Hall v Foster

EX TEMPORE Judgment 1Before me is a notice of motion seeking the striking out of part of the defence and the entry of judgment for possession in favour of the plaintiffs, as well as certain ancillary orders. 2The matter has a reasonably complicated background. The property in question is land situated and known as Lot 1 Araluen Avenue, Mount Kembla. On 17 October 2000 the plaintiffs agreed with the first defendant, Mr Foster, and his late mother, for the plaintiffs to buy and the defendant and his late mother to sell the property. The sale was conditional on the registration of a plan of subdivision. Under the terms of the contract the parties were to use their best endeavours to satisfy that condition. The purchase price was $510,000, of which $385,000 was paid as a deposit. The repayment of that deposit was secured by a mortgage granted in favour of the plaintiffs. The proposed subdivision did not proceed. 3It appears that, because of his inability to pursue a subdivision, the first defendant had purported to issue notices rescinding the agreement. As part of that process, or at least around the same time, he had also written to the plaintiffs offering to redeem the mortgage. The plaintiffs commenced proceedings originally seeking specific performance of the agreement. However, in the end, the plaintiffs sought judgment for a money sum as they had in the meantime abandoned their claim for specific performance. 4On 15 April 2011 Tamberlin AJ upheld the plaintiffs' claim (Hall v Foster [2011] NSWSC 295). His Honour gave a money judgment in favour of the plaintiffs in the sum of $1,672,166.65, plus costs. In the course of his Honour's judgment his Honour found that the defendants had not used their best endeavours to secure the subdivision. His Honour also found that they were not entitled to seek to rescind the agreement when they did and that they were not entitled to seek to redeem the mortgage when they did (at [91] to [96]). An appeal to the Court of Appeal against that judgment was unsuccessful (Foster v Hall [2012] NSWCA 122). 5After that appeal the plaintiffs filed a motion in those proceedings seeking an order under s 67 of the Supreme Court Act 1970 appointing a receiver to the property. In the meantime the defendants had entered into a contract for sale of the property with the first defendant's brother. The motion came before Ball J and was determined by his Honour on 16 August 2012 (Hall v Foster [2012] NSWSC 974). His Honour rejected the claim for the appointment of a receiver principally on the basis that the plaintiffs were already protected by the mortgage over the property. However, his Honour did grant an order restraining the defendants from pursuing the sale to the first defendant's brother. That order was made conditional upon the plaintiffs giving the usual undertaking as to damages. 6I note two matters about Ball J's judgment. First, his Honour records (at [5]) that the money judgment given by Tamberlin AJ included the amount that was originally secured by the mortgage with interest which had then grown to approximately $800,000. Second, his Honour found (at [27]) that it would "be preferable if the property were sold with vacant possession". 7Following the judgment of Ball J, the plaintiffs entered into an agreement for the sale of the property. I understand that agreement was entered into on 14 December 2012 and is itself contingent upon the property being subdivided. 8In July 2012 the plaintiffs commenced these proceedings seeking possession of the property. They have control of most of the property, except that the first defendant is residing in one of the residences on the property. (The second defendant, being the first defendant's mother, had in the meantime passed away and he has been appointed the executor of her estate.) A writ of possession was issued following the entry of default judgment. It was set aside following the filing of a defence. 9Paragraph 5 of the amended statement of claim pleads certain terms and conditions of the mortgage, including that the defendants would be in default if, at any time, the total amount secured exceeded the sum of $750,000, and that otherwise the principal amount and any accrued interest would be repayable not later than ten years from the date of the mortgage which has expired. Paragraph 6 pleaded as a bare fact that the defendants were in default of those provisions. 10A defence was filed. In relation to paragraph 5 it admitted the paragraph, but also recited the earlier offer that had been made to repay the mortgage and the plaintiffs' refusal to accept the sum that was tendered. Paragraph 6 contained an admission of the defaults but otherwise asserted various facts concerning the various attempts to sell the property. 11In relation to the matters set out in the defence in paragraph 5 concerning the earlier offer, as I have stated Tamberlin AJ held that that offer was made in the context of an attempt by the defendants to rescind the agreement for the sale of the property which was not valid. In my view it follows that the matters that are positively pleaded by the defendants in paragraph 5 are legally irrelevant to the relief claimed. 12Similarly, the various facts that are pleaded in paragraph 6 are legally irrelevant to the claim for possession. At their highest they may be matters that may be relevant to any accounting that would need to be undertaken as between mortgagor and mortgagee either if and when a sale is completed, or, if a sale is not completed, the defendant contends that the plaintiffs were in breach of some obligation owed to him as a consequence. 13The first defendant sought to resist the order for possession on the basis that he has a lack of confidence that the plaintiffs will seek to diligently pursue the sale. Consistent with what I have just stated about paragraph 6 of the defence, that apprehension is irrelevant to the question of whether the plaintiffs have a right to possession. 14In addition I would add that in the proceedings before Ball J the price of obtaining an order preventing the sale to the first defendant's brother was that the plaintiffs offer an undertaking as to damages. This offers an additional protection to him against conduct by the plaintiffs that may prejudice his financial position. 15The first defendant also sought or submitted that the appropriate order in respect of possession should be one that only enables possession to be given when the proposed sale by the plaintiffs is completed. The difficulty with that contention is that it has no legal basis to support it. It effectively invites the Court to sit as some form of supervisor of the plaintiffs in pursuing their contract for sale, which is not its function. At a practical level it is a result that could have the potential to significantly delay the proposed sale. 16In my view, at its highest, the only basis upon which the Court could delay the execution of the writ of possession is by reference to some particular hardship or circumstance of the first defendant, such as the need for him to obtain somewhere else to live. 17Mr Foster explained that his financial predicament is dire and that he does not expect he will be able to find any alternative accommodation. He did not identify any particular period as appropriate to find somewhere else to live. Counsel for the plaintiffs, Mr Dawson, indicated his client was prepared to accept 13 July 2013 as an appropriate time, being two months from today. Given the history of the matter, that period seems to be of the order that would be appropriate, although I will extend it for a further week and a half to 22 July 2013. 18Accordingly, the Court will make the following orders: (1)pursuant to UCPR 14.28 subparagraphs 5(a) to 5(c) and 6(b) to (g) of the Defence filed 26 April 2013 be struck out; (2)pursuant to UCPR 13.1 that there be judgment for possession in favour of the plaintiffs for the land comprised in Folio Identifier 1/588781 being the land situated at and known as Lot 1 Araluen Avenue, Mount Kembla in the State of New South Wales; (3)that the plaintiffs have leave to issue a writ of possession in respect of the property on and from 22 July 2013; (4)direct the defendant to provide the plaintiffs with an executed copy of the contract for the sale of the property. 19The first defendant seeks to resist an order for costs on the basis that a writ of possession was earlier obtained. However, that was set aside by the filing of a defence on his behalf. In the circumstances, I think there is no alternative but to order the defendant to pay the plaintiffs' costs of the proceedings. 20I also grant liberty to apply on three days' notice.