Pham v Mazen Zraika; Pham v Sebie (No. 4)

[2018] NSWSC 566

Supreme Court

New South Wales

Medium Neutral Citation:

Pham v Mazen Zraika; Pham v Sebie (No. 4) [2018] NSWSC 566

Hearing dates:

18 April and 24 April 2018

Date of orders:

24 April 2018

Decision date:

02 May 2018

Jurisdiction:

Equity

Before:

Slattery J

Decision:

Caveator ordered under Real Property Act 1990, s 74MA to withdraw the caveat. Caveator restrained under Real Property Act, s 74O from lodging further caveats. Caveator ordered to pay the plaintiffs’ costs.

Catchwords:

REAL PROPERTY - caveats - withdrawal of caveats - Real Property Act, s 74MA - contract for sale of land made in October 2014 - specific performance of the contract for sale ordered in May 2017 - settlement scheduled before the Registrar in Equity on 11 April 2018 - caveat lodged on 4 April 2018 - plaintiffs apply on 18 April 2018 for orders under Real Property Act, s 74MA that the caveator withdraw the caveat and for orders under Real Property Act, s 74O that the caveator be restrained from lodging further caveats - whether the Court should exercise its discretion under Real Property Act, s 74MA to order the withdrawal of the caveat - whether there is a serious question to be tried - what is the balance of convenience - whether an order restraining the caveator from lodging further caveats should be made - whether caveators should pay the plaintiffs’ costs and if so on the indemnity basis.

Legislation Cited:

Real Property Act 1900, ss 74O, 74MA

Cases Cited:

Circuit Finance Pty Ltd v Crown and Gleeson Securities Pty Ltd (2005) 12 BPR 23,403
Hanson Construction Materials Pty Ltd v Roberts (2016) 93 NSWLR 1
Jensen v Bank of Queensland (2011) 15 BPR 29,601
Pham v Enterprise ICT Pty Ltd [2017] NSWSC 446; Pham v Enterprise ICT Pty Ltd [2017] NSWSC 583
Pham v Enterprise ICT Pty Ltd and Others; Pham v Sebie [2017] NSWSC 1509
Pham v Enterprise ICT Pty Ltd and Others; Pham v Sebie (No. 2) [2018] NSWSC 22
Pham v Enterprise ICT Pty Ltd and Others; Pham v Sebie (No. 3) [2018] NSWSC 381
Pham v Enterprise ICT Pty Ltd and Others; Pham v Sebie (No. 5) [2018] NSWSC 567
Schibaia v Elias [2013] NSWSC 1485

Category:

Procedural and other rulings

Parties:

In proceedings 2015/325044:
First plaintiff: Andy Vuong Duc Pham
Second plaintiff: Thi Huong Giang Pham
First defendant: Enterprise ICT Pty Ltd
Second defendant: Nadine Musabwasoni
Third defendant: Robert Sebie

In proceedings 2015/56505:
First plaintiff: Andy Vuong Duc Pham
Second plaintiff: Thi Huong Giang Pham
First defendant: Robert Sebie
Second defendant: Commonwealth Bank of Australia
Third defendant: ENA Development Pty Ltd (ACN 105 235 363)
Fourth defendant: Mazen Zraika

Representation:

In proceedings 2015/325044:

 

Counsel:

 

Plaintiffs: B. Zipser

 

Solicitors

 

Plaintiffs: John Bui, Bui Lawyers
First Defendant: Jamal Kayrouz, Streeterlaw
For Registrar General of New South Wales: Anthony Hugh Foster Booth

 

In proceedings 2015/56505:

 

Counsel:

 

Plaintiffs B. Zipser

 

Solicitors:

  Plaintiffs: John Bui, Bui Lawyers
For Registrar General of New South Wales: Anthony Hugh Foster Booth

File Number(s):

(2015/325044); (2015/56505)

Publication restriction:

No

Judgment

1. This is my fourth judgment in these proceedings. My first judgment was given on 8 November 2017: Pham v Enterprise ICT Pty Ltd and Others; Pham v Sebie [2017] NSWSC 1509. My second judgment was given on 30 January 2018: Pham v Enterprise ICT Pty Ltd and Others; Pham v Sebie (No. 2) [2018] NSWSC 22. My third judgment was given on 29 March 2018: Pham v Enterprise ICT Pty Ltd and Others; Pham v Sebie (No. 3) [2018] NSWSC 381. This fourth judgment deals with a motion filed by the Phams on 18 April 2018 (“the 18 April motion”). Orders on the motion were made on 24 April 2018 and these reasons for those orders were published on 2 May 2018. This judgment should be read together with my three previous judgments.

