Southern Cross Constructions (NSW) Pty Limited v Salfa Pty Limited (In Liquidation) (Receivers and Managers Appointed)
[2009] NSWSC 634
•30 June 2009
CITATION: Southern Cross Constructions (NSW) Pty Limited v Salfa Pty Limited (In Liquidation) (Receivers and Managers Appointed) [2009] NSWSC 634 HEARING DATE(S): 30 June 2009 JUDGMENT OF: Hammerschlag J EX TEMPORE JUDGMENT DATE: 30 June 2009 DECISION: Declaration that plaintiff has equitable mortgage CATCHWORDS: REAL PROPERTY – mortgages – LEGISLATION – Home Building Act 1989 (NSW) – s 7D - whether terms of a deed between the plaintiff and the defendants conferred on the plaintiff an equitable mortgage in respect of certain parcels of land or whether s 7D Home Building Act 1989 (NSW) prevented such an interest – held the section did not apply to the contract embodied in the deed and that the plaintiff was entitled to declarations that it held mortgage interests in the land LEGISLATION CITED: Corporations Act 2001 (Cth)
Home Building Act 1989 (NSW)PARTIES: Southern Cross Constructions (NSW) Pty Limited - Plaintiff
Salfa Pty Limited (In Liquidation) (Receivers and Managers Appointed) ACN 082 308 101 - First Defendant
John Vouris as receiver and manager of Salfa Pty Limited - Second Defendant
Robert William Whitton as receiver and manager of Salfa Pty Limited - Third Defendant
Ferry Asset Holdings Pty Limited ACN 125 330 243 - Fourth Defendant
James Joseph Ferry - Fifth Defendant
Philip Harold Mudge - Sixth Defendant
Andrew Bagg - Seventh DefendantFILE NUMBER(S): SC 50018/2009 COUNSEL: A.G. Bell SC [Plaintiff] SOLICITORS: Henry Davis York [Plaintiff]
Colin Biggers & Paisley [First Defendant]
NOT Lawyers [Second, Fourth & Fifth Defendants]
ERA Legal [Seventh Defendant]
IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
COMMERCIAL LIST
HAMMERSCHLAG J
30 JUNE 2009
50018/2009 SOUTHERN CROSS CONSTRUCTIONS (NSW) PTY LIMITED -V- SALFA PTY LIMITED (IN LIQUIDATION) (RECEIVERS & MANAGERS APPOINTED) & ORS
EX TEMPORE JUDGMENT
1 HIS HONOUR: By amended summons filed in Court on 5 June 2009 the plaintiff moves for:
a a declaration that it holds a valid and enforceable equitable mortgage in respect of the real property described in folio identifier 14/SP76969;
b a declaration that it holds a valid and enforceable equitable mortgage in respect of the real property described in folio identifier 21/SP76969; and
c a declaration that the first defendant is indebted to it in the sum of $2,068,875.54 as at 11 June 2009 plus interest thereafter accruing at a rate of 15 percent per annum compounding annually on 12 June of each year.
2 It does not seek any order as to costs.
3 In support were read an affidavit of Andrew Peter Box sworn 11 June 2009 and an affidavit of James Falconer affirmed 25 June 2009.
4 The first defendant was placed under a winding-up order on 10 June 2008.
5 On 6 February 2009 leave was given to the plaintiff pursuant to section 471B of the Corporations Act 2001 (Cth) to proceed for this relief.
6 The first defendant's liquidator thereafter filed a submitting appearance.
7 All other parties to this suit have filed submitting appearances.
8 The basis for the relief is a Deed made on the 20 December 2006 (“the Deed”) by the plaintiff, the first defendant, the fifth defendant, the sixth defendant and the seventh defendant.
9 The defendants are the owners of the two subject properties which are strata units and which were built by the plaintiff for Gemshine Pty Ltd, the developer.
10 Under the Deed the defendants agreed to provide the subject properties to the plaintiff as security for monies owed to it by Gemshine Pty Ltd.
