior to settlement. The caveat has been withdrawn.
At the date of settlement on 12 November 2010, final instructions were given for the cheques required at settlement. Mr Russo wrote to the solicitors for Nationwide stating that the cheques to be drawn were to Arab Bank Australia Limited in the sum of $817,737.15 and to Nationwide Capital Pty Limited in the sum of $70,240.85. The letter giving these instructions stated "the cheque drawn in your client's favour is to be held by them on account of interest and land tax". There is no doubt that land tax of approximately $29,000 was to become due.
There is considerable dispute about what really happened. Boutros said that Mr Dominic Morello, an employee of Nationwide, said that he could not allow Mr Russo to have the money and he needed to be sure that interest and land tax were paid. Malke said she knew of this arrangement.
Mr Joe Morello, the sole director of Nationwide, in an affidavit of 13 November 2012, said that Boutros had told him he did not want to pay Mr Russo, and had said, "I really need the money. Can't you just say hold it for me and give it to me later." Mr Morello said that as it was the money of Boutros he agreed to this.
Mr Domenic Morello gave somewhat similar evidence. He did not make the decision but gave evidence that he said to Boutros, "Well you can do what you want with the money as it is your money. But you will need to sort it out with the solicitors".
On 15 November 2010 Boutros asked for and was paid $15,000 out of the amount withheld and on 17 November 2010 he was paid a further $30,000, using this to buy a truck.
I accept that Mr Russo thought the money was retained for future interest and land tax. He said as much when receivers and managers were appointed to Constructions. He did not know Boutros had drawn down the $45,000.
I am more doubtful about Malke but I accept she did not know of the draw down, at least when it was made. I find it is more likely than not that the reasons for retention were a sham agreed between Nationwide and Boutros to assist Boutros and to disadvantage Mr Russo. The withdrawals three days and five days after settlement support this finding.
The evidence against such a finding is a Recital in a Licence Agreement to which Constructions, Boutros and the receivers to Constructions were parties. Recital C stated:
(c) The $70,464.85 retained by Nationwide Capital was retained at the request of and with the consent of the company on account of future interest and outstanding land tax on the property.
The only importance of this matter goes to the liability of Malke. If she did not know of the true facts and did not know of the draw downs then it might be that at least so far as her guarantee is concerned she could not be fixed with default at least until failure to make any payment on 12 January 2011. After the draw down there was no money available to pay the interest due on 12 December 2010 after taking into account the land tax liability.
12 December 2010 was a Sunday so pursuant to the terms of the Deed of Loan, an interest payment was due on the next business day being Monday 13 December 2010. No payment was made.
On 17 December 2010 ERA Legal, solicitors for Nationwide, sent letters of demand to Boutros and Malke stating that there was default and that "in the circumstances the total amount owing of $1,044,665 was due". It may be that Malke did not get this notice.
On 28 January 2011 Boutros and Malke were served with notices pursuant to s 57 2(b) of the Real Property Act1900 (NSW) and s 111(2) of the Conveyancing Act 1919 (NSW). The notice which was addressed to Boutros on its face demanded payment of arrears of interest of $160,576. The notice addressed to Malke was somewhat different: the one in evidence was dated one month later and it referred to a demand of $1,044,665 but went on to itemise interest unpaid of $250,622.08 and then said in paragraph [7]:
7. You are hereby required to pay the said sum within one month after service of this notice.
What is meant by "the said sum" is not clear but a better construction would, I think, be that it was the interest that was meant. It does not really matter as nothing was paid.
Meanwhile, on 21 December 2010 Nationwide appointed Messrs Richard Albarran and David Ingram as receivers and managers of Constructions and as agents for the mortgagee under the mortgage over the Cosgrove Street property from Boutros to Nationwide.
On 4 February 2011, a conference was held at the offices of ERA Legal attended by Mr Daren Anderson of ERA Legal, Boutros, Mr Russo and Mr Cook of Hall Chadwick Chartered Accountants of which the receivers were members. There is little dispute about the outcome. Mr Russo in his affidavit evidence said that certain things were agreed and that he asked that they be put into writing. Mr Anderson wrote a letter purporting to do this on 4 February 2011. For some inexplicable reason that letter is headed "Without Prejudice Save As to Costs". That letter said that as a result of a request from Constructions, a company with which it was connected namely Affordable Recycling Pty Ltd, would be given permission by the receiver to reopen and operate a waste transfer station at the Cosgrove Street property. The letter goes on to state that it was agreed in principle at the conference that subject to an appropriate licence agreement being entered into that:
1. Boutros would consent to Nationwide immediately instructing the real estate agent to place the Cosgrove Street property on the market for sale with a six week marketing campaign at the end of which the property would be sold by auction with the reserve to be nominated by the agent in consultation with the receivers.