2. The first and second judgments set out the history of these unusual proceedings from September 2017 until late January 2018. The third judgment deals with the course of the proceedings between late January 2018 and the 29 March 2018. This fourth judgment brings the matter up to the 24 April 2018. Because of the complex array of procedural and other applications involving the conveyancing transaction the subject of these proceedings, the Court has taken the course of setting out as much of the procedural history as possible. Events, matters and persons are referred to in this fourth judgment in the same way that they are in each of my previous judgments.

3. And before my involvement of the proceedings Pembroke J gave two extensive judgments leading to his orders for specific performance of the contract for sale of the Chiswick property: Pham v Enterprise ICT Pty Ltd [2017] NSWSC 446; Pham v Enterprise ICT Pty Ltd [2017] NSWSC 583.

4. Two caveats were lodged over the Chiswick property in the period after my third judgment and before the contract for sale of Chiswick property was first due to be settled, namely in the period from 26 March to 11 April 2018: one caveat was in the name of Mr Mazen Zraika (AN232813) (“the Mazen Zraika caveat”) and the other caveat was in the name of Mr Ramzy Sebie (AN217443) (“the Ramzy Sebie caveat”). When the matter came before the Court on 24 April 2018, the Court ordered the removal of Mr Mazen Zraika’s caveat and made certain orders against the Registrar General. This judgment provides the Court’s reasons for the making of those orders.

5. Mr Ramzy Sebie was also joined as a respondent to the motion, as well as the Registrar General of New South Wales. Relief on the 18 April 2018 motion against Mr Ramzy Sebie is dealt with in a separate judgment given on 1 May 2018: Pham v Enterprise ICT Pty Ltd and Others; Pham v Sebie (No. 5) [2018] NSWSC 567.

6. The Phams’ motion of 18 April 2018 seeks orders pursuant to Real Property Act1900, s 74MA that Mr Zraika withdraw caveat AN217443 and other consequential relief, as follows:

“7. Pursuant to s 74MA of the Real Property Act, by 4 pm on the day after this order is made Mazen Zraika shall withdraw the caveat with dealing number AN217443.

8.   If Mazen Zraika fails to withdraw the caveat by the specified date, the caveat will lapse and the Registrar General is thereafter authorised to remove it from the Register.

9. Pursuant to s 74O of the Real Property Act, Mazen Zraika is restrained from lodging, or causing to be lodged, any further caveat or other dealing on the title to the Chiswick Property.

10.   Mazen Zraika shall pay the plaintiffs’ costs of and incidental to this motion on an indemnity basis or, in the alternative, on a party-party basis.”

7. At the hearing of the motion against Mr Zraika, an amended motion in substantially identical terms was relied upon. But for the purposes of these reasons, the motion will simply be referred to in its original form.

8. In the Court’s orders made on 26 March 2018, the Court extended the date for settlement of the contract for sale of the Chiswick property to 2pm on 11 April 2018. In the end, the parties were not in a position to settle by 11 April 2018, so the Registrar amended the date for settlement to 2 May 2018 at 2pm.

The Course of Proceedings on the 18 April 2018 Motion

9. The Phams approached the Court on 18 April 2018 on an ex parte basis. This was, in substance a duty judge application. But because of my familiarity with this matter, and having given several previous judgments, I decided to deal with it myself.

10. The motion was filed in Court and made returnable instanter. In support of the motion the Phams filed the affidavit of Mr Andy Pham of 18 April 2018. Orders were made for service of the motion, supporting affidavit and a copy of those orders on Mr Zraika by 5pm that same day.

11. I am satisfied that the orders for service upon Mr Zraika were complied with by the Phams. The 18 April 2018 motion for relief against Mr Zraika and the other respondents to the motion was listed for hearing before me on Tuesday, 24 April 2018 at 9.30am.

12. But on 24 April 2018 correspondence from Mr Zraika to my Associate dated 23 April 2018 prompted consideration whether or not the Pham’s motion should be adjourned. That correspondence was tendered and became Exhibit A, on the application. Ultimately after consideration of this correspondence, the Court decided to proceed with the motion against Mr Zraika and to make orders.

13. As earlier indicated, Mr Zraika was served in accordance with the Court’s orders on 18 April 2018. That means he was given notice of the motion five days before he was required to appear on 24 April, although there were only three clear working days during this period: 19, 20 and 23 April. That should have been enough time to organise lawyers to respond to defend the claim. Instead the court received the Exhibit A correspondence, which was unsatisfactory.

14. In the letter addressed to my Associate of 23 April 2018 (Exhibit A), Mr Zraika said:

“Dear Katsanos,

I have written to Mr Pham, stating I am not in Sydney and will be back on the 5 May 2018.

