Solicitors:
G Koning (Plaintiff)
B Nott (with leave Defendant)
File Number(s): 2017/374520
[2]
REVISED EX TEMPORE Judgment
I am dealing with a notice of motion filed urgently in a possession matter seeking a further stay of a writ of possession which is due to be executed at 10:00 am on Monday 13 August 2018. This is the third appointment for an eviction in the matter, however I record that the first appointment in May of this year misfired because the sheriff served the notice to vacate at the wrong address. I will not go into the circumstances that have been ventilated about how that might have occurred. Suffice it to say that, it having occurred, this is the second appointment, of which the occupants, including Mrs Nott who occupies the premises with her family, have received.
The matter was set for eviction on 19 June 2018 but on 18 June 2018, when the matter was before the Possession List Judge, Davies J, the parties reached an agreement for a stay in contemplation of the defendants refinancing the mortgage by 7 August 2018. That did not occur, hence this application.
I should say that the original agreement recorded in the consent orders entered by Davies J contemplated in the event of delay the parties may negotiate in relation to the matter. For instance, condition (c) of order 5 is in these terms:
"The defendants are to effect a discharge of the plaintiffs' debt in full by no later than 7 August 2018, with any extension to this timeframe to be agreed by both parties in writing."
That condition, I think, was to be understood with condition (d), which provided the following:
"In the event that A, B or C above are not complied with by the defendants, the defendants undertake not to apply for a further stay of the writ of possession or otherwise contest it, and not to seek to set aside the judgment in these proceedings dated the 3 April 2018."
The orders also provided for the plaintiff to arrange a further appointment for eviction forthwith not before 8 August 2018 notwithstanding the stay. Under this order the appointment for 13 August 2018 was arranged. These arrangements were sensible arrangements in the circumstances, allowing a degree of indulgence to the borrower, but seeking to protect the rights of the Bank which, after all, has a judgment of this Court entitling it to possession because of the default of the borrower.
The notice of motion filed seeks not only an extension of the stay, contrary to the conditions of the last stay, but also raises a matter which was discussed before Davies J when the matter was last before his Honour. That is to say, the applicant for the stay, the defendant, is seeking 14 days to file a defence regarding the application of the Farm Debt Mediation Act 1994 (NSW) ("Farm Debt Mediation Act") to this matter. As Mr Koning, solicitor for the Bank, has pointed out, and as I raised at the outset with Mrs Nott, who has the authority of the defendant's company to appear today, normally if a party wishes to be let in to defend a matter in respect of which default judgment has been entered it is incumbent upon the defendant to seek in express terms an order setting aside the judgment which must be supported by an affidavit providing a full and satisfactory explanation for the delay, and evidence of facts, which if accepted at a trial, would demonstrate that the defendant has a fair and arguable defence. Now, that has not been done.
The present motion does not seek to set aside the judgment, and the present affidavit does not really address those matters. But it may be said some explanation might be inferred, given the previous agreement of the parties for a stay, and the efforts that have been made in the meantime to achieve Mrs Nott's desire, which is to refinance the loan. Making every allowance for the fact that she is self-represented, that may be sufficient. But I am not required to decide that issue today.
The second matter is whether there is an arguable defence. It is obviously impossible for me, sitting hearing this urgent application, to make any considered judgment about the application of the Farm Debt Mediation Act. I interpolate that on my understanding of the scheme of the Farm Debt Mediation Act, at best, in any event, it provides limited respite for a borrower for a period not exceeding six months. Moreover, the Farm Debt Mediation Act was not raised until May, when Mrs Nott sent a request for mediation to the Bank, which the Bank declined, not out of hand but for carefully expressed reasons explaining the Bank's view that the Farm Debt Mediation Act does not apply for this particular debt.
I must say that the argument in relation to the application of the Farm Debt Mediation Act on the material before me is not very strong. I acknowledge that there is a body of evidence which suggests that this is not a farm debt, although Mrs Nott has sought to explain that evidence. There is a question whether, having regard to the various enterprises the defendant is engaged in, it is not a farmer. Mr Koning drew to my attention a decision of Walton J in another case, involving a different creditor, to the effect that his Honour was satisfied that the Farm Debt Mediation Act did not apply. I have not read the decision, but from what I have been told by Mr Koning, this was principally because his Honour was not satisfied that Reavill Farm Pty Ltd ("Reavill") was a farmer: Southern Cross Credit Union Ltd v Reavill Farm Pty Ltd [2018] NSWSC 999. Now, obviously, the parties being different there is no issue estoppel arising out of his Honour's decision which binds the Court in deciding this case. But it does demonstrate the difficulties which the defendant may have in demonstrating a fair and arguable defence if an application were to be made to set aside the judgment.
