National Australia Bank Limited v Ricardo Roura Damelian

Mr Damelian, the McMahon's Point property and the NAB 8Further circumstances of relevance are the following: Mr Damelian advances the state of his health as a reason why a stay should be granted. There is no doubt that Mr Damelian faces significant challenges to his health. A general practitioner's certificate from Dr Robert Bowser who he has been consulting for some four years is in evidence. Dr Bowser says, and I have no reason to doubt, that Mr Damelian has insulin dependent diabetes, some signs of kidney failure, hypertension, ischemic heart disease, obstructive sleep apnoea, as well as a chronic dental bone infection following dental work. He also has profound characteristic sleep disturbance. 9Mr Damelian was born July 1950, and is currently aged 62 years. He had an umbilical hernia operation about 17 April this year. The discharge summary from Royal North Shore Hospital indicates cardio irregularity was detected during that procedure with nonspecific ECG changes. The cardio-irregularity did resolve after approximately half an hour according to the hospital notes, and was discussed with Mr Damelian. He was advised to follow up with his regular cardiologist over the following days. The hernia operation was a sudden onset event, and he was rushed to emergency at Royal North Shore Hospital. But it is now 7 June, which is about six to seven weeks after that operation. Mr Damelian is able to attend Court today and to present his case with competence. 10Mr Damelian also says, and I accept, that he has suffered a bereavement of a close relative over Christmas. His immediate plans are the following. He accepts that he is going to have to leave these premises. He accepts that he must do so by no later than 31 July, as is implicit in the stay that he seeks. He does not wish to leave until then for the following reason. He has made arrangements to move into premises in Whale Beach on Sydney's northern beaches. He has been in negotiations with a Ms Donna Reidy, for his wife to execute a lease in respect of Ms Reidy's premises in Whale Beach. Donna Reidy's letter in evidence explains this. I have no reason to doubt that his wife, Mrs Jacqueline Damelian does intend to lease this property in Whale Beach for their residential use. But the property is being renovated and not available for occupation until about 1 August. 11Mr Damelian says from the bar table and in his affidavit evidence that he has no alternative accommodation, cannot afford motel or hotel accommodation, and is looking towards family and friends to provide him with some funds to enable him to execute the lease for the property owned by Donna Reidy by the end of July. He says from the bar table that the rental of this property in Whale Beach will be about $700 per week. Presumably, with the assistance of family and friends, when the time comes, to move into the Whale Beach property, those funds will be able to be found. 12Before coming to Court Mr Damelian discussed these circumstances, and his need for a short extra period at the McMahon's Point property, with Mr Sherman, the agent for the mortgagee in possession, and a well-known liquidator in this state. Mr Damelian says that he discussed with Mr Sherman his difficulties in trying to organise alternative accommodation, and that he has something lined up but cannot move until August. He said that Mr Sherman replied: "No Rick, that is quite okay, that sounds reasonable". 13Although not advanced in affidavit evidence, but put from the bar table in discussion with the Court, Mr Damelian says Ferrier Hodgson were not proposing to market the property for sale until after the federal election, which is a matter of public record. The Prime Minister has already announced it will be held on 14 September 2013. It seems to be assumed that the state of the real estate market is such that it is undesirable to market the property over the winter period and before the federal election. 14But that evidence has been contradicted by evidence advanced by the Bank. I have admitted evidence on this issue from both sides on a hearsay basis, because of the urgency of this application. The Bank's reply evidence from a Mr Ryan Spooner, an employee of Ferrier Hodgson, is that his instructions are to take immediate steps to ready the McMahon's Point property for sale, to engage an agent its their sale and to sell it as soon as reasonably practicable. He says he has no intention of delaying, nor any instructions to delay the sale of the property until after the federal election, 15The Bank also adduces similar evidence from a solicitor from Allens, Mr Christopher Prestwich. His evidence on information and belief sourced from Mr Sherman, is that Mr Sherman certainly did discuss a request from Mr Damelian to remain in possession of the properties for a longer period, and that Mr Damelian did explain to Mr Sherman about the renovations to the property at Whale Beach. Through Mr Prestwich, Mr Sherman says that he did communicate the Bank's position on or about 31 May that the Bank was not willing to allow Mr Damelian to remain in possession after 17 June. He says that at no point did he discuss the timing of the sales process of the McMahon's Point property with Mr Damelian, and there is no intention to delay sale until after the federal election. 