Solicitors: Elee Luke Georges (Plaintiff)
Benjamin & Khoury Solicitors and Attorneys (First-Third Defendants)
File Number(s): 2016/248914
[2]
Ex tempore Judgment (revised)
(The commencing portion of his Honour's reasons were not recorded due to malfunction in the recording equipment. What follows down to "they seek a variety of remedies" at [15] has been added from his Honour's memory during the revision of that part of the judgment recorded and transcribed).
HIS HONOUR: The plaintiff claims judgment for possession of land situate at YY XXXXX Rd., Tahmoor in the State of New South Wales and arrears of "rent" due under a lease or licence of the land by him to the defendants.
The plaintiff is and has at all material times been the registered proprietor of the land. Prior to 29 November 2012, the plaintiff, his wife and other family members and associates became acquainted with the second and third defendants who control the company which is the first defendant, M & J Enterprises Pty Limited. Various financial arrangements were entered into involving these persons and a company controlled by the plaintiffs, depending, of course, on whose side of the story is accepted.
Certain things, however, are common ground. It is accepted that the plaintiff and the second and third defendants are parties to a deed dated 29 November 2012 dealing with various past and, what were then intended, future transactions. The recitals recorded that the second and third defendants had previously leant $100,000 to the company associated with the plaintiff and his wife. That company wished to borrow, and the second and third defendants were prepared to loan an additional sum of $300,000 with the plaintiff and his wife acting as personal guarantors, all "subject to the terms of the deed".
The second and third defendants were then registered proprietors of a property in Marrickville. The further financial arrangements between the parties were to be effected by two interconnected property deals. First, the loan of $300,000 was to be financed by the second and third defendant first selling the Marrickville property to the plaintiff and his wife and advancing the loan to the company out of the proceeds of sale. Although, I interpolate, that on the second and third defendant's version of events this "sale" was really intended as a type of "mortgage-back" arrangement to secure their obligations under a proposed purchase by them of the Tahmoor property. After the completion of the Marrickville sale, according to in the deed the plaintiff and his wife and the second and third defendant would be jointly liable for financially servicing an ongoing mortgage over the Marrickville property.
The Tahmoor property consists of a residence and a market garden. The deed contemplated by stipulation the second and third defendants working the market garden for a combined total net weekly wage of $1,000.
By Clause 2.6, the second and third defendants were to "be given an option to purchase" the properties situated at Marrickville and Tahmoor. For the Marrickville property it would be more accurate to say re-purchase which lends some weight to the suggestion of a "mortgage-back" arrangement. Probably at best this is an agreement to grant an option which on the material before me was never brought into effect.
The plaintiff's case is that the second and third defendant did go into possession of the Tahmoor property, not as employees, but under a lease or licence arrangement, by which they agreed to pay rent or a licence fee of $5,320 to the plaintiff. This happened to be approximately the amount of the plaintiff's mortgage and it is alleged that they soon defaulted on this financial obligation.
Moving on, by contract for the sale of land dated 23 August 2013, the plaintiff agreed to sell to the first defendant, the company controlled by the second and third defendants, the Tahmoor property for a price of $1 million as contemplated in the deed. It is the plaintiff's case supported by their affidavits, and by a notice to admit facts which were not disputed by the defendants, that the purchaser failed to complete within the time stipulated in the contract and failed to comply with a notice to complete leading to the plaintiff terminating the contract by notice of rescission. I should add that the deposit for the Tahmoor property was a sum of $300,000 which equates to the amount the second and third defendant said they loaned to the company associated with the plaintiff and his wife, again as contemplated by the deed of 29 November 2012.
When the contract for the sale was terminated, the second and third defendants were in possession. The plaintiff issued a number of notices to quit and eventually was able to evict them and go back into possession where he remains. An attempt by the second and third defendants to recover possession from him by way of interlocutory proceedings in this Court was refused by Harrison ASJ in 2015.
It seems in the meantime, that the second and third defendant sought to recover from the plaintiff the Marrickville property and he again agreed to re-sell it to them. But from the undisputed narrative in the notice to admit facts, the second and third defendant again defaulted on settlement, failed to comply with a notice to complete, and the plaintiff terminated that contract.
The upshot of all this is that the plaintiff relevantly was able to retain both properties and, according to the defendants, the benefit of loans and credits advanced by them to him, or to an entity controlled by him, totalling $570,000.
Although the plaintiff is again in possession of the Tahmoor property, he seeks judgment for possession to vindicate its title as against the defendants and judgment for the arrears of rent or licence fee up to the date of the eviction.
The defendants filed a cross-claim on 18 November 2014, essentially premised on the deed of 29 November 2012 and by which they seek a variety of remedies, including a declaration that the agreement for the sale of land of 23 August 2013 remains on foot as a binding and enforceable agreement, an order for specific performance of that agreement and a declaration that the moneys received by the plaintiff from the sale of the Marrickville property be deducted from the balance of purchase moneys due under the contract for the sale of land.
During the course of argument I expressed some doubts about the viability of the claim for specific performance as there was no evidence to demonstrate that the defendants were in a position to complete by providing the balance of purchase moneys, a sum of $700,000. This was against the backdrop of information provided to me by Mr Khoury, solicitor, who appears for them, that since this dispute arose Mr Gligorijevic has suffered a serious stroke and that the present circumstances are such that Mr Khoury's firm has been required to represent them on a pro bono basis as there have been insufficient funds to retain counsel experienced in the field. It may be that the outcome of entitlements in relation to the proceeds of the sale of the Marrickville property would be relevant to that question. However, I say no more about it.