I was under the impression that legal proceedings between Mr Pham and Mr Sebie have concluded, as Mr Sebie is now registered proprietor of [Chiswick property].

I was excepting (sic) that Mr Sebie might re-enter negations (sic) with me. Failing that, I was excepting (sic) him to issue a lapsing notice on my caveat which will be challenged, which is the standard process. I was not aware that Mr Pham is still an interested party in the property.

I want to stress and protect my interest in the property. I [am] open to negotiating a resolution about my payout with all parties involved including Mr Pham, upon my return back to Sydney on the 5 May 2018.

I ask if there if (sic) there is any matter listed in this court about the above property to be stood over until I return back to Sydney. ”

15. Mr Zraika was able to write to the Court in these terms to say that he could not be present until 5 May. But he was not apparently able to file an affidavit before then setting out the basis of the caveat that he proposed to support. His caveat was filed long after some of the underlying transactions to which it refers (in 2007), but only days before the settlement date of 11 April. And then he is not available to defend the caveat until the appointed date for the settlement of the Chiswick property has passed. The history of these proceedings makes the Court suspicious of this conduct.

16. There was ample evidence that Mr Zraika was well aware that the proceedings were being sought and that he simply decided not to attend them. Shortly after the Mazen Zraika caveat was filed, Mr Pham telephoned Mr Zraika’s mobile phone number on 6 April 2018, which is recorded on the form of the caveat. But Mr Zraika quickly hung up the telephone on Mr Pham after confirming that it was indeed his phone number. Two days later Mr Pham sent a letter to Mr Zraika recording what had happened on the telephone. But no response came back from Mr Zraika. Finally, on 17 April 2018, just before the matter came to Court on 18 April 2018, Mr Pham sent an SMS message informing Mr Zraika that the matter would be listed at 9.30am on 18 April 2018 before me. The SMS message is very clear and the matter was indeed listed at 9.30am when the application for leave to file process was made.

17. The Court decided to proceed, partly because of the clarity of the notice given to Mr Zraika, partly because of the inherent problems with the caveat, and partly because of these other suspicious circumstances.

The Application to Remove the Mazen Zraika Caveat

18. The principles governing the Court’s discretion to make orders under Real Property Act, s 74MA for the withdrawal of a caveat may be shortly stated. The Court will normally order the withdrawal of a caveat, unless the caveator can establish an entitlement to an interlocutory injunction restraining the registered proprietor from dealing with the land pending trial of the caveator’s claim: HansonConstruction Materials Pty Ltd v  Roberts (2016) 93 NSWLR 1; [2016] NSWCA 240 (“Hanson Constructions”) (at [77]). The language of Real Property Act, s 74MA is very broad and the generality of the statutory language accommodates a great variety of circumstances, including that the caveator’s claimed interest is spurious, or even accepting that the caveator does have a caveatable interest: Hanson Constructions at [60]-[61].

19. A caveator’s claim to have an interest in the land must raise a serious question to be tried, as to the existence of the interest claimed in the caveat: Hanson Constructions at [77]. But once the caveator discharges that onus, the continuation or removal of the caveat depends upon the Court’s assessment of the balance of convenience: Hanson Constructions at [77]. The authorities recognise that the strength of the caveator’s claim to an interest in land may be significant in assessing the balance of convenience: Hanson Constructions at [79].

20. The application of these principles to the present case leads the Court to conclude below: that the caveator is not able to discharge the onus of showing there is a serious question to be tried; and that the balance of convenience strongly favours an order to withdraw the caveat. The form of the caveat and other surrounding circumstances show why this is so.

21. The caveat identifies Mr Zraika as the caveator and Mr Robert Sebie as the registered proprietor. The statutory declaration in support of the caveat was executed by Mr Zraika on 14 March 2018 at Pope’s Crossing. Schedule 1 of the caveat provides as follows:

Particulars of the estate or interest in the abovementioned land
LOAN PROVIDED TO ROBERT SEBIE, FIRST INSTRUMENT 12/11/2007, SECOND INSTRUMENT 26/01/2018.
By virtue of the instrument referred to below
Name of Instrument	Date	Parties
LOAN: SECURED OVER LAND (GOODS AND SERVICES).	12/11/2007 25/01/2018	MAZEN ZRAKIA & ROBERT SEBIE MAZEN ZRAKIA & ROBERT SEBIE
By virtue of the facts stated below
LOAN: SECURED OVER LAND – PROVIDED TO ROBERT SEBIE 12/11/2007 (IN FORM OF GOODS AND SERVICES) FIRST INSTRUMENT 12/11/2007, SECOND INSTRUMENT 25/01/2018

22. The caveator cannot establish a serious question to be tried. The Mazen Zraika caveat does not comply with the formal requirements to specify a caveatable interest, it is internally contradictory and no evidence is advanced in support of it.

