Pascoe v SMIRNEOS

[2013] FCCA 676

FEDERAL CIRCUIT COURT OF AUSTRALIA

PASCOE v SMIRNEOS & ORS [2013] FCCA 676

Catchwords:
BANKRUPTCY – Application to vary orders previously made – where previous orders restricted due to proceedings underway about validity of mortgage – where mortgage later validity upheld – where property subject of the mortgage to be sold – where undertaking that variation does not affect parties’ rights inter alia – whether to make requested order.

Applicant: SCOTT DARREN PASCOE

First Respondent: HELEN SMIRNEOS

Second Respondent: ANDREW SMIRNEOS

Third Respondent: GEOFFREY REIDY

Fourth Respondent: WESTPAC BANKING CORPORATION ACN 007 457 141

Fifth Respondent: NATIONAL LENDING PTY LTD
ACN 119 336 631

Sixth Respondent: STEVE SMIRNEOS

Seventh Respondent: PETER SMIRNEOS

Eighth Respondent: BARBARA VALEJIA SMIRNEOS

File Number: SYG 346 of 2010

Judgment of: Judge Raphael

Hearing date: 14 June 2013

Date of Last Submission: 14 June 2013

Delivered at: Sydney

Delivered on: 14 June 2013

REPRESENTATION

Solicitors for the Applicant: Kemp Strang

Solicitors for the Fourth Respondent: Henry Davis York

ORDERS

1. In respect of the orders made on 2 October 2012 by Federal Magistrate Smith:

   (a)For Order 2, replace the words “(including Westpac Bank Corporation)” with the words “(except for money paid to Westpac Banking Corporation pursuant to mortgage no. AC243751)”; and

   (b)For Order 3, add the following words at the commencement of that Order “With the exception of any money paid by the trustees for sale to Westpac Banking Corporation in discharge of mortgage no. AC243751,”

2. No order as to costs.

FEDERAL CIRCUIT COURT OF AUSTRALIA

AT SYDNEY

SYG 346 of 2010

SCOTT DARREN PASCOE

Applicant

And

HELEN SMIRNEOS

First Respondent

ANDREW SMIRNEOS

Second Respondent

GEOFFREY REIDY

Third Respondent

WESTPAC BANKING CORPORATION ACN 007 457 141

Fourth Respondent

NATIONAL LENDING PTY LTD ACN 119 336 631

Fifth Respondent

STEVE SMIRNEOS

Sixth Respondent

PETER SMIRNEOS

Seventh Respondent

BARBARA VALEJIA SMIRNEOS

Eighth Respondent

REASONS FOR JUDGMENT

1. There comes before me today an urgent application for a variation of certain orders made by Smith FM on 2 October 2012 in these proceedings.  The matter has a lengthy history involving disputes between various parties concerning rights in respect of a property located at 124 Tennyson Road, Gladesville, having folio identifier 12/5/2166 and a mortgage over that property granted to the Westpac Banking Corporation, the fourth respondent in the substantive proceedings and the applicant today.

2. When Smith FM made the orders that are sought to be amended, there was in existence proceedings between certain of the other parties and Westpac concerning the validity of Westpac’s mortgage, No. AC24375, and it was for that reason that Smith FM put restrictions upon the distribution of the proceeds of the sale of the property including any distribution to Westpac.  On 5 April 2013, as a result of an agreement between the first and second respondents in these proceedings and the bank and the applicant in the main proceedings, McDougall J in the Supreme Court of New South Wales, made the following orders:

   “(1) Make orders by consent and direct the entry of judgment to make a declaration of right in accordance with the form of consent orders initialled by his Honour and dated today’s dates as follows:

   (i) The statement of claim be struck out.

   (ii) A declaration that the real property mortgage No. AC243751 is valid and enforceable and secures as at 17 December 2012, the amount of $634,000.00.

   (iii) Judgment in favour of the first defendant against the plaintiff in the sum of $634,000.00.

   (iv) No order as to costs.”

3. I’m advised by Mr Tao, who appears for the bank, and such advice is confirmed by Ms Parkin, who appears for the trustee applicant in the substantive proceedings, that the property has at last been sold and that completion is due to take place at 3.00pm today.  The bank has interpreted Smith FM’s orders as requiring it to give a discharge of its mortgage without securing the amount due thereunder and this is an interpretation which is certainly open.

4. The orders it seeks varying Smith FMs orders will have the effect of allowing the completion to take place and for the bank to provide a discharge upon it receiving the money owed under the mortgage.  The orders of Smith FM in relation to the balance of the funds would remain.  It is almost unheard of for a mortgagee to give a discharge of mortgage without payment of the moneys secured thereunder and one could not expect the bank to do this.

5. On the other hand, I believe that whilst the first and second respondents have consented to the orders made by McDougall J, it should be made clear that by altering the orders of Smith FM there has not been any variation in the rights of the parties inter se.  I have asked the bank to give such an acknowledgement and it has.  In those circumstances – given that I am told from the bar table that the first applicant in the substantive proceedings neither consents nor opposes the application, that the third respondent consents as does the fifth respondent and that the sixth, seventh and eighth respondents have not entered an appearance – I believe that it is appropriate to make the orders requested.  The first and second respondents are those parties who have consented to the validity of Westpac’s mortgage and I cannot see any reason why the sale should be prevented by them.  If they have anything to say on the matter, they may do so at a later time, probably in separate proceedings.  Because, the effect of the acknowledgement by the bank is to maintain the status quo as between them and the bank.  In those circumstances I make the order in the form of the short minutes signed by me, amended in brown and placed with the papers.  There will be no order as to costs. 

I certify that the preceding five (5) paragraphs are a true copy of the reasons for judgment of Judge Raphael.

Date:  27 June 2013