In the matter of First Mortgage Company Home Loans Pty Limited; Penrith City... [2026] NSWSC 695 | Case summary | Zoe

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In the matter of First Mortgage Company Home Loans Pty Limited; Penrith City... [2026] NSWSC 695 | Case summary | Zoe

HIS HONOUR: By Notice of Motion filed on 16 April 2026, the Penrith City Council (“the Council”) seeks an order under r 55.11 of the Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”) that money held in court be paid out to it. The application is principally supported by the affidavit of Matthew Bullivant sworn on 14 April 2026. Mr Bullivant is the Council’s Director of Corporate Services, and I am satisfied that he has the Council’s authority to make his affidavit on its behalf.
When the matter was before me on 15 June 2026, I raised with Mr Elliot of learned counsel, who appears for the Council, the question about whether the Notice of Motion had been served. After some argument, Mr Elliot made an application that I make an order under r 10.14(3) UCPR. Principally, until then, the Council had relied upon the representation by a solicitor acting for the respondent that he would accept service, but upon closer examination of r 10.13, it became apparent to the Council that the conditions of that rule could not be satisfied in the present case.
In order to maintain the application for an order under r 10.14(3), I stood the matter over for a day to enable an affidavit to be prepared in conformity with the requirements of r 10.14(3A) UCPR. That was attended to overnight, and counsel read and relied upon the Affidavit of Ms Heather Maria Thomas affirmed on 16 June 2026. Ms Thomas is the solicitor employed by the solicitor acting for the Council who has carriage of the matter under supervision of the solicitor on record, Mr Oldfield.
Perhaps it is logical to deal with the question of service before I return to the question of payment out. The Council’s claim to be entitled to payment out of the moneys held is based upon the following facts which I largely derive from the affidavit of Mr Bullivant, and to some extent, from the affidavit of Ms Thomas.
The short facts relied upon are that the respondent to this Motion, a Mr Oliver Johannes Edo De Paz, was an employee of the Council who, between 31 August 2022 and a date in May 2024, embezzled the total sum of $1.262 million, largely being infrastructure repayment bonds that were due to be refunded to development applicants upon the completion of the development. The applicant diverted those refunds to accounts controlled by him.
From the very helpful written submissions of Mr Elliot, and based upon the evidence I have referred to, the sum of $450,000 (being part of the embezzled funds) was used as a substantial deposit towards the purchase of real property. The balance of the purchase price was raised by Mr De Paz by way of a mortgage from First Mortgage Company Home Loans Pty Ltd, the plaintiff named in the summons by which the order for payment in had been made. The funds paid into court, that is to say, the amount of $426,922.94, are the net proceeds upon the mortgagee sale.
I should say that when his fraud was discovered, Mr De Paz apparently voluntarily gave up possession of the property to the mortgagee for the purpose of it exercising its power of sale under the mortgage agreement. On the evidence of Mr Bullivant, there is no doubt that the Council has a well-nigh overwhelming claim to payment out of the moneys held in court. The evidence suggests no other person has any competing claim to any part of those funds.
From the evidence of Ms Thomas, which I accept which, has been provided partly on the basis of information and belief, Mr De Paz was charged with a number of fraud offences under the Crimes Act 1900 (NSW) including offences under ss 192E(1)(b), 192B(1) and 192B(2). It appears that upon arraignment in the District Court following his committal, Mr De Paz, on 24 October 2025, entered pleas of guilty to each of those offences, and being unable to demonstrate special or exceptional circumstances under s 22B of the Bail Act 2013 (NSW), his previous bail was revoked, and he was remanded in custody.
He adhered to his pleas of guilty when he came before his Honour Judge Krisenthal in the District Court at Penrith for sentence on 17 April 2026. Krisenthal DCJ sentenced Mr De Paz to a total term of imprisonment of five years and six months with a non-parole period of three years and eight months. He will first be eligible for release on parole on 23 June 2029, and his head sentence will expire on 23 April 2032. Ms Thomas has been unable to ascertain the correctional centre in which Mr De Paz is currently held.
Prior to the entry of the pleas of guilty, Mr Oldfield had written to Mr De Paz on 16 October 2025 about the Council’s claim for restitution of the moneys defrauded. Mr Oldfield asked Mr De Paz to state whether he admitted the funds were stolen by him, that they were used to assist in the purchase of the property, and whether he would consent to the funds being paid out of court to Council.
A Mr Stern, a sometime senior associate at the legal practice known as National Criminal Lawyers acting for Mr De Paz in the criminal proceedings responded on his behalf by letter dated 23 October 2025. Mr Stern confirmed that Mr De Paz intended to enter pleas of guilty to the fraud charges on arraignment, that the funds were used to assist in the purchase of the property, and that Mr De Paz consented to the funds being paid out to Council.
Mr Stern indicated that he would be prepared to provide further information on request. It is quite clear that Mr Stern had actual (not only ostensible) authority to make those admissions on behalf of Mr De Paz given that he was responding directly to the letter of 16 October 2025. He did not, at that time, say anything about service of any process. However, from Ms Thomas’s Affidavit, I am satisfied that over the signature of Mr Oldfield, the Council’s solicitors wrote again to Mr Stern on 12 March 2026.
Mr Oldfield indicated, inter alia, that he was in the process of filing a Notice of Motion supported by affidavit naming Mr De Paz as the respondent. He enquired whether Mr Stern or the legal practice was instructed to accept service on behalf of Mr De Paz. He added:

The motion and affidavit were not filed until 16 April 2026, and on Friday 17 April 2026 at 4.08pm, Ms Thomas acting on the faith of Mr Stern’s earlier representation, wrote to the legal practice under cover of a letter signed by Mr Oldfield, referring to the previous representation of 12 March 2026, and enclosing “by way of service”, the motion and the affidavit and a notice of listing for directions on 13 May 2026.
As no notice of appearance was filed, nor had she heard otherwise from the legal practice, Ms Thomas emailed Mr Stern with a copy to the practice’s generic email address about the directions hearing before the registrar on 13 May 2026, indicating that Council’s instructions were for the matter to be set down for hearing at the earliest date suitable to counsel. Having heard nothing, she called the branch office of National Criminal Lawyers where Mr Stern normally worked and spoke to the receptionist there who informed her that Mr Stern had left the firm. Ms Thomas left her number and asked that the solicitor now with carriage of the matter call her back.
Later that same day, she received a call from Mr Matthew Fernandez, solicitor, who said words to the effect of, “I can see your emails of 12th March and 17 April 2026, and the attached documents are contained on our file”. He added “the file is closed so we do not have instructions to act for Mr De Paz anymore”. As is obvious, by coincidence, the motion and affidavit were served on the very day that Mr De Paz had been dealt with in the District Court by Krisenthal DCJ. But nothing turns on that.
In the circumstances, as I have found them to be on the evidence to which I have referred and which I accept, I am satisfied that service by email on the solicitors on 17 April were steps taken for the purpose of bringing the process to the notice of Mr De Paz. I am satisfied that those steps were effective given that the solicitors still acted for him on that day, and I will, by order, direct that the notice of motion and supporting affidavit be taken to have been served on Mr De Paz on that date.
Returning to the substance of the claim, I am satisfied that following a detailed investigation, Mr Bullivant, on behalf of the Council, reported the matter to the NSW Police Force on 10 May 2024. He also referred the matter to the Independent Commission Against Corruption.
On 15 May 2024, a letter was hand-delivered to Mr De Paz from the Council setting out the allegations of fraud and theft and requesting that he attend a meeting to respond to the allegations. That meeting was held on the same day, and Mr De Paz admitted to Mr Bullivant that he had stolen at least $630,000 in the infrastructure repayment bonds. However, as I have said, the Council’s investigation carried out by independent consultants suggested the figure was much higher.
The Council lodged a caveat on title to the property on 30 June 2024 claiming a caveatable interest, doubtless, by means of tracing the funds into that property. After going into possession on 11 June 2024, First Mortgage exchanged contracts on the sale of the property on 16 December 2024, and the sale was completed on 25 January 2025. As I have said, net surplus of the purchase price after discharge of the mortgage and deduction of the costs of sale was paid into court. On 8 July 2025, Mr De Paz voluntarily paid the sum of $200,000 to the Council which I infer was from cash he retained on hand, and I have already recited and accepted the evidence about the Council’s demand for the payment out of the money in court to it.
Mr Elliot has set out the legal principles which inform the operation of r 55.11 UCPR, and in particular, by reference to the decision of Kunc J in Westpac Banking Corporation; Applications of Rightquip Pty Ltd (In Liq*) and Gleeson* [2026] NSWSC 585. His Honour set out four considerations by reference to other authority as follows. It was necessary for the evidence to: