In November 2014 Genbay Pty Ltd sold the Bodalla Arms Hotel at Bodalla to the defendants, Nikola and Michelle Coric, for $350,000, providing $225,000 vendor finance. In these proceedings Genbay sought possession of that property. Today an agreement was reached between it and Mrs Coric. Mr Coric did not appear. He has become inactive in the proceedings. I made the orders which the plaintiff and Mrs Coric had agreed, by consent, so far as they were concerned.
These are the reasons for making the orders which Mr Coric did not appear to oppose.
It was a term of the sale contract that $35,000 of the loan be repaid within five business days of the defendants' receipt of their first GST refund, from lodgement of their first business activity statement for the Hotel. The balance was payable on 23 December 2015, being 12 months from the completion date of the sale. The loan was secured by a registered mortgage over the Hotel. The contract also provided for the monthly payment of interest and a regime, in the event of default.
These proceedings were commenced in August 2016, Genbay then claiming that the loan was not repaid in December 2015 when it fell due, with the result that Mr and Mrs Coric fell into default, which had not been rectified, despite demands made under s 57(2)(b) of the Real Property Act 1900 (NSW).
By their defence Mr and Mrs Coric did not deny their default. They claimed, however, that the purchase price had been misrepresented. It was in fact a total of $500,000, taking into account that under clause 40 of the contract, they would forego a debt of $150,000 payable by tenants of certain sheds attached to the land, for a 50 year period, the tenants having paid that sum to Genbay at the time of completion. The result was, they claimed, that they had been unable to refinance their borrowings. That had led to the default, for which Genbay was responsible, it having received $150,000 of the purchase price in respect of the shed lease.
Further, Mr and Mrs Coric claimed that Genbay knew, or ought to have known, that the income of the Hotel depended heavily on the provision of live music, but it had failed to disclose complaints made to the Independent Liquor & Gaming Authority, which were likely to result in orders preventing the provision of live music at the Hotel. They had to cease providing such music in February 2016, following orders which required expensive acoustic modifications to be made to the Hotel. Had they been aware of those orders, they said they would not have entered into the contract.
In the result, Mr and Mrs Coric claimed that Genbay was not entitled to possession.
No point was taken by Genbay that various matters pleaded in the defence should have been pursued by cross-claim. Orders were made by the Registrar for preparation of the matter for hearing. Mr and Mrs Coric did not comply with them, with the result that in February 2017, it was ordered that they could not adduce further evidence, without the Court's leave.
That leave was sought by a motion filed in April 2017 for Mr and Mrs Coric. Following this their solicitor, as earlier foreshadowed, ceased to act. No affidavit supporting the motion was filed, nor did Mr and Mrs Coric appear on 2 May to press their motion. The result was that the motion was dismissed and the matter listed for hearing on 16 June. Mr and Mrs Coric made no further application for leave to lead any evidence. Nor did they serve any evidence prior to the hearing.
By email of 14 June, to which was attached a medical certificate and other documents from Moruya District Hospital, Mrs Coric sought an adjournment of the hearing, on the basis that she had a pinched nerve, and could not move, walk or travel to Sydney to represent herself. Genbay opposed the adjournment and arrangements were made to permit Mrs Coric to participate at the hearing by telephone.
The medical certificate did not establish that Mrs Coric was suffering a pinched nerve in her back. Hospital records revealed that she went to the Emergency Unit, having suffered sudden onset of back pain after recent cleaning work, which had significantly reduced her mobility. She was discharged with prescribed medication, advised that she should maintain her mobility as much as possible, within the limits of her pain and provided with a certificate that she was "unable to attend normal duties from 14 June to 16 June".
There was also no appearance for Mr Coric at that hearing and no explanation advanced for his absence, as there was on this occasion, namely ill health. Mrs Coric's application for an adjournment that day was pressed on the basis that refinance had been approved, subject to valuation.
In the result, the adjournment application was still opposed. It was finally not pressed, it being agreed that Genbay's case would be heard, that judgment would then be reserved, but the Court would not be called on to give judgment, if the borrowings were repaid. If they had not been repaid within 28 days, however, the Court would be advised and judgment would be delivered.
The hearing was adjourned after Genbay put its case, Mrs Coric, by oversight not having read Genbay's written submissions. She was given the opportunity to respond in writing by 4pm on Wednesday 21 June with Genbay having the opportunity to reply, by 4pm on Friday 23 June. The parties were directed to approach to inform the Court whether the matter had resolved within the agreed 28 days, failing which judgment would be given.
In her written submission of 21 June, to which various documents were attached, Mrs Coric advanced complaints made in the defence about:
The purchase price, which it was argued should have been $500,000;
The terms of the lease, which it was claimed had not been agreed; and
Noise restrictions and submissions which Mrs Coric claimed had been made by the Eurobodalla Shire Council to the Office of Licence and Gaming in 2015, which were extensively quoted.