2. That the estate agent would be instructed that should Boutros or any of his immediate family buy the property then there would be no commission payable on the sale.
The letter went on to list certain terms and certain acknowledgments which would have to be included in that licence agreement and ended by saying:
Upon Boutros, Constructions and Chalita Boutros acknowledging the matters specified in A - J above by executing a duplicate of this letter and returning it to this office we will commence preparation of their Licence Agreement.
No copy of the letter was signed but nevertheless the Licence Agreement was prepared and entered into with the Recitals as required and the other matters referred to as the terms set out in it. Like many things that seem to have happened in this matter without any particular explanation, the property was sold by private treaty and not by auction by the mortgage managers by a contract entered into on 14 February 2011 and settled on 8 March 2011, the sale price being $1,300,000.
Pleadings
The plaintiff proceeds by Amended Statement of Claim. It alleges an event of default on 20 December 2010 through failure to pay the monthly lower rate of interest within five business days of 12 December 2010 when the interest payment was due. It then alleges the demand made on 17 December 2010 for payment of $1,044,665; failure to pay, the service of notices to which I have referred, the exercise of the power of sale over the Cosgrove Road property for $1,300,000 and the payment of $1,185,220.47, being the net proceeds of sale in reduction of the loan. It then claims the liability of each of the defendants to pay from the date of default namely, 12 December 2010. In addition, paragraphs [33] and [34] plead that as at 13 June 2011 the amount due was $672,033.13 and that by the service of the Statement of Claim the plaintiff demanded payment.
The defences of all defendants are in much the same terms. They deny the event of default on 20 December 2010. They allege an agreement, called the Bond Term, to retain money sufficient for one months interest and land tax. They make other claims not now pressed. Malke claims that she did not know at least until after 18 December 2010, that there had been an agreement to withdraw $45,000 and that this variation without her consent has the result that she is no longer bound by the guarantee.
A reply to the defence of the third defendant was filed at the commencement of the hearing. It alleges that the Loan Agreement contained a whole agreement clause which precludes there being evidence of any other agreement. Nationwide seems to continue to maintain an event of default this time on 13 December 2010.
There is a cross-claim of all defendants. It is relevant to say that the receivers and managers of Constructions filed a submitting appearance but it was accepted that Boutros, exercising residual powers as a director of Constructions, could instruct the same counsel who appeared for him and Malke to pursue the cross-claim on behalf of Constructions. There was no objection to that. Many of the claims in the cross-claim are no longer pressed but one of those pressed is pleaded as a breach of duty to act in good faith by making an improper demand when an event of default had not occurred. Nationwide's answer to this was that in any event there was another event of default in the presentation of a creditor's petition against Boutros.
I pointed out on a number of occasions to counsel for Nationwide that this additional claimed event of default was not something that could be raised by defence to a cross-claim and that if the plaintiff wished to rely on some other event of default other than that pleaded in the Amended Statement of Claim it would be necessary to amend the Statement of Claim to add that ground. Until a few days ago this invitation was not taken up. It was ultimately accepted that an event of default said to arise on presentation of a creditor's petition was not of assistance to the plaintiff as the event took place before the loan was entered into. In any event, no damage was suffered as a result of the claimed breach.
The only claim now really pressed under the cross-claim was that receivers appointed by Nationwide had breached an agreement to put the property to sale by auction after a six week advertising period and that the defendants would have the opportunity to purchase at auction without any commission going to the agent. It was also claimed the defendants had the right to purchase prior to auction at a price at which the receiver was prepared to sell. I will deal with this briefly later.
Consideration
In his opening Mr Andrew Martin, counsel for the plaintiff, said the three issues to be determined were as follows:
(a) Was there any event of default between 12 and 20 December 2010?
(b) Did the instructions in respect of the money retained form a term of the Loan Agreement?
(c) In respect of the sale of the Cosgrove Street property, was there an agreement to postpone the right to sell?
Mr Geoffrey McDonald, counsel for the defendant added a further question as follows:
(d) Was the option to accelerate repayment of all monies exercised by notice of 17 December 2010?
