Prime Capital Securities Pty Ltd v Nusage Pty Ltd (No 2)

[2024] ACTSC 119

SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

Case Title:

Prime Capital Securities Pty Ltd v Nusage Pty Ltd (No 2)

Citation: 

[2024] ACTSC 119

Hearing Date: 

18 April 2024

Decision Date: 

24 April 2024

Before:

Mossop ACJ

Decision: 

See [29] and [30]

Catchwords: 

MORTGAGES – MORTGAGES AND CHARGES GENERALLY – Remedies of the mortgagee – where mortgagor defaulted on loan and order for possession made in favour of mortgagee –common ground that property needs to be sold – application for stay of order to enable mortgagor to sell property on most favourable terms – interim stay granted

PRACTICE AND PROCEDURE – PARTIES – Application for nonpublication order – where grounds for seeking order may become fact in issue in proceedings – interim nonpublication order made

Legislation Cited: 

Australian Securities and Investments Commission Act 2001 (Cth), s 12CB

Court Procedures Rules 2006 (ACT), r 2013

Evidence (Miscellaneous Provisions) Act 1991 (ACT), s 111

Guardianship and Management of Property Act 1991 (ACT)

Cases Cited: 

GE Personal Finance Pty Ltd v Smith [2006] NSWSC 889; NSW ConvR 56‑164

Permanent Custodians Ltd v Bunn [2008] ACTSC 21

Prime Capital Securities Pty Ltd v Nusage Pty Ltd [2024] ACTSC 36

Stubbings v Jams 2 Pty Ltd [2022] HCA 6; 276 CLR 1

Parties: 

In proceedings SC 289 of 2023

Prime Capital Securities Pty Ltd ( Plaintiff)

Nusage Pty Ltd ( Defendant)

Jia Tian ( Applicant)

In proceedings SC 140 of 2024

Jia Tian BHLG Aaron Torline (First Plaintiff)

Nusage Pty Ltd (Second Plaintiff)

Prime Capital Securities Pty Ltd ( Defendant)

Representation: 

Counsel

D Robens (Prime Capital Securities Pty Ltd)

R Markham (Jia Tian and Nusage Pty Ltd)

Solicitors

Lexmerca Lawyers (Prime Capital Securities Pty Ltd)

Adero Law (Jia Tian and Nusage Pty Ltd)

File Number:

SC 289 of 2023

SC 140 of 2024

MOSSOP J:

1․Ms Jia Tian is a Disability Support Pensioner and is the sole director and shareholder of the company Nusage Pty Ltd (Nusage). In 2021, acting through a finance broker, Nusage obtained a loan for $850,000 from Prime Capital Securities Pty Ltd (Prime). The loan was used to purchase a six‑bedroom residential property in Ainslie where Ms Tian lives, which is the subject of the proceedings (the property). The registered proprietor of the property is Nusage and, in 2022, it defaulted on the loan. Prime sought possession of the property against Nusage (SC 289 of 2023) (the initial proceedings). In the initial proceedings, Ms Tian was unrepresented. On 30 January 2024, McWilliam J made an order for possession: see Prime Capital Securities Pty Ltd v Nusage Pty Ltd [2024] ACTSC 36. Her Honour ordered possession to be provided by 16 March 2024. Her Honour also made some comments about the features of the transaction in light of the decision of the High Court in Stubbings v Jams 2 Pty Ltd [2022] HCA 6; 276 CLR 1, and the inability, despite genuine endeavours, for Ms Tian to obtain legal assistance.

2․As a consequence of the publication of her Honour’s reasons, Ms Tian was able to obtain legal assistance from her current solicitors.

3․Ms Tian then applied for a stay of the orders and a reinstatement of Nusage, which had been deregistered by Australian Securities and Investments Commission (ASIC). That application was listed before me and the parties agreed to orders requiring ASIC to reinstate Nusage, directing Nusage and Ms Tian to commence any new proceedings against Prime by 17 April 2024, and staying the order for possession until an interlocutory application in the new proceedings could be heard.

4․New proceedings were commenced (SC 140 of 2024) (the new proceedings) in which Ms Tian, acting by her litigation guardian, Mr Torline, is the first plaintiff and Nusage is the second plaintiff. Prime is the defendant. Unless specific reference is made to the initial proceedings, these reasons will refer to the parties according to their roles in the new proceedings, rather than by their roles in the initial proceedings.

5․The claim in the new proceedings is one of unconscionability in equity as well as unconscionable conduct in breach of s 12CB of the Australian Securities and Investments Commission Act 2001 (Cth). Amongst other orders, the claim seeks an order that only the principal of the loan be repayable.

6․In the new proceedings, interlocutory relief is also claimed. For present purposes, the principal interlocutory relief is a continuation of the stay of the orders made in the initial proceedings until 31 October 2024. That is sought pursuant to r 2013(1)(a) of the Court Procedures Rules 2006 (ACT). The plaintiffs also seek an order under s 111 of the Evidence (Miscellaneous Provisions) Act 1991 (ACT) forbidding the publication of the names of the first and second plaintiffs and replacing them with pseudonyms. Finally, the plaintiffs seek “[a] declaration that the Defendant does not hold an enforceable interest in the surplus funds from the first mortgagee’s power of sale of [a specified property different from the property in Ainslie]”.

7․At the hearing before me on 18 April 2024, the plaintiffs moved upon the application for an extension of the stay and for the pseudonym orders. The orders relating to the surplus funds were not sought and the evidence in relation to that issue was only relied upon insofar as it was relevant to the discretion to grant a further stay.

8․The evidence put before the court established, sufficiently for the purposes of the interlocutory application, that Ms Tian has suffered from schizophrenia, complex post‑traumatic stress disorder, anxiety and depression. I say “sufficiently for the purposes of the interlocutory application” in order to make it clear that I am not reaching any final finding of fact on that issue, which is likely to be a fact in issue in the new proceedings. Rather, I am simply reflecting the limited but uncontradicted evidence on the interlocutory application. Ms Tian has been hospitalised for her mental health conditions in the past. She also suffers from some physical disabilities which are unnecessary to set out. Her condition varies from time to time. The evidence of her mental state is not up to date, with the most recent evidence being from September 2023.

9․The evidence indicates that she can present well and, as a consequence, be refused ongoing mental health assistance from government mental health services. A doctor’s letter from 2022 gives an indication of her condition at that stage as follows:

The severity of each condition varies over time. At present I am most concerned about the schizophrenia. Ms Tian has more negative than positive symptoms of schizophrenia so that she struggles with organisation and planning and at present has no symptoms of psychosis such as hallucinations but does have some paranoia. Due to poor organisation Ms Tian at times forgets medication, struggles to organise her activities of daily living such as food and housing and changes medical appointments from face-to-face to telephone consultations at the last minute.

10․The evidence also establishes that the property is filled with items in a manner consistent with what might be expected from someone with disabling hoarding behaviour. It shows rooms piled high with items to such an extent that it is impossible to walk through them without obstruction.

11․The position adopted by Ms Tian in both sets of proceedings recognises that the property needs to be sold. She wishes to do that herself so that:

(a)she can remove her belongings from the property in an orderly manner; and

(b)she can undertake basic repairs to the property so as to put it in a saleable condition and hence have it sold on terms more favourable than if those issues were not addressed.

12․I was told at the hearing that the nature of the repairs sought to be undertaken was, for example, to ensure that electrical items such as lights were functioning and that there was hot and cold water available.

13․A stay would also allow her to find alternative accommodation, although pending the sale of the property or the release of the surplus funds, she cannot afford to pay for alternative accommodation.

14․The evidence established that the amount owed to Prime under the loan as at 12 December 2023 was $1,169,331.97, and that this was increasing at the rate of approximately $17,000 per month. There was also evidence that the expected sale price for the property was substantially in excess of that amount, or the amount to which the loan liability would have reached in six months’ time. The plaintiffs therefore submitted that the position of Prime was protected because the security for the loan easily covered the maximum extent of liability, even if the stay was granted for the period sought.

15․The submissions made by Prime were that a stay of an order for possession should not be continued, and that it had the financial and other capacity to remove items from the property and have the property sold. Counsel submitted that, even if the new proceedings were successful, there had undeniably been a loan of $850,000 from Prime to Nusage which would need to be repaid, and that there was an admitted default on the mortgage entitling Prime to possession. He indicated that Prime was willing to place items removed from the property in storage. He indicated that the new proceedings would be met with a claim of issue or Anshun estoppel, arising out of the making of final orders in the initial proceedings by McWilliam J.

16․The evidence of the plaintiff indicated that there was another property which Ms Tian owned, which was sold by a mortgagee in possession and which generated surplus funds presently amounting to $185,691.74. The lawyers acting for the mortgagee in that process have indicated that for the surplus funds to be released, there would need to be either an agreement between Ms Tian and Prime, or an order of a court directing their payment. The solicitors for the plaintiffs have proposed to Prime that the surplus funds be released to Ms Tian so as to give her the financial resources to empty the property and bring it to a condition where it could be sold, as well as to pay for alternative accommodation for Ms Tian. However, no agreement has been able to be reached with Prime on that issue and hence the surplus funds remain stuck.

17․Although the plaintiffs did not move on that aspect of their interlocutory application that sought a declaration in relation to the surplus funds, the submissions advanced by the plaintiffs emphasised the need for the release of the funds in order to permit the plaintiffs to proceed with the sale of the property. The plaintiffs sought to rely upon the absence of a positive response by Prime to the plaintiff’s proposal that the surplus funds be released as a discretionary matter reflecting adversely on the conduct of Prime and hence favouring the grant of a stay. However, the emphasis that the plaintiffs put on the need for those funds to be released to permit the remediation and sale of the property, and their insistence that they did not otherwise have sufficient financial resources to enable this to occur, undermined the plaintiffs’ case for a stay in circumstances where those funds were not released because it called into question the plaintiffs’ capacity to do what needs to be done in a prompt and efficient manner in the absence of those funds.

18․The steps that need to be taken in relation to the sale of the property are relatively straightforward.

(a)clear out the items that are presently in the property, by either disposing of them or putting them into storage;

(b)undertake any essential repairs that make it reasonably saleable; and

(c)engage a real estate agent to market it for sale.

19․None of these activities require significant amounts of money (relative to the value of the proceeds of sale) or should involve any significant delay. There is, however, potential for delay if progress is contingent upon Ms Tian’s participation in, and decision‑making in relation to, that process. Further, the manner in which submissions were put as to the significance of the release of the surplus funds tended to emphasise the difficulty that would be experienced if those funds were not released. Having regard to the fact that no agreement has been reached in relation to the surplus funds and the application for orders in relation to those funds was not pursued at this stage, the surplus funds will not be released. If those funds were truly essential to the making of progress, then progress is unlikely to be made.

20․Rule 2013 provides that the court may, by order, stay the enforcement of all or part of an order, including because of facts arising or discovered after the order was made, and may make the orders it considers appropriate, including, for a money order, an instalment order. This rule gives the court a wide discretion to stay the enforcement of an order: see Permanent Custodians Ltd v Bunn [2008] ACTSC 21 at [4]. There is no time limit on the stay that may be granted. However, the starting point must be that the judgment creditor is entitled to have a judgment enforced without delay.

21․The decision of Johnson J in GE Personal Finance Pty Ltd v Smith [2006] NSWSC 889; NSW ConvR 56‑164 deals with three different, but commonly encountered, circumstances in which a stay of possession of property may be sought. They are:

(a)where default judgment has been granted but the proceedings are to be defended;

(b)where the loan is to be refinanced; and

(c)where the property that is security for the loan is to be sold.

22․In that third category of case, his Honour said (at [20]) that cooperation between plaintiff and defendant may have the effect of maximising the prospect of a favourable sale price, but that an application for a stay may encounter difficulties if arrangements for the sale are left to the last minute when a writ of possession is about to be executed. His Honour also indicated that a stay may be sought on hardship grounds, but that unless one of the three categories of circumstances are established, there should be no reasonable expectation of an extended stay on hardship grounds alone.