Mrs Coric had neither sought, nor been granted leave to lead any evidence, as Genbay submitted in its 23 June reply. In any event, her submissions disclosed no defence to Genbay's claim.
The borrowings were not repaid by Mr and Mrs Coric and the matter was relisted on 21 July, so that Genbay could provide final figures as to the amount outstanding under the mortgage. Mrs Coric then sent further documents to my Associate about her pursuit of a settlement with Genbay.
As at the date of the original hearing in June, what Mr and Mrs Coric said was certified to be $330,789.06, including the cost of the proceedings. The amount outstanding on 21 July was certified to be $356,041.81.
Genbay's case was supported by the January 2017 affidavit sworn by one of its directors, Mr Hardy, to which the relevant documents were exhibited, including the contract. Mr Hardy explained the circumstances in which the terms of the contract and lease were negotiated. Both Genbay and Mr and Mrs Coric were independently represented by solicitors on that transaction.
There was an issue as to whether or not the contract had been stamped, it attracting stamp duty of some $35,000, under the Duties Act 1997 (NSW). Mrs Coric's case was that the duty had been paid, but she had no evidence to establish this. The contract was then received in evidence, on the basis that the requirements of s 304(2) of the Duties Act, would be followed by Genbay's solicitor.
On the pleadings there was no issue as to the contractual obligations between the parties; the pleaded default in relation to the loan; the security given over the Hotel; and Mr and Mrs Coric's failure to repay what they owed Genbay under the mortgage, both when repayment fell due and following demand and the service of the s 57(2)(b) notice. There was also no issue that the borrowings have not been refinanced, as Mr and Mrs Coric hoped to do, when the hearing adjourned in June. On the basis of those admissions, Genbay is entitled to the orders which it seeks.
Mr and Mrs Coric have not adduced any evidence to establish what they otherwise advanced by their defence, in relation to any of the matters there pleaded.
The contract for sale by which they are bound specifies the $350,000 purchase price which the parties agreed. That contract provided in relation to the lease of the shed:
"40.3 Sale subject to New Shed Lease
(a) The purchaser acknowledges that:
(i) the Current Shed Lease will be surrendered by the vendor and the Shed Lessee; and
(ii) the vendor and the Shed Lessee shall enter into the New Shed Lease,
prior to completion, and
(iii) all rent payable for the term of the New Shed Lease shall be paid in full to the vendor on the commencement date of the New Shed Lease; and
(iv) despite clause 40.10 such rent shall not be subject to any adjustment or allowance on completion.
(b) The property is sold and the purchaser takes title subject to the New Shed Lease.
(c) The purchaser acknowledges that vacant possession of the Bodalla Arms Hotel premises will be provided to the purchaser."
The new shed lease is in evidence. It specifies a term of 50 years. The basis for the claim of misrepresentation in relation to the shed, or the purchase price of the Hotel is thus not apparent. It is also relevant that Mr and Mrs Coric had legal representation on the purchase. They called no evidence from their legal representatives to support their claims. Nor did they otherwise advance an evidentiary case, as they had every opportunity to do.
The contract disclosed that Genbay did not own the Hotel licence, but had the right to require it to be transferred to Mr and Mrs Coric, which it was. The contract made no provision for disclosure of complaints made to the Independent Liquor & Gaming Authority. In any event, the orders made in relation to the provision of live music in February 2016, long post-dated the sale, which occurred in November 2014. There was no evidence that those orders depended on anything that Genbay did or failed to do, or which it was contractually obliged to reveal to Mr and Mrs Coric.
As I earlier observed, when the borrowings were not repaid within the agreed 28 days, without leave Mrs Coric also sent other communications concerning the parties ongoing negotiations and her pursuit of refinancing. Notwithstanding that Mrs Coric is unrepresented, these communications should not have been sent and could be taken into account, in resolving what lies in issue, for the reasons discussed in Bull v Lee (No 2) [2009] NSWCA 362 at [8] - [10].
In the result I was satisfied that the orders which Genbay and Mrs Coric had agreed, should be made, Mr Coric having had every opportunity to appear to resist the orders Genbay sought, but not having availed himself of the opportunity to do so.
[2]
Orders
For those reasons I ordered that:
1. Judgment for the plaintiff against the first and second defendants for possession of the property known as and at the Bodalla Arms Hotel, XX-XX XXXXXXXX XXXXXXX, Bodalla New South Wales being the land comprised in Certificate of Title Folio Identifier X/XXXXXXX.
2. Judgment for the plaintiff against the first and second defendants in the sum of $356,041.81.
3. The Judgments for possession and debt in paragraphs 1 and 2 of these short minutes of order are stayed up to and including 4 August 2017.
THE COURT NOTES that agreement between the plaintiff and the second defendant that if the plaintiff receives the sum of $320,000 on or before 4 August 2017 in relation to the judgments for possession and debt then plaintiff will accept the sum of $320,000 in full and final satisfaction the judgments for possession and debt in paragraphs 1 and 2 of these short minutes of orders.
[3]
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Decision last updated: 21 July 2017