Mr Martin did accept that the due date for payment in advance of the second month's interest was 13 December 2010. For a reason I cannot fathom he continued to argue that the event of default occurred on that day and that the words "and such failure continues for more than five business days" was some period of grace not bearing on the event of default. I do not think that could be correct.
Five business days after 13 December 2010 comes to Monday 20 December 2010. Default has to continue for more than five business days. Thus an event of default occurred on 21 December 2010. It follows there was no event of default between 12 and 20 December 2010. Neither was there an event of default enabling the option to make the total amount due exercisable. It certainly could not have been exercised on 17 December 2010.
The next matter is the retention fund or Bond Term. Whatever the agreement, Constructions and Boutros cannot get any advantage from the withdrawal totalling $45,000 as it was Boutros on behalf of Constructions who caused the money to be withdrawn . It was, I consider, a sham arrangement but Malke was entitled to treat it as real. It could not operate I think, as a variation of the Deed of Loan in light of the whole agreement clause. However, it was argued by counsel for the defendant that it could be an agreement collateral to the Deed of Loan, and even if it were an agreement to perpetrate a sham transaction, both parties should be bound by the consequences.
The question is whether this bears upon the liability of Malke under the Deed of Guarantee. If there were a variation, cl 14.1 of the Deed of Guarantee would mean that Malke remained bound. If there were some collateral agreement this would, I consider, be an arrangement which was varied and would fall within cl 14.1(c). It was pleaded that there was an implied term that the Bond Term would not be varied without the consent of Malke. No basis for this implication was shown.
I relisted the matter on 23 November 2012 because I was concerned to discuss in open Court some questions I thought arose during my deliberations. I had said during the hearing that the whole exercise seemed to me to be a waste of time. The focus on the event of default to some extent obscured what was happening. I said that if the claim failed for some unsatisfactory pleading then, unless there were some type of Anshum estoppel the plaintiff would just start again.
However, I said it seemed to me that there was plain default through failure to repay the loan on the due date and on any basis that had been pleaded in the Amended Statement of Claim. It followed that interest on the higher rate would in any event be payable from 13 December 2010 and that seemed to determine the matter. It was not suggested that this was not sufficiently pleaded. What I then said was, in any event, subject to any relief which could be given on the cross-claim.
During the discussion on 23 November 2012 Mr Martin indicated he might seek leave to amend the Statement of Claim by amending paragraph [24]. That paragraph at present pleads as follows:
On 20 December 2010 an Event of Default for the purposes of the Loan Agreement occurred.
Particulars
Failure by the First Defendant to pay the monthly Lower Rate interest instalment within 5 business days of 12 December 2010 when the interest payment was due
Mr Martin has now sent to me and to counsel for the defendant, an amendment he seeks to make to paragraph [24] as follows:
On 13 December 2010 an event of default occurred by the non-payment of interest due on that day and that default continued for more than five business days.
Counsel for the defendants opposes the amendment. Once again this amendment seems to me to continue to claim an event of default took place on 13 December 2010. I made my views clear on this during the hearing. Default is not the same as an event of default, which requires the default to continue for more than five business days. It is pointless to allow the amendment sought and for that reason I do not allow it.
Cross-Claim
There is some difficulty with the cross-claim because the Cosgrove Street property was sold by Messrs Albarran and Ingram as agents for the mortgagee. It was not sold by them as receivers. They were not parties to the Licence Agreement in their capacity as agents but rather in the capacity as receivers and managers. Although the Licence Agreement recites that the receivers took possession of the Cosgrove Street property on 23 December 2010, there is no other evidence that this took place. The fact is, however, that the managers sold the property. As they were not parties to the alleged contract they are not liable for any breach, assuming there was a breach. They were, however, agents for the mortgagee in effecting the sale so that Nationwide could be bound if there were any binding agreement.
I have come to the conclusion there was no binding agreement to put the property up for sale on a particular basis. When the terms of an agreement were discussed there is no doubt that Mr Russo asked that what was discussed and perhaps agreed be set out in writing. I do not think the facts are sufficient to make the discussion a done deal falling within the first category of contract as described in Masters v Cameron (1954) 81 CLR 353 at 360. The letter, although headed "Without Prejudice", does make it clear that a signed copy of the letter was required to be returned and this did not happen, although the Licence Agreement which did contain all the other listed terms other than those relating to the sale of the property was signed. In addition, the letter does refer to an agreement "in principle".