23․Having regard to the commencement of the new proceedings challenging the enforceability by Prime of the agreements entered into by the plaintiffs, the apparent willingness to have the property sold and the evidence that the proceeds of the sale are likely to be adequate to easily pay out the liability to Prime as at the anticipated sale date, there is a proper basis for the continuation of the stay. However, the evidence is insufficient to establish an appropriate timetable for the emptying of the property and it being put in a saleable condition. The evidence is also inadequate to establish how that can be achieved in circumstances where there is an apparent lack of funds and no manager of the property appointed under the Guardianship and Management of Property Act 1991 (ACT) which might relieve Ms Tian of the necessity that she make all of the decisions required.

24․In circumstances where her litigation guardian is an insolvency practitioner and where she is represented by solicitors, evidence of the type required may not be difficult to produce. However, it has not been produced to date.

25․The submission that a stay should be granted for a period of six months is an unattractive one in circumstances where the capacity to undertake each of the steps necessary has not been demonstrated and where that timeframe appears to revolve around the decision‑making capacity of a mentally impaired person. It is difficult to see, on the evidence that has been put before the court, why the steps to bring the property to a condition where it can be marketed for sale should take longer than between two and six weeks, if addressed in an appropriately energetic and competent manner.

26․Rather than refuse the continuation of a stay due to the present inadequacy of evidence, I consider that it is appropriate to permit the plaintiffs a further seven days in which to file any further evidence that they wish, to address:

(a)the steps that have been taken in relation to the property between the date of the last hearing on 18 April 2024 and today;

(b)the steps that will be undertaken in the future;

(c)the date on which each of those steps will be undertaken;

(d)who will undertake those steps; and

(e)how each of those steps will be funded.

27․It will then be possible to consider whether a stay should be granted and, if so, for how long and on what conditions. It will also be necessary to make directions in relation to the progress of the new proceedings.

28․So far as the application for a pseudonym order is concerned, although an opposing party would usually not have any interest in whether or not a pseudonym order was made, in the present case counsel for Prime said that he had not had an opportunity to consider the issue and wished to consider whether Prime ought to make any submissions on the issue, having regard to the fact that the extent of mental impairment is likely to be a fact in issue in the new proceedings. While the previous publication of McWilliam J’s earlier decision on the Internet tends to undermine the capacity of the court to make a practically useful order for the future, I will make a short‑term nonpublication order so as to preserve the position in relation to these reasons.

29․Although the application for interlocutory orders was made in the new proceedings, given that what is sought is a stay of enforcement in the initial proceedings pursuant to r 2013, it is appropriate to make the stay order in the initial proceedings.

30․In proceedings SC 289 of 2023, the orders of the Court are:

1.The defendant has leave to file and serve no later than 1 May 2024, any further evidence in support of the application for a stay of the order for possession made on 30 January 2024.

2.The proceedings are listed at 9:30am on 3 May 2024 before Mossop J.

3.Order 2 made on 18 April 2024 is discharged and the orders made by McWilliam J on 30 January 2024 are stayed until 4pm on 3 May 2024.

4.Pursuant to s 111 of the Evidence (Miscellaneous Provisions) Act 1991 (ACT), the publication of a report of the evidence referred to in the reasons given on 24 April 2024, or the publication of the names of Nusage Pty Ltd or of Jia Tian as referred to in those reasons, is forbidden until 4pm on 3 May 2024.

5.Nothing in order 4 prevents publication of the reasons given on 24 April 2024 to the parties and their legal advisers.

6.Costs are reserved.

31․In proceedings SC 140 of 2024, the orders of the Court are:

1.Order 2 made on 18 April 2024 is discharged.

2.The proceedings are listed at 9:30am on 3 May 2024 before Mossop J.

3.Costs are reserved.

I certify that the preceding thirty-one [31] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Acting Chief Justice Mossop.

Associate:

Date: 2 May 2024