Upon the close of the plaintiff's case and in the course of discussion with Mr Khoury about the cross-claim, Mr Khoury moved to amend the cross-claim to include, in the alternative, a claim for restitution of various amounts referred to in the deed of 29 November 2012 which the defendants say were sums due to them if the plaintiff persuades the Court that he lawfully terminated the contract for sale of land.
Mr Young of counsel, who appears for the plaintiff, objected to the amendment. He relied upon the familiar principles derived from Aon Risk Services Australia Limited v Australian National University [2009] HCA 27; 239 CLR 175, including the significance of case management considerations in the exercise of the Court's powers over the practice and procedure observed in the conduct of civil litigation. He also pointed out that such a significant case could not be met today; the total amount of money claimed being in the order of $570,000; and that, in any event, there is no averment in the statement of cross-claim that would support that claim.
The cross-claim, as pleaded, is based almost wholly upon the deed of 29 November 2012 and what the defendants say flow from that deed and their entitlements under it. Each of the figures that Mr Khoury wishes to claim in the alternative are referred to in the pleading of material facts, in particular at [7]-[10]. In the pleading to found the entitlement to specific performance, the various sums totalling $570,000 are referred to as amounts having been, in substance, paid by the defendants to the plaintiff under the contract for sale, although there is no pleading in the alternative that if the claim for a specific performance fails restitution of those sums is claimed in the alternative.
From a review of the evidence and the pleadings in the matter it is apparent to me that it has always been discernible, without too much delving, that the difference between the parties is that the defendants say that the relationship between the parties must be understood by reference to the original deed, whereas the plaintiff's case has been centred on the contract for the sale of land and his entitlements for what he asserts is the default of the defendants on the lease or licence.
In effect, it might be thought that the case on each side of the record have been somewhat like ships passing in the night. Although the claim for restitution of these funds has not been articulated with pellucid clarity, it has been relatively clear on the face of the pleadings that that formed a basis of the defendants' cross-claim.
During the course of the discussion I did express the view that in the present circumstances, where the plaintiff is the registered proprietor and, at best, the defendants have a right in personam as purchasers under a contract for the sale of land, even if the defendants' side of the story is made good, it is difficult to see why the plaintiff, who is in possession, having on any view of it terminated the lease or licence, should be denied judgment for possession.
I indicated that view to Mr Khoury and he has obtained instructions to consent to judgment in favour of the plaintiff for possession. I will enter that judgment in due course, but it should be clearly understood that the entry of that judgment is without prejudice to the rights of the defendants to fully ventilate the issues they wish to further in their cross‑claim, including those issues in relation to the contract for the sale of land.
I acknowledge the force of Mr Young's argument that the overriding purpose in this case does not favour the grant of an adjournment to enable the defendants to regularise their cross-claim. And I accept that until the plaintiff sees any amended pleading it is impossible for Mr Young to say whether or not the plaintiff can meet the amended case on the basis of the evidence already read, or whether additional evidence will need to be marshaled. I think however that overall the interests of justice in identifying the true issues in dispute between these parties favour the grant of an adjournment. That will allow what seems to be the differences between the parties to be fully aired and resolved by judicial determination in due course.
Mr Khoury was bold enough to ask that I extract an undertaking from Mr Young that the property would not be dealt with adversely to the defedant's interest during the adjournment. However, the grant of an adjournment is significantly an indulgence in favour of the defendants, and I am not prepared to extract such an undertaking from the registered proprietor in possession of the land in the absence of any specific evidence to demonstrate that it is likely that Mr Helou would surreptitiously divest himself of his assets during the period of any adjournment. I think it is still the case, notwithstanding the overheated Sydney property market, that it takes quite some time to sell a parcel of land. If any reason arises which causes any disquiet on the defendants' side of the record, there will doubtless be ample time to approach the Court for urgent relief that may be appropriate.
In the interests of advancing the resolution of the matter, although I have received evidence, I do not think that the matter ought to be treated as part-heard before me. No oral testimony has been led. It may be that in the course of administering the list, the matter will be reallocated to me. But it is better that the case take its chances in the general list, to facilitate or enhance its prospects of obtaining an early hearing date.
For these reasons, I make the following orders:
1. Sever the cross-claim from the proceedings for separate hearing and adjourn the matter on a date to be fixed by the registrar.
2. By consent, judgment for the plaintiff for possession of the land known as YY XXXXX Rd, Tahmoor in the State of New South Wales, being the whole of the land comprised in certificate of title folio identifier 10/10849.
3. Adjourn the plaintiff's claim for monetary relief to be heard with the cross-claim.
4. The defendants to pay the plaintiff's costs thrown away by reason of the adjournment.
5. Liberty to the plaintiff to apply for a lump sum costs order on seven days' written notice.
6. The defendants are to file and serve an amended cross-claim in accordance with my reasons on or before 14 September 2016.
7. The plaintiff is to file any response of amended statement of claim, defence to cross-claim or reply on or before 28 September 2016.
8. List the matter before the common law case management registrar at 9am on 5 October 2016 for directions as to the exchange of further evidence, if any, and to fix a date for hearing.
9. Direct that the defendants are to be treated as the moving party on the further hearing and are to bear any further fee required for allocation of any such hearing.
[3]
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Decision last updated: 29 August 2016