23. Because he did not attend the proceedings, Mr Zraika did not adduce any evidence in support of the interest claimed in the caveat. This lack of evidence is in itself a sufficient basis for concluding that the caveator did not establish a serious question to be tried and for the claim to maintain the caveat to fail at the threshold.

24. But the lack of compliance with formalities and the contradictory nature of the Mazen Zraika caveat deserves to be separately noted. Caveats must adequately particularise the nature of the estate or interest claimed by the caveator in the land: Circuit Finance Pty Ltd v Crown and Gleeson Securities Pty Ltd (2005) 12 BPR 23,403 at [10] - [27]. A caveat that simply describes the caveator’s interest as an “equitable interest” will ordinarily be judged to be insufficiently described: Schibaia v Elias [2013] NSWSC 1485 per McDougall J.

25. There are many problems with Schedule 1 of Mr Zraika’s caveat. Its description of the caveator’s interest does not identify what kind of interest is claimed in the Chiswick property, including legal or equitable or whether there is a charge, a mortgage or some other security interest.

26. Schedule 1 contains other uncertainties. It is unclear under which of the two identified instruments that the alleged interest arises, whether one replaces the other, whether one contains a charge or both do, or what is the case.

27. Schedule 1 of the Mazen Zraika caveat is defective in substance and the caveat should, in my view, be removed. But even if the caveat were not defective, in my view, the balance of convenience clearly favours its removal for several reasons.

28. Mr Zraika’s claimed interest in the land is well protected by the Court’s existing orders. Upon completion of the contract for sale of the Chiswick property from Robert Sebie to the Phams, the Phams are obliged to pay the purchase price of $2,000,000 into court. And the funds paid into Court cannot be paid out without the leave of the Court. It is clear from earlier disputes in this case that there was no contest between Ms Musabwasoni and Mr Robert Sebie that the sale to the Phams was not at an undervalue. It is hard to see how Mr Zraika could claim any prejudice to his security interest in the Chiswick property by having it converted into money in court. If he has such an interest he is free to claim it at a later point of time.

Orders Under Real Property Act, s 74O

29. The Court should make an order under Real Property Act, s 74O.

30. There is a prior history of Mr Zraika filing caveats in these proceedings. He filed an earlier caveat in 2015 when the property was owned by Mr Robert Sebie. He allowed that caveat to be lifted for the property to be sold to Enterprise ICT, a sale Pembroke J found to be a sham. That caveat was in similar form to the current caveat. That prior conduct gives the Court reason to believe that if an order is not made under Real Property Act, s 74O there is a substantial prospect that Mr Zraika may file further caveats.

The Orders Against the Registrar General and Other Orders

31. The Court also made orders against the Registrar General on 24 April 2018. The Court ordered that until the registration of an instrument of transfer in respect of the Chiswick property from Mr Robert Sebie to the Phams, or until the Court otherwise orders, the Registrar General “shall not accept for lodgement any caveat presented for lodgement which prohibits or purports to prohibit the Registrar General from registering the transfer unless such caveat is lodged by a local, state or federal government authority, otherwise than with the leave of the Supreme Court”.

32. In some cases it may be appropriate for the Court to make an order restraining the Registrar General from accepting for lodgement, other than with the leave of the Court, caveats in respect of a property. The power undoubtedly exists and has been exercised from time to time: Jensen v Bank of Queensland (2011) 15 BPR 29,601; [2011] NSWCA 71 (“Jensen”). The danger of further caveats being lodged is sufficient to enliven the exercise of this Jensen jurisdiction.

33. In my view, there is ample basis for the making of an order of this type against the Registrar General in this case. The Court refers to the history set out in previous judgments, including the judgments of Pembroke J, identified earlier in these reasons. The history of these various and related proceedings, of which these various judgments give a full account, shows a number of enduring features: reliance by parties on inherently suspicious documents; the filing of successive clearly defective caveats in circumstances that seem only designed to sabotage the completion of the contract for sale to the Phams; findings of fraud against parties associated with Mr Ramzy Sebie and Mr Robert Sebie; the swearing of false declarations; the filing of multiple caveats in respect of allegedly long-standing claims that have only just emerged; when caveats are contested the Court’s processes are abused and misused; and the reality that unless the Phams are able to achieve settlement of the contract for sale in the near term, that they are likely to lose their finance for the acquisition of the Chiswick property.

