In the matter of Webuildem Pty Ltd (Receivers & Managers Appointed) & In the matter of Maroun Investments Pty Ltd (Receivers & Managers Appointed) [2012] NSWSC 1619

Judgment (ex tempore) 1HIS HONOUR: By notice of motion filed in court today, the applicant Martina Athitakis, who is an occupant of the property at unit xxxx x xx xxxxx Hilly Street, Mortlake, claims an order staying execution of a writ of possession which is otherwise to be executed at noon today. Ms Athitakis is also a director of the first defendant and registered proprietor of the property, Webuildem Pty Limited.

Background 2For present purposes, I take the history of this matter largely from the judgment of Black J given on 27 June 2012 [Re Webuildem Pty Ltd [2012] NSWSC 708]. The substantive proceedings were commenced on 9 November 2011 and fixed for hearing on 6 December 2011, but that date was vacated, and the proceedings were ultimately fixed for hearing for 3 days commencing on 7 March 2012. They were settled on the first day of that hearing by terms of settlement, in accordance with which Hammerschlag J made orders the following day, 8 March 2012. 3As well as providing for the defendants to give access to the bank to certain properties for valuation purposes, the terms recorded an agreement between the parties, whereby they agreed to certain orders, called the 'escrow orders', being entered, if Webuildem's indebtedness to the bank was not repaid by 12 June 2012; that the bank would procure the retirement of the receivers (which, in due course, happened); that certain releases would be provided; that a complaint to the Financial Ombudsman Service would be withdrawn; that the defendants acknowledged that if refinance was not effected by 20 June 2012, the bank would be at liberty to enforce the escrow orders, including by the appointment or reappointment of receivers and managers; but that if the defendants refinanced their obligations in accordance with the settlement terms, the proceedings would be dismissed. 4On 6 June 2012, the defendants, by their solicitors, sought an extension of the time for refinancing to 14 August 2012. The plaintiff bank not having responded, the defendants had the matter re-listed before the Court on 12 June 2012, which was the date by which refinancing was to be effected under the settlement terms, but which was also the next available listing day. In an interlocutory process filed in court that day, the defendants sought orders that the terms of settlement of 7 March, and orders made consequent to them on 8 March 2012, be set aside, and, alternatively, a stay of the operation of the 8 March orders until further order. 5On 12 June, Black J made directions for the service of affidavits and written submissions, and noted an undertaking by the plaintiffs to take no steps to enter the escrow orders until 22 June 2012, to which date the matter was adjourned for hearing. The matter was heard by his Honour on 22 June, on which occasion the bank gave a further undertaking to take no steps to enter the escrow orders until 27 June, to which date the matter was adjourned for judgment. On 27 June, his Honour dismissed the application. His Honour's judgment of that date reveals that the matter proceeded as an application, in effect, for a stay of the orders of 8 March, and not at that stage as an application to set them aside; however, the stay was sought, inter alia, in aid of the pending application to set them aside. 6A number of grounds were advanced before his Honour, including that there was a reasonable refinancing proposal that would enable the defendants to redeem the mortgage within a fairly short time, and that the defendants had a demonstrable capacity to secure or refinance the debt (at [22]). While not concluding whether, as a matter of law, that was a sufficient ground for a stay, his Honour approached the matter on the basis that, accepting that such circumstances could justify a stay, the proposal then advanced, which envisaged a ten week period to complete a refinancing, was not within a sufficient time frame to meet the test, and that the defendants had not shown a demonstrable capacity to secure or refinance the relevant debt (at [24] - [25], [27]). 7Another basis advanced was that the bank had misrepresented the payout figure, providing a ground for rescission of the settlement agreement. His Honour found that no seriously arguable case for rescission on that basis had been established (at [32]). It was also argued that the settlement agreement had been procured by duress, and again, without reaching a final view on that question, his Honour concluded that the defendants had not established a serious question to be tried that the settlement or escrow orders were liable to be set aside for duress, and that it would not be in the interests of justice to stay the escrow orders on that basis (at [44]). His Honour also rejected a contention that settlement terms were not binding on some of the parties, and that that contention could support a stay of the escrow orders (at [50]). 8For those and other reasons, on 27 June 2012, his Honour dismissed the application for a stay, released the plaintiffs from their undertakings not to enter the escrow orders, to the extent that such release might have been necessary, but stayed the judgment and orders until 4 July 2012, noting an undertaking by the plaintiffs to take no steps to enter the escrow orders until 4 July 2012. 9The defendants then made an application for leave to appeal from his Honour's judgment to the Court of Appeal, which application was dismissed by the Court of Appeal. 10After the expiry of the stay and undertakings granted by Black J, the escrow orders were entered on 16 July 2012, including that Webuildem give Arab Bank possession of various properties enumerated in them, including the subject property. The receivers filed their notice of motion for a writ for possession on 1 August 2012. As appears from the affidavit of Martina Athitakis filed today, the sheriff gave notice to vacate on 21 September 2012, appointing noon today, 31 October, as the time for vacation.