Ravenswood Pty Ltd v Caruso - [2017] SASC 31

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
RAVENSWOOD PTY LTD v CARUSO
[2017] SASC 31
Reasons for Decision of The Honourable Justice Nicholson
9 March 2017
MORTGAGES - MORTGAGES AND CHARGES GENERALLY - RIGHTS AND LIABILITIES OF MORTGAGOR AND MORTGAGEE - POSSESSION - RIGHTS AND LIABILITIES OF MORTGAGEE IN POSSESSION
APPEAL AND NEW TRIAL - APPEAL - PRACTICE AND PROCEDURE - SOUTH AUSTRALIA - STAY OF PROCEEDINGS
On Friday 3 March 2017 a Judge of this Court refused Mr Caruso's application for a stay of execution of a warrant for possession. The warrant was executed on Monday 6 March 2017 and possession handed over to Ravenswood Pty Ltd, the mortgagee. On 6 March 2017 but after the execution of the warrant, Mr Caruso applied a second time for a stay of execution. The application came before a different Judge.
Held: Application dismissed.
Supreme Court Civil Rules 2006 r 289, r 290; Land and Business (Sale and Conveyancing) Act 1994 s 5, referred to.
Caruso v Ravenswood Pty Ltd [2017] SASC 15; House v The King [1936] HCA 40, (1936) 55 CLR 499, considered.