34. In addition to these matters, the evidence of Mr Anthony Booth, a solicitor in the employ of the Registrar General, shows that other parties have been trying to lodge caveats over the Chiswick property but have been rejected by the Registrar General.

35. The form of order against the Registrar General that the Phams originally proposed would have prohibited the registration by the Registrar General of all caveats. But it was obvious that caveats by public authorities in respect of outstanding rates or tax liabilities should be excepted from the scope of the prohibition, so this was written into the form of the final order.

31. Finally, unrelated to the orders made against Mr Zraika and the Registrar General on 24 April 2018, the Court made directions for the further conduct of the part of the motion against Mr Ramzy Sebie. This part of the motion was ultimately determined on 1 May 2018. The directions for the further conduct of the part of the motion against Mr Ramzy Sebie constitute the balance of the orders made that day. They are procedural orders and need not be discussed further.

Conclusion and Orders

37. For these reasons, the Court makes the following orders and directions:

1. Pursuant to s 74MA of the Real Property Act 1900 (NSW), by 4pm on 26 April 2018 Mazen Zraika shall withdraw the caveat with dealing number AN232813.

2. If Mazen Zraika fails to withdraw the caveat by the specified date, the caveat will lapse and the Registrar General is thereafter authorised to remove it from the Register.

3. Pursuant to s 74O of the Real Property Act, Mazen Zraika is restrained from lodging, or causing to be lodged, any further caveat or other dealing on the title to the property at 11 Tutt Crescent, Chiswick (folio 2 in DP 241738) (“the Chiswick Property”).

4. Adjourn the balance of the plaintiffs’ motion in these proceedings filed on 18 April 2018 (“the 18 April 2018 motion”) for further hearing to 4pm on Monday, 30 April 2018, before me.

5. Mazen Zraika shall pay the plaintiffs’ costs of and incidental to the 18 April 2018 motion.

6. Until registration of an instrument of transfer in respect of the Chiswick Property from Robert Sebie to the plaintiffs (“the Transfer”), or until the Supreme Court otherwise orders, the Registrar General shall not accept for lodgement and shall not record in the Registrer any caveat presented for lodgement, which prohibits or purports to prohibit the Registrar General from registering the Transfer, unless such caveat is lodged by a Local, State or Federal Government authority, otherwise than with leave of the Supreme Court.

7. Direct that Mr Ramzy Sebie serve by 2.30pm on Friday, 27 April 2018 any affidavits on which he seeks to rely in support of the 18 April 2018 motion.

8. Refer paragraph 26 of Mr Andy Pham’s affidavit of 24 April 2018 (which is set out in Schedule A to these orders) to the Attorney General of NSW as first law officer of the Crown for the Attorney General’s attention and consideration with a view to the possible further investigation of the matter by police.

9. The Court notes that Streeterlaw has been granted leave today to appear on behalf of the second respondent on the motion, Ramzy Sebie, notwithstanding the fact that Streeterlaw has not filed an appearance on behalf of that party.

10. Direct Streeterlaw to file a notice of appearance on behalf of the second respondent, Ramzy Sebie, by 10am on Thursday, 26 April 2018

11. If Order 10 of these orders is not been complied with, grant liberty to the plaintiffs to immediately re-list these proceedings between 2pm and 4pm on Thursday, 26 April 2018 with a view to the Court making final orders that day against the second respondent to the 18 April 2018 motion.

12. Vacate the date set for the costs hearing in this matter on 3 May 2018 and request that my associate notify all parties, including the Registrar in General, with a view to them fixing another mutually convenient date to argue all questions of costs including the costs of the Registrar in General.

13. Order that the solicitor for the plaintiffs serve a copy of these orders on all parties by 6.00pm today.

14. Order that these orders may be taken out forthwith.

Schedule A

“Threat to me and children on 23 April 2018

26   At around 2:45 pm on 23 April 2018 two men of Arabic appearance attended by office at 22 Smart Street, Fairfield. They were both taller than me, and bulky. They both had tattoos on their arms. Based on my observations, they were in their mid 30s. They asked my assistant, Jo, to speak with me. I then came out of my room to speak with them. We had a conversation which included words to the following effect:

Man:   The proceeding in court tomorrow concerning the Chiswick property involves a lot of parties. We know where your children go to school.

The man then showed me a document which was a page from my firm’s website with some handwritten information on it. The conversation continued:

Me:   What is your relationship to the Sebie family? Can I see a copy of your driver’s licence?

Man:   My name is Jo. I will not show you my driver’s licence.

Me:   If you have no relationship to the Sebie family, please leave the office.

The two men then left the office.”

**********

Decision last updated: 02 May 2018