Palmer v Orix Australia Corp Ltd

[2006] NSWSC 1208

CITATION:	Palmer v Orix Australia Corp Ltd & ors [2006] NSWSC 1208
HEARING DATE(S):	14 September 2006
JURISDICTION:	Equity Division Duty List
JUDGMENT OF:	Brereton J
EX TEMPORE JUDGMENT DATE:	09/14/2006
CATCHWORDS:	PAYMENTS INTO AND OUT OF COURT – Procedure – Where funds paid in without proceedings – Summons for payment out should be filed with matter number allocated to affidavit on payment in – – requirement for accountant’s certificate and evidence of absence of stop orders - Parties – Where defendant who cannot be served does not apparently have claim – order that defendant be removed as party
LEGISLATION CITED:	Supreme Court Rules 1970 (NSW), Pt 70 rr 12, 13 NSW Court Forms Precedents & Pleadings, [3440]
CASES CITED:	Re Howe; Ex parte Brett (1871) LR 6 Ch App 838, 841 Austin v Royal (1999) 47 NSWLR 27
PARTIES:	Christopher John Palmer (plaintiff) Orix Australia Corporation Limited (first defendant) Sam Peter Cassaniti (second defendant) Michelle Hatzidimitrou (third defendant) St George Bank Limited (fourth defendant) Quest Enterprises (NSW) Pty Ltd (fifth defendant)
FILE NUMBER(S):	SC 4158/06; 1535/06
COUNSEL:	Mr D Courtenay (sol) (plaintiff)
SOLICITORS:	Courtenay & Co (plaintiff) Kemp Strang (fourth defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
DUTY LIST

BRERETON J

Thursday 14 September 2006

4158/06 Christopher John Palmer v Orix Australia Corporation Ltd & Ors

JUDGMENT (Ex tempore)

1 HIS HONOUR: On 22 February 2006, in proceedings 1535/05, St George Bank Ltd paid into Court a sum of $21,635.19, being the surplus proceeds of sale of a property situate at and known as Unit 3, 3 Kaleski Avenue, Moorebank in the State of New South Wales, being the land comprised in folio identifier 3/SB 39420, which St George had sold as mortgagee. In the affidavit which accompanied the payment in, the deponent indicated that claims on the surplus were being made by Orix Australia Corporation Ltd, Sam Peter Cassaniti, and Christopher John Palmer of O'Brien Partners. By summons filed in proceedings 4158/06 on 9 August 2006, Mr Palmer, as plaintiff, claims an order pursuant to Trustee Act s 98 (3) that the moneys paid into Court be paid out to him. The defendants are Orix as first defendant, Mr Cassaniti as second defendant, Michelle Hatzidimitriou as third defendant, St George Bank as fourth defendant and Quest Enterprises as fifth defendant. Mr Palmer is the liquidator of Hats Enterprises Pty Ltd, the registered proprietor of the subject property.

2 Caveats lodged by Orix and by Quest Enterprises Pty Ltd followed the St George mortgage on the title.

3 There is no evidence before me of the precise nature of the interest which Orix claimed, but on what I am informed by Mr Courtenay, solicitor, who appears for the liquidator but who has also acted for Orix in related proceedings, it appears to have been an interest in the nature of a charge under a finance lease facility. Quest Enterprises’ caveat described itself as “Quest Enterprises Pty Ltd trading as Cassaniti & Associates”, and claimed an equitable interest of an undescribed nature pursuant to a letter of engagement said to have been entered into between Hats Enterprises and Mr Cassaniti.

4 Strictly speaking, the summons should have been filed in proceedings 1535/05, the number of its file in which the payment in was made [Supreme Court Rules 1970 (NSW), Pt 70 rr 12, 13]. Where funds have been paid into court under SCR Pt 70 r 12 without commencing proceedings, on an affidavit under SCR Pt 70 r 13, proceedings for payment out when commenced, are to be allocated the number assigned to the affidavit [SCR Pt 70 r 12(3)]. Current practice in the Registry in this respect does not appear to accord with the Rules.

5 The first defendant, Orix, has indicated that it does not oppose Mr Palmer's application in respect of the funds currently held in Court. The second defendant, Mr Cassaniti, is currently incarcerated at Silverwater. He has been served with notice of the summons and does not appear. I shall return to the third defendant. The fourth defendant, St George Bank Ltd, has filed a submitting appearance. The fifth defendant has been duly served by post to its registered office and does not appear.

6 The third defendant was one of the directors of Hats Enterprises. Mr Courtenay says he is currently unaware of her residential address. Her former solicitor, one Mr Velcic, was notified of these proceedings on 14 August 2006 but declined to accept service, understandably enough in circumstances where he was unable to obtain instructions, and he has since informed Mr Courtenay that he has not had contact with the third defendant since 2005 and has no contact number or address for her. In those circumstances, I am not able to be satisfied that notice has been given to the third defendant.

7 The question remains whether it is necessary that she be notified. Her potential interest arises in this way. As I have said, Orix had lodged a caveat in respect of the subject property, apparently claiming an interest in the nature of a charge pursuant to a lease finance agreement. Orix obtained judgment against Hats Enterprises, a related company Hats Civil Pty Ltd, Mr Steven Hatzidimitriou who was the sole director of and shareholder in both of those companies, and the third defendant his wife Michelle Hatzidimitriou who had with her husband guaranteed the liabilities of both the Hats companies to Orix. Upon sale of her property at 81 Central Avenue, Chipping Norton, Michelle Hatzidimitriou paid some $105,000 to Orix in reduction, but not total discharge, of the amount which Orix was owed and which she had guaranteed. There remained a shortfall of about $25,000. Accordingly, the third defendant did not pay out the Orix debt in full.

8 Where a surety has guaranteed the whole of a debt, the right to subrogation to securities of the creditor does not arise if the surety has discharged part only of the debt [Re Howe; Ex parte Brett (1871) LR 6 Ch App 838, 841; Austin v Royal (1999) 47 NSWLR 27]. The position is otherwise if the obligation was limited to part of the debt, and that part has been paid in full, but that does not appear to be the situation here.

9 Accordingly, it would seem that the third defendant, not having paid off Orix's debt in full, is not subrogated to the rights of Orix and does not acquire an equitable interest in the subject property. In those circumstances it seems to me that she is not a necessary party to the proceedings. However, it is inappropriate, if she is not to be notified, that she be a party to the proceedings and be bound by the determination.

10 On an application for payment out, the conventional practice is for the applicant to obtain from the Court Accountant a certificate of its amount of funds in court and that there are no stop orders [NSW Court Forms Precedents & Pleadings, [3440]]. Apparently, the Registry has informed the plaintiff’s solicitor that an order in terms of the summons, for payment out of all funds in Court, is preferred because it avoids the probability of missing some accrued interest. I would accept that when the order is in terms sufficient to relate to all the funds in court including interest, a certificate as to the amount in court may not be necessary. However, evidence as to the absence of a stop order remains necessary.

11 The plaintiff’s solicitor now informs me that a search in the Registry has disclosed no stop orders.

12 In those circumstances, the appropriate orders are in my opinion as follows:

(1) Order that proceedings 1535/06 and 4158/06 be consolidated.

(2) Order that Michelle Hatzidimitriou be removed as a defendant.

(3) Orders 1 and 2 in the summons.

(4) Direct these orders be entered forthwith.

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