Irrespective of whether or not there was a binding agreement it is necessary to remember that the cross-claim is for damages. Malke was not a party to the contract although she might have been a potential purchaser. The only party who could claim damages would be Constructions on the basis that it suffered loss as a result of breach of contract, in other words, as a result of premature sale of the Cosgrove Street property. Malke does not plead by way of defence reliance on the counter-claim of Constructions. It is accepted that there is no evidence of damage. No claim was made for a separate hearing on the issue of liability other than a suggestion in outline preliminary submissions which it is not suggested was an application. I was told that the only basis upon which Constructions took part in the proceedings was to enable the cross-claim to be brought really for the benefit of Malke. Even if there were a contract proved, as there is no evidence of actual damage, breach of it could only give rise to nominal damages in favour of Constructions. This could be of no assistance whatsoever to Malke or Constructions and could not give an entitlement to costs. I should add that even it there were a separate hearing on damages that would not bear upon the liability of Constructions or the guarantors to now pay the amount claimed in light of cl 10.3 of the Deed of Loan. This and cl 15.1(a) of the Deed of Guarantee were not pleaded and not referred to in the submissions but this may be as well to point it out.
Result
The result of all this is that the plaintiff is entitled to a money judgment against each of the defendants in the proved sum of $1,229,662.37. This is the amount claimed as at 13 November 2010 and should take the interest up to 13 December 2010 and it is therefore the correct figure for judgment.
So far as the sale of the Beaufort Street property is concerned, the plaintiff is entitled to an order in the nature of that sought. No claim was made in the pleadings for an order for possession. While this might follow from the order sought for judicial sale, it could not be made if the first mortgagee has taken possession. There is no evidence of this and as no order was sought, I will not take this further.
Orders
(1) Judgment for the plaintiff against the first, second and third defendants in the sum of $ 2,402,221.
(2) Declare that the third defendant has charged property 23 Beaufort Street, Croydon Park, being the land in Certificate of Title Folio Identifier 46/1/5412 in favour of the plaintiff pursuant to Deed of Guarantee at the 12 November 2010 as security for moneys payable under such guarantee and that the plaintiff is entitled to enforce such charge.
(3) Order that the said property be sold subject to the supervision of the Court.
(4) Order that the plaintiff conduct the sale by public auction or, if not sold at auction, by private sale, and pay the proceeds of sale in the following order:
(a) First, for all the proper costs and expenses relating to the sale of the property;
(b) Secondly, as at any remaining proceeds of sale after payment in accordance with order 4(a), the whole of the amount due to the Fourth Defendant pursuant to registered mortgage AE834653;
(c) Thirdly, as to any remaining proceeds, such sum shall be paid into Court to await determination by the Court as to entitlement as between the plaintiff, the fifth defendant and the sixth defendant.
(5) The plaintiff shall, with respect to the sale of the property, act in the following fashion:
(a) Prior to offering the property for sale, the plaintiff shall consult with, the fourth defendant, with respect to the sale of the property and ascertain from the fourth defendant a minimum sale price necessary to pay out the fourth defendant's mortgage ("the minimum price"), which shall include a reasonable allowance for further interests and costs under that mortgage up to the anticipated date of completion of the sale;
(b) Unless the Court otherwise orders, the Plaintiff shall not offer the property for sale at less than the minimum price;
(c) In the event that the fourth defendant does not provide the plaintiff the minimum price within fourteen days of request, or the minimum price is a figure that the plaintiff reasonably believes is unlikely to be realised or exceeded on the sale of the property, the plaintiff shall not proceed to sell the property, but shall instead cause the matter to be re-listed before the Court and shall notify the fourth defendant of the listing, for the purpose of the Court making directions as to the minimum reserve price for any action and minimum sale price for any sale by private treaty.
(6) Order that the plaintiff act at all times in relation to the selling of the property in accordance with the duties owed by a mortgagee in exercising a mortgagee's power of sale.
(7) Order the cross-claim be dismissed.
(8) Order the first, second and third defendants pay the plaintiffs' costs of the proceedings, including the costs of the cross-claim.
(9) Order the first, second and third defendants pay the costs of the fourth defendant.
(10) Stand over the question of costs of the fifth and sixth defendants until the outcome of any priority hearing, with leave to those defendants to re-list the matter prior to such date on seven days notice.
(11) Exhibits may be returned.
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Decision last updated: 30 November 2012
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