RAVENSWOOD PTY LTD v CARUSO
[2017] SASC 31
Civil
NICHOLSON J.
Introduction

The background to Mr Caruso’s present interlocutory application before me, filed on 6 March 2017 (FDN 37) can be discerned from the judgment of Bampton J delivered on 17 February 2017 in Caruso v Ravenswood Pty Ltd[1] and the transcript of proceedings before Blue J who heard and determined an earlier interlocutory application by Mr Caruso last Friday, 3 March 2017.
[1] [2017] SASC 15.
Essentially, on 7 September 2016, a Master of this Court made an extended order for possession of the relevant property in favour of Mr Caruso’s mortgagee. The order was to the effect that Mr Caruso was to give possession within 70 days rather than the usual 14 days in order to allow time for Mr Caruso to procure refinancing. The Master had been informed that Mr Caruso had entered into a contract to sell the property for $1,200,000 with a three month settlement and that in the meantime he would refinance within four to six weeks. As it happened, no contract to sell and no refinancing came to fruition.
In due course, a warrant authorising the sheriff to obtain possession of the property on behalf of the mortgagee was issued by this Court. Meanwhile and to date, Mr Caruso has taken various curial and extra curial steps to have the order for possession set aside and the execution of the warrant for possession stayed, without success.
In the hearing before Blue J on 3 March 2017, Mr Caruso sought a stay of execution of the warrant pending the resolution of an appeal to the Full Court (FDN 36) against the judgment of Bampton J which in turn had dismissed Mr Caruso’s appeal from the order for possession made by the Master on 7 September 2016. Blue J refused to stay the execution of the warrant but did stay any subsequent sale of the property until the determination of Mr Caruso’s appeal from Bampton J which Blue J specially listed for hearing on 3 April 2017.
On Tuesday 7 March 2017, Mr Caruso filed an appeal (FDN 39) to the Full Court against Blue J’s decision to refuse a stay of execution of the warrant for possession. That appeal requires permission (as recognised by Mr Caruso in the filed notice of appeal). That permission needs to be sought in accordance with the procedures set down in rules 289 and 290 of the Supreme Court Civil Rules 2006 and supplementary rule 231.
Last Monday, 6 March 2017, the warrant for possession was executed by the sheriff. Possession of the property was obtained and the locks changed. The applicant and his son were thereupon excluded from the property. Possession was handed over to the mortgagee bearing in mind, as the mortgagee acknowledges, the existing stay ordered by Blue J in respect to any sale of the property.
On Monday 6 March 2017, Mr Caruso filed the interlocutory application together with an affidavit in support sworn by Mr Caruso that same day (FDN 37 and 38 respectively) that are now before me. It would appear that this application was filed the same day but after the warrant had been executed and possession obtained by the sheriff (see paragraph 6 of the affidavit). In this application, Mr Caruso sought a variation of the orders made by Blue J.
Blue J’s orders included, relevantly, the following:
4.The application for a stay of execution of the warrant for possession is dismissed.
5.The sale of the property by [the mortgagee] is stayed pending the hearing and determination of the appeal.
6.Liberty to apply.
The orders sought by Mr Caruso in the interlocutory application that is now before me are as follows.
1.That the order for possession of the Honourable Judge Blue made on 3 March 2017 herein be varied by staying the enforcement of the said order until the determination of the notice of appeal dated 1 March 2017 to the Full Court of this Honourable Court has been made.
2.An order permitting the defendant to re-key the locks to the subject property and retain possession of, and the keys to, the premises, until the determination of the said appeal by the Full Court has been made.
3.Costs.
4.Such further or other orders as the Court deems fit.
The effect of the application is to have another Judge of coordinate jurisdiction revisit the application before Blue J for a stay of the execution of the warrant for possession made only last Friday. In my view, the application before me lacks utility and is an abuse of process.
The warrant for possession has now been executed. Furthermore it was, in any event, to expire on Tuesday 7 March 2017 by effluxion of time. There now is nothing left to stay and this was so at the time Mr Caruso filed his application. The warrant has been exhausted. Whilst Mr Caruso remains the registered proprietor of the property and is able to deal with the property in that capacity albeit subject to the legal rights of the mortgagee, he no longer has possession or entitlement to possession by force of law. The legal right to possession now rests with the mortgagee. Accordingly, in order for Mr Caruso to demonstrate an entitlement to possession such that his Court might make an order directing the mortgagee to return possession to Mr Caruso, he would need to demonstrate a legal basis for any such entitlement over and above his being the registered proprietor who has by operation of law given up his entitlement to possession. Neither by his affidavit nor by the submissions put by Mr Caruso when the matter was called on for hearing before me on 8 March 2017 has Mr Caruso demonstrated any such legal entitlement.
Furthermore, but for one potential consideration, there is nothing in Mr Caruso’s affidavit to suggest a change in circumstances such that would support a revisiting of the stay application heard by Justice Blue only last Friday afresh.
Mr Caruso relies on his notice of appeal from Blue J’s orders filed on Tuesday 7 March 2017 (FDN 39) as providing a justification for revisiting the stay application. In my view, the prospects of succeeding with an appeal against Blue J’s decision are low. Blue J made a discretionary judgment and, it would appear, had regard to all relevant considerations and did not embark on any irrelevant considerations when exercising his discretion whether or not to grant the stay. As such, the principles set out by the High Court in House v The King,[2] will apply. In any event, given that the warrant has been executed, any appeal from Blue J’s decision will also lack utility.
[2] [1936] HCA 40; (1936) 55 CLR 499.
The one potential new consideration (even if the lack of utility issue could be overcome) arises from the fact that during the hearing on 8 March 2017, Mr Caruso handed up a copy of a contract for sale of the relevant property, apparently executed and entered into by Mr Caruso as vendor and another person, JSS, as purchaser on the day of the hearing, that is, 8 March 2017.
The contract, on its face, records an agreement to sell the subject property for $1,300,000 with settlement to take place on 10 April 2017 but subject to the purchaser obtaining finance in the amount of $1,000,000 on or before 30 March 2017. The contract provides for vacant possession to be provided to the purchaser at settlement.
According to Mr Caruso, the purchaser was first approached last Saturday, that is, after Blue J had refused the stay. The purchaser apparently inspected the property on the Sunday and entered into the contract the following Wednesday, which was yesterday. I have no information before me as to whether or not Mr Caruso has served on the purchaser the vendor’s statement as required by section 5 of the Land and Business (Sale and Conveyancing) Act 1994.The cooling off period will not commence to run until that notice has been served. As such, it is not possible to know when the contractual cooling off period will expire. However, the earliest time it could expire would be the end of the second clear business day after the day on which the contract was entered into, provided the notice were to have been served on that day. As such, I am satisfied that the contractual cooling off period has not yet expired (see s 5(8) of the Land and Business (Sale and Conveyancing) Act 1994). During the cooling off period, the purchaser has an unfettered right to withdraw from the contract.
Furthermore, the subject to finance clause is generously drawn. The purchaser is obliged to use best endeavours to obtain a loan from a specified lender, the Delphi Bank, on or prior to 30 March 2017 (approximately three weeks hence) in the amount of $1,000,000 for a term “as agreed” at an interest rate being “the agreed residential rate” and with respect to repayment terms “as agreed”. In addition, such evidence as there is before the Court suggests the likely value of the property to be well less than $1,000,000. As at 1 January 2016, the Valuer-General’s valuation was $750,000 and at an auction on 22 July 2016 the property was passed in at $800,000 on a vendor’s bid.[3]
[3] Affidavit of Karen Olsson sworn 8 December 2016, FDN 22.
In all the circumstances, the prospects of the purchaser being able to procure the finance required, of Mr Caruso being able to enforce any such contractual obligation as he would appear to have against the purchaser that he use best endeavours to obtain such finance prior to 30 March 2017 and of, ultimately, the sale of the property settling on or before 10 April 2017, must be regarded as extremely guarded.
In any event, I do not regard the existence of this contract for sale as enhancing in any material way Mr Caruso’s claim for a stay of the warrant for possession. It adds nothing to the balance of convenience matters dealt with by Blue J. Indeed, the inconvenience to Mr Caruso of having been deprived of his residence and his place of business, as canvassed before Blue J and during the hearing before me, would appear to have been lessened by the presence of this contract. In the contract Mr Caruso has unconditionally promised that in the event of settlement on 10 April 2017 he will give vacant possession to the new purchaser. On Mr Caruso’s own case he will be obliged to vacate the premises in approximately four weeks time, in any event.
The existence of the contract of sale may have some bearing on the issues to be considered by the Full Court on 3 April 2017 during its hearing of the appeal from the judgment of Bampton J. In the event that Mr Caruso, by then, were to be able to demonstrate that he had an unconditional contract for sale with finance approved, the Full Court might consider allowing time to enable the contract to settle on 10 April 2017. In such a case, and in the event that all monies properly due under the mortgage were to be tendered, the mortgagee would be obliged to honour the equity of redemption and to discharge its mortgage and permit the sale to be completed.
Finally, I add that in the event that I were to be wrong with respect to the question of utility, I am satisfied for the reasons provided by counsel for the mortgagee both to Blue J and in the hearing before me that, should Mr Caruso be restored to possession, significant detriment would be caused to the mortgagee. It would have to, in effect, start again the lengthy and complex process of obtaining an order for possession and a warrant for possession. As I have already indicated, and independently of the lack of utility issue, Mr Caruso has provided no further information or submissions that would cause me to decide the balance of convenience question differently from the way in which it was decided by Blue J. The fact that Mr Caruso will be out of possession of his property until the hearing of the appeal on 3 April 2017 and the inconveniences this will cause him both with respect to his residential arrangements and his business arrangements, does not carry sufficient weight in this respect.
Mr Caruso’s interlocutory application filed 6 March 2017, FDN 37, is dismissed.
I will hear the parties on the question of costs.