11 Clause 4 of the Deed provids as follows:
4. MORTGAGE
4.1 The Mortgagors agree to mortgage the Security Properties to SCC (the “Mortgages”) to secure the performance by Gemshine and Salfa of their respective obligations under the Security Deed and under this Deed including but not limited to payment of the Debt to SCC.
4.2 The Mortgages incorporate the provisions of Memorandum Number Q860000 filed at Land and Property Information NSW.
4.3 The Mortgagors agree to immediately execute all documentation, including forms of mortgage approved by Land Property and Information NSW required to register the Mortgages as second mortgages if requested by SCC and to do everything reasonably required by SCC to register the Mortgages on the titles of the Security Properties.
4.4 The Mortgagors consent to the lodgement of caveats over the Security Properties by SCC.
4.5 The Mortgagors must not cause or permit any person to acquire any interest in the Security Properties after the date of this Deed without the prior written consent of SCC.
4.6 The Mortgages agree that they will not object to a caveat over the Security Properties by SCC and will not take any steps to remove or for the purpose of removing such caveats on the Security Properties.
4.7 The Mortgagors irrevocably appoint SCC and its officers or duly appointed attorneys jointly and severally as their attorney for the purposes of clause 4.8.
4.8 Each attorney may:
4.8.1 In the name of the Mortgagors or the attorney do anything which the Mortgagors may lawfully authorise an attorney to do in connection with this Deed or the Security Properties which in the attorney’s opinion is necessary or expedient to give effect to any right, power or remedy conferred on SCC by this Deed, or by law including executing any document including without limitation any document the Mortgagors fail to execute in accordance with clause 4.3;
4.8.2 Delegate its powers, including this power of delegation, to any person and may revoke a delegation;
4.8.3 Exercise or concur in exercising its powers even if the attorney has a conflict of duty in exercising its power or has a direct personal interest in the means or result of that exercise of powers.
4.8.4 The Mortgagors agree to ratify and confirm anything done by an attorney or its delegate in accordance with clause 4.8.1.
12 Clause 5.3 of the Deed provides as follows:
5.3 With the exception of the lodgement of caveats over the Security Properties SCC undertakes to take no action to enforce its rights under the Security Deed or this Deed provided that it receives the following payments from Gemshine or Salfa on time:
5.3.1 $125,000.00 on or before 22 December 2006;
5.3.2 $173,000.00 on or before 24 January 2007;
5.3.3 the balance of the Additional Amount on or before 30 March 2007; and
5.3.4 All interest accrued on the Additional Amount plus the costs payable by Salfa pursuant to clause 8.2.3 on or before 30 March 2007.
13 According to the affidavit of Mr Box, on 27 December 2006 the plaintiff received a payment from Gemshine of $125,000 and on 29 January 2007 a further payment of $173,000. As at 11 June 2009 the amount due was $2,068,875 which included interest unpaid. The payment of the balance which was due on or before 30 March 2007 was not and has not been paid, hence these proceedings.
14 Originally there was a controversy as to the entitlement of the plaintiff to the relief, one or more of the defendants taking the point that the deed was void by virtue of s 7D of the Home Building Act 1989 (NSW) which provides relevantly as follows:
“A contract does not give the holder of a contractor licence or any other person a legal or equitable interest in any land, and a provision in a contract or other agreement is void to the extent that it purports to create such an agreement or interest."
15 Section 6(1)(a) of that Act provides that ss 7-7E applies to:
“…a contract under which the holder of a contractor licence undertakes:
(a) to do, in person, or by others any residential building work or any specialist work.”
16 The point has, it seems, by reason of the submitting appearances, now been abandoned, and in my view, properly so. The Deed is not a contract under which the plaintiff agreed to do any work. By the time it was entered into the debt which it purports to secure had already arisen. The work in respect of which the debt arose had by then well and truly been finished. In those circumstances s 7D did not apply to the deed.
17 It follows, in my view, that the plaintiff is entitled to the relief which it seeks. I accordingly make orders in accordance with the document entitled Short Minutes of Order which I have initialled, dated today's date, and placed with the papers.
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