Australia and New Zealand Banking Group Ltd v Kavia Holdings Pty Ltd

EX TEMPORE Judgment (REVISED) 1By a Commercial List Summons filed on 20 September 2013, the plaintiff ("the Bank") seeks possession of a property at Elizabeth Bay ("the Property"). As originally constituted, the only defendant to the proceedings was Kavia Holdings Pty Ltd (Administrators Appointed) (Receivers and Managers Appointed). Kavia is the registered proprietor of the Property and the mortgagor of it to the Bank. 2The matter was first before the Court on 4 October 2013. On that occasion, the second and third defendants, Mr and Mrs Crawley were joined as parties to the proceedings. Mr and Mrs Crawley sought to have the proceedings transferred to the Possession List in the Common Law Division. Hammerschlag J declined that application and listed the matter for hearing today. 3Kavia was placed into administration on 16 April 2013. The administrators do not appear and do not oppose the orders sought by the plaintiff. 4Mr and Mrs Crawley, at all relevant times, have been directors of Kavia. Mr Crawley is a 49 per cent shareholder in Kavia. Mr and Mrs Crawley are in occupation of the Property. On 27 March 2012, Mr and Mrs Crawley executed a Residential Tenancy Agreement ("the Lease"). They executed the Lease as directors of Kavia (as lessor) and personally (as lessees). The term of the Lease commenced on 31 March 2012 and expiries on 28 February 2015; a term of two years and eleven months.

Basis of the Bank's case 5The Bank's claim for possession arises from the following facts. 6On 12 May 1992, Kavia granted the Bank a first registered mortgage ("the Mortgage") over the Property. 7The Mortgage was expressed to be "in consideration of all or any loans advances credits or banking accommodation whether made created or given on the signing hereof or that may hereafter be made created or given in its discretion by the Bank to for or on account of [Kavia]." 8Clause 1 of the Mortgage contained the following provision: "That [Kavia] will on demand in writing pay to the Bank... the amount or balance which shall for the time being be owing or unpaid by [Kavia]... to the Bank... for or in respect of all loans advances credits or banking accommodation heretofore made created or given by the Bank or now or which may hereafter be made created or given by the Bank to for or on account or at the request of [Kavia]... or in respect of any indebtedness from [Kavia]... to the Bank on any account whether now existing or which may hereafter be opened or by any means whatsoever including all sums which [Kavia]... is or may hereafter become liable immediately or contingently to the Bank upon or in respect of any account or accounts in which [Kavia]... is now or may hereafter be interested or concerned...". 9The Mortgage was thus an "all moneys" mortgage. 10The Mortgage was granted, originally, to secure to the Bank an advance then made by it to Kavia of $1.85 million to secure the purchase by Kavia of the land on which the Property is located, and the buildings then on that land. 11Some 19 years later, on 28 July 2011, the Bank, by Letter of Offer offered to make available to Kavia a range of facilities in an amount in the order of $60 million. The Letter of Offer was addressed to the "Aldonet Group", of which Kavia is evidently a member. The various members of the Aldonet Group, including Kavia, accepted the Bank's offer. Mr and Mrs Crawley accepted the Letter of Offer on behalf of Kavia as its directors. 12The facilities in the Letter of Offer relevantly terminated on 29 February 2012. Upon termination of the facilities, the outstanding amount under them was due and payable. 13Mr and Mrs Crawley thus executed the Lease within a month of the termination of the facilities. 14The Bank made demand on Kavia on a number of occasions for the amounts due under the facilities referred to in the Letter of Offer. Relevantly, the Bank purported to make demand on Kavia on 5 February 2013 in circumstances to which I will refer further below. 15There is no dispute that Kavia is liable to, but has not paid, the amount the subject of the demand of 5 February 2013. The amount due is, as at today, $45,499,296.53. 16Mr and Mrs Crawley seek to resist the Bank's claim for possession of the Property on three bases.