Applications of FundIT Ltd [2024] NSWSC 588
Sandhurst v Dabboussi
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Catchwords
Applications of Hengyi ZhaoApplications of FundIT Ltd [2024] NSWSC 588
Sandhurst v Dabboussi
Judgment (2 paragraphs)
[1]
JUDGMENT
These proceedings were commenced by statement of claim filed on 7 September 2023. The precise identity of the plaintiffs has changed from time to time, but the general subject matter of the proceedings has remained the same: the plaintiffs claim that the defendant, Mr Dabboussi, owes them money and that the debt was secured by property in Horningsea Park, NSW (the Horningsea Park Property).
The parties have made several applications to procure a consent judgment. A detailed and helpful history of these and related proceedings was given by Williams J on 20 May 2024: Sandhurst v Dabboussi; Eid v Dabboussi (Supreme Court (NSW), Williams J, 20 May 2024, unrep). These reasons assume familiarity with those earlier reasons.
Since those reasons were given, the parties have made further applications for consent judgment in these proceedings. The first such application was referred to me as duty judge on 13 June 2024. It was apparent that that application had not been served on the other interested parties in accordance with the direction made by Williams J on 20 May. I refused to enter consent judgment and gave brief reasons for doing so.
As was explained by Williams J in her 20 May reasons and as was also explained by me to the parties on 13 June, the Horningsea Park Property was subject to a registered mortgage and has been sold pursuant to the mortgagee's power of sale. The excess proceeds of that sale, after satisfying the mortgagee's claim, were approximately $1,200,000 and have been paid into Court in proceedings 2023/98977 (the Sandhurst proceedings). At the time those funds were paid into Court, the mortgagee identified a number of parties who appeared to have, at least potentially, an interest in the Horningsea Park Property or to the excess proceeds of sale.
The Property was one of the assets of the marriage of the defendant, Mr Dabboussi, and his former wife, Ms Bernard. In 2021, Ms Bernard commenced proceedings in the Federal Circuit and Family Court of Australia (Division 2) seeking relief that includes orders under s 79 of the Family Law Act 1975 (Cth) altering the interest of the defendant and Ms Bernard in the property of the marriage, including the Horningsea Park Property (the Family Law Proceedings).
Because the Family Law Proceedings involve a dispute as to the parties' respective interests in the Horningsea Park Property, almost all of the persons identified by the mortgagee in the Sandhurst proceedings as having a potential interest in the Property have apparently been joined to those proceedings.
It was for all of these reasons that yet another claim to an interest in the Horningsea Park Property was transferred to the Federal Circuit and Family Court of Australia pursuant to the Jurisdiction of Courts (Cross-Vesting) Act 1987 (NSW). That claim was brought by Mr Mahdi Sultan against the present defendant and two companies associated with him. Williams J gave reasons for transferring those proceedings on 5 June 2024: Sultan v Dabboussi [2024] NSWSC 683.
The parties made another application for the Court to enter consent judgment on 16 June 2024. I refused that application after a short hearing on 28 June 2024 because the amended statement of claim was at that stage verified by Ms Zeidan, the second plaintiff, but not by any other plaintiff. This same difficulty in relation to an earlier iteration of the statement of claim was pointed out by Williams J in her 20 May 2024 judgment and was one of the reasons her Honour declined to enter judgment on that day.
Ms Zeidan purported to address this issue by having each other plaintiff "consent" to the statement of claim. Nonetheless, she remained the only plaintiff to have verified it. An affidavit prepared by Ms Zeidan dated 9 June 2024 in support of her 16 June application revealed that she had misunderstood the point made by Williams J (and the UCPR), which is that each plaintiff is required to verify the pleading. She cannot verify someone else's claim.
This particular difficulty has now been attended to. A further amended pleading has been filed and consent judgment has again been sought. However, the proposed consent judgment is not only as to the defendant's indebtedness to each plaintiff, but also seeks declarations as to each plaintiff's entitlement to security over the defendant's property, including the Horningsea Park Property.
The principal difficulty with a consent or any other judgment as to the plaintiffs' entitlements to the defendant's property is that this Court has already declined to entertain the question of who had an interest in the Horningsea Park Property pending the outcome of the Family Law Proceedings, where precisely that question is already in issue. I see no reason why this Court should do so now. The fact that the proposed judgment would be by consent does not alter my view about that matter. The proposed consent judgment would contain findings as to the nature of the underlying indebtedness as well as declarations as to each plaintiff's interest in the Property. For example, the proposed consent judgment in favour of the first plaintiff is in the following terms:
"Verdict and judgment in favour of the first plaintiff
1 Verdict in favour of Khalil Eid, Aygul Oygur, Mahmood Eid and Ali Tarabay as trustees for the E and T Superfund ("first plaintiff") against the defendant:
a. in the sum of $300,000 being for the principal referred to in clause 1.1 of the Secured Loan Agreement dated 15 November 2018 between the first plaintiff and the defendant, and,
b. In the sum of $101,293.15 in accrued interest on the principal debt calculated at the rate of six percent (6%) per annum pursuant to clause 4 of the said agreement from 15 November 2018 to 11 June 2024.
2 Judgment against the defendant in the first plaintiffs' favour in the amount of $401 ,293.15.
3 Declare the defendant's obligation to repay the first plaintiff the above loan and interest and the judgment sum referred to in order 2 is secured by way of Charge in favour of the first plaintiff over the defendant's interest in the property at XX Horningsea Park Drive Horningsea Park, New South Wales being the land comprised in the Folio Identifier XXXXX ("Property") pursuant to clause 7 of the said Secured Loan Agreement."
They are largely matters about which other claimants to the Property are likely to have a real interest in contesting.
The parties submitted that consent judgment in these proceedings is sought in order to, amongst other things, facilitate the plaintiffs' claim to the excess proceeds of sale of the Property which have been paid into Court in the Sandhurst proceedings. As mentioned, one attempt to have those funds paid out has already been stayed pending the outcome of the Family Law Proceedings (see Williams J's 20 May 2024 judgment). Another attempt has been transferred to that Court, as I have explained. If the present plaintiffs wish to contend that their loans were secured against the Horningsea Park Property and that they are therefore entitled to the excess proceeds of sale, the appropriate course is to apply to be joined to (or for the defendant to join them to) the Family Law Proceedings so that their claim to be entitled to the proceeds of sale of the Property can be resolved in the same proceeding as the claims of all the other hopefuls.
In the meantime, I will only allow judgment to be entered against the defendant for the claimed indebtedness. That judgment will not include any declaration as to whether and to what extent the resulting judgment debt is secured and will not relevantly bind any other person who claims to be entitled to the excess proceeds of sale of the Property, as I explained in Applications of Bizcap AU Pty Ltd; Applications of Hengyi Zhao; Applications of FundIT Ltd [2024] NSWSC 588 at [21], or to any other property of the defendant. Those questions are more appropriately dealt with in the Family Law Proceedings.
I therefore decline to make any of the other declarations and orders sought in the Third Further Amended Statement of Claim at this stage. I will enter judgment, but the proceedings will otherwise be stayed pending the conclusion of the Family Law Proceedings.
The orders of the Court will therefore be:
1. Judgment for the first plaintiff against the defendant in the amount of $401,293.15;
2. Judgment for the second plaintiff against the defendant in the amount of $267,979.20;
3. Judgment for the third plaintiff against the defendant in the amount of $267,633.96; and
4. Stay the proceedings until further order of the Court.
[2]
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Decision last updated: 29 July 2024
Parties
Applicant/Plaintiff:
Eid, Oygur, Eid and Tarabay as trustees for the E and T Superfund