It did seem to me also from the evidence before me that there is a question at least not only about whether the debt is a farm debt but also about whether Reavill is a farmer. Under s 4 of the Farm Debt Mediation Act farmer means a person, including a company, who is solely or principally engaged in a farming operation. It is unnecessary to refer to the extended definition. On the case that Mrs Nott has sought to carefully present, at its highest it would seem, that the greatest part of the income of the defendant derived from primary production is of 45 per cent, indeed 45.63 per cent. Looking at something as elementary as the raw numbers it may be difficult to establish that Reavill is solely or principally engaged in a farming operation. I acknowledge income is not the sole test, however those observations demonstrate that were all the evidence to be led it may well be that the Bank will have a strong argument in relation to the application of the Farm Debt Mediation Act.
Currently the level of indebtedness of the defendant is $1,075,000. As at the time of valuation for the purpose of the loans back in 2015, a valuation of $1,295,000 was made, and on those raw figures, as I commented during the course of the discussion, there is not much head room. Mrs Nott, however, tells me that she has had recent market appraisals, which value the two separate lots of adjoining land at a total of $1,450,000.
In any event, I have gathered the impression that Mrs Nott is not keen to engage in expensive litigation about the matter. Her real object is to attempt to refinance the mortgage of her family home. In that regard, the Bank has previously stated and has affirmed the statement before me today, that if the eviction goes ahead on Monday they will stay their hand as to taking any steps to market the property for sale for a period of two weeks, and that period would permit Mrs Nott and her family to bring the current prospect for refinancing to fruition. It would certainly cause inconvenience - that inconvenience being that the family would have to move out until the refinance occurred, which no doubt would be distressing, and perhaps difficult.
Mrs Nott has said that if there was a further stay of the eviction she is prepared to undertake to the Court that she and her family will voluntarily vacate the premises if there is no settlement of the proposal for refinance by 31 August 2018. Now, I suppose that is a period of three weeks. I have discussed with her the nature of an undertaking, that breaching an undertaking can attract a criminal liability for contempt of court and that the penalties for contempt include the imposition of a term of imprisonment. She tells me she understands that.
There is some difficulty with an undertaking, and that relates to the fact that there was an undertaking given to Davies J that there would be no unilateral application by the defendants for a further stay, and that any extension to the agreed timeframe would only be by further agreement. I think it important to point out that the Bank did not say it would extend the time if asked, only that it may be prepared to, I would infer, on good cause being shown, for instance, that refinancing had been finalised and settlement of the refinancing was imminent and that there had been some hiccup which involved only a short delay. Obviously, it is the Bank's interest for the loan to be refinanced. But if it cannot obtain the benefit of refinancing within a reasonable time it ought not be forestalled from exercising its legal right to enforce its security.
I acknowledge that Mrs Nott has put on evidence that she has had some health issues recently, and I understand that she is the mother of four children, who also occupy the house with her husband and her, and that this creates significant domestic pressure. I understand it will be depressing for the children to have to move out. She is a member of a well-established local family, and doubtless there are friends and relatives nearby who could assist.
One of the difficulties for the Court, of course, is that if there is a further stay and the eviction has to be cancelled for Monday it cannot be, usually, re-organised at short notice, and that a delay of three weeks can easily become a delay of six weeks or more.
So far as the refinancing proposal is concerned, there is only a letter from a private individual, a Mr Stevens, who says due to circumstances outside Mrs Nott's control, or the defendant's control that he was not in a position to settle until 21 August 2018. His letter states that the full offer is unconditional, and includes a loan sum of $1,100,000 which ought to be about enough to discharge the mortgage if settlement occurs by 21 August 2018. Mrs Nott tells me that she has some additional funds if there is any small short-fall in the amount of the loan, compared to the amount necessary to pay out the Bank on the date of settlement.
I am not of the view that the Bank has taken an unreasonable attitude, given that no firm conventional evidence has been brought to demonstrate that refinancing is imminent. I accept Mrs Nott has been doing her best to achieve that purpose, however it is not as though there is an advanced process where an established lender, by way of a bank or a building society, has indicated that it is in a position to proceed to settlement on 21 August 2018. It would seem, for instance, that Mr Steven's letter, which was provided by Mrs Nott, is the first instance the Bank has heard of his involvement. A previous indication from another lender, apparently, did not proceed.
Given the previous undertaking, and having regard to the consideration that the evidence in relation to the likelihood of refinancing in the short term is not strong, I am not persuaded that I should grant a further stay of the writ of possession.
(See transcript for discussion with Mr Koning about how long the bank would wait before marketing property.)
Noting the undertaking of the Bank given by Mr Koning that the Bank will not take any action to market the property for sale, and that Mrs Nott and her family may leave their possessions in the premises, until 31 August 2018, I decline the application for the extension of the stay.
I stand prayers 2 and 3 in the motion over until 31 August 2018 before the Registrar at 9:00 am.
[3]
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Decision last updated: 21 August 2018