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[2012] NSWSC 1619
Supreme Court of NSW
2012-10-31
Brereton J, Black J, Hammerschlag J
Original judgment source is linked above.
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happened); that certain releases would be provided; that a complaint to the Financial Ombudsman Service would be withdrawn; that the defendants acknowledged that if refinance was not effected by 20 June 2012, the bank would be at liberty to enforce the escrow orders, including by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.
Grounds for the stay 11As Mr Koch put it, the present application is, in that context, made at 30 seconds to midnight. Essentially, two grounds were advanced by Mr Levet, counsel for the applicant, in support of the proposed stay. The first was that proceeding with the ejectment was inappropriate in the context of proceedings instituted by the defendants, or at least some of them, in the Federal Court of Australia, by application filed in that court on 30 July 2012, which claims orders that, as between the applicant Webuildem and the respondent Arab Bank, certain provisions of the consent orders of 8 March 2012 may not be pleaded in bar to the applicant's claim in the Federal Court proceedings, and damages for misleading and deceptive conduct, said to have been constituted by alleged misrepresentations made by or on behalf of Arab Bank in connection with the negotiation of the loan and security that underlies the dispute. 12In the statement of claim that supports the originating application in the Federal Court, Webuildem pleads the consent orders in paragraph 13, but particularly subparagraphs 8(c) and (d) of those consent orders, which contained a release by Webuildem and related parties of the receivers and managers, and authority to plead that release in bar to any claim by the releasing parties. Paragraph 14 then pleads that so much of the consent orders as is evidenced by paragraphs 8(c) and (d) was unjust and unconscionable. The pleading does not impugn the balance of the consent orders, nor does the application seek to have the consent orders set aside. 13As I have said, an application for leave to appeal from Black J's orders was dismissed. There has been no application, in this Court or in the Federal Court, to set aside the escrow orders. Mr Levet informs the Court from the bar table, and, for present purposes, I of course accept, that some reference to such a prospective application was made in the hearing before Foster J in the Federal Court of Webuildem's application for summary dismissal of the proceedings, in respect of which his Honour has reserved judgment. But the fact remains that while the possibility of such an application may have been foreshadowed, none has, at this stage, been made. Were the ejectment to proceed, that would, in no way, affect the ability of Webuildem to prosecute the claim it has made in the Federal Court for damages. Were Webuildem's application in the Federal Court as currently framed to succeed in full, that would have no bearing on the enforceability of the writ of possession. Those circumstances demonstrate that the pendency of the application in the Federal Court, whatever its merits, is simply not relevant to an application for a stay of the writ of possession. 14The other ground of the application is that it is said in Ms Athitakis' affidavit that "we now have finance in place with letters of offer from institutional and non-institutional lenders to make an offer to the mortgagee to settle their claim." No particulars are provided, it is said for reasons of commercial sensitivity. Although it is asserted that the offer, if put and accepted, will be capable of settlement within 28 days, and the offer will be finalised and put within 7 days, it is of some significance in this respect that it seems that any offer is to emanate from the proposed refinancing parties, that is the borrowers, as opposed to from the lenders. So it cannot be known what, if any, the response would be from the prospective lenders. 15There is, unfortunately, no sufficient detail of the proposed refinancing to form any view as to whether it is realistic, reasonable or might happen within a time that might be acceptable, even if that were a sufficient ground to stay execution of the writ. In that context, it is to be borne in mind that it was for the very purpose of refinancing that the settlement agreement and escrow orders were entered into on 8 March, with a view to that occurring by 12 June, and of course, it is now the last day of October. 16Courts are always reluctant to see a person's accommodation in their homes affected by writs of ejectment, and I am no exception to that, and would lean in favour of granting a stay if it were reasonably open on the material to do so. On the other hand, courts must bear in mind that trade and commerce depends upon the validity and enforceability of security for loan transactions, and cannot allow compassionate considerations to override the legal entitlements of financiers when they are clearly established. 17For those reasons, I regret that in the context of what has transpired in this case, and on the material presently before the Court, no sufficient basis for a stay is established. 18I order that the motion be dismissed with costs.
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 17 May 2013