16Mr Prestwich is also informed by Mr Pickering, the Senior Director Strategic Business Services of the NAB, who has carriage of this matter on behalf of the Bank, and would be the person giving instructions to the mortgagees agent in possession, that once possession of the property is obtained, that Mr Pickering intends to instruct Mr Sherman and Mr Sarantinos from Ferrier Hodgson to market the property for sale as soon as possible. 17Mr Prestwich has done a further calculation as to the running of interest on the outstanding judgment debt secured by the Bank's mortgage. The judgment debt as at today is $6,581,699.28. Interest on this judgment debt accrues at a rate of $1,622.88 per day. Mr Prestwich has calculated in accordance with current rates of interest on judgments in the Supreme Court that the period of 46 days between 17 June and 1 August will accrue the sum of additional interest of $74,652.48. Interest would be greater were it to be calculated in accordance with the default rates of interest under the Bank's mortgage of the McMahon's Point property. 18In the course of argument I raised with Mr Damelian whether or not as a condition of the stay that he sought he was prepared to have that sum or a sum like it paid into Court. Mr Damelian is a bankrupt. The making of such a payment himself would not be consistent with his bankruptcy. On the other hand, these funds may be able to be found elsewhere. The Whale Beach property for example will be leased by his wife and funds for his future accommodation will be found from other family sources. 19Mr Damelian very frankly indicated that neither he, nor any sources from family or friends close to him, would be in a position to find a sum, in the order of $74,652.48, to cover the extra period of his proposed occupation between 17 June and 1 August. He said that he would be able to find some $700 a week for continuing to stay at the McMahon's Point property, but not much more.

Stays of Writs of Possession - Applicable Principles 20Applications for stays of writs of possession are regular applications in the Common Law duty list. The principles that govern the granting or refusal of such stay applications are well established. They have been summarised by Johnson J in GE Personal Finance Pty Limited v Smith [2006] NSWSC 889 ("GE Personal Finance"). His Honour in GE Personal Finance identifies three common circumstances which applicants for a stay often advance on stay applications. The first is where the defendant indicates that the proceedings are to be defended: GE Personal Finance at [13] and [15]. In those circumstances a draft notice of grounds of defence should be provided and the defendant should be in a position to make submissions concerning the merits of the proposed ground. That situation does not apply here. 21The second usual basis for a stay is where the defendant indicates that the loan is to be re-financed: GE Personal Finance at [13] and [16] to [19]. But proof of steps undertaken to re-finance are normally expected to be provided on the application. Those circumstances do not apply here either. 22The third situation is where the defendant indicates that the subject property is to be sold: GE Personal Finance at [13] and ]20]. In those circumstances it is usual that copies of agency or sale agreements or the contract for the sale of the property to be provided. That too is not the case here. 23This is, as many of these applications are, an application based on the grounds of hardship. Johnson J explains in GE Personal Finance at [22] and [23] how hardship stays are considered. His Honour makes clear that where, as is the case here, vacation of the premises by the defendant is inevitable, there ought be no reasonable expectation of an extended stay being granted on hardship grounds: [22] Ordinarily, if a Defendant is not in a position to demonstrate a reasonable foundation for a stay in one of the three circumstances referred to in para 13 above, then there could be no reasonable expectation of an extended stay on hardship grounds only. If it is inevitable that the Plaintiff will obtain possession of the property for the purpose of exercising the power of sale, then it will be necessary for the Defendant to vacate the property. [23] Of course, particular factors may exist in an individual case which bear upon this class of stay application and which may ground the exercise of discretion by way of a stay for a longer period. However, in circumstances where vacation of the premises by the Defendant is inevitable, there ought be no reasonable expectation of an extended stay being granted on hardship grounds. 24The question here is should a stay be granted? Considering arguments for and against a stay, Mr Damelian has a number of factors going in his favour and a number of factors going against him. In his favour he has the fact that this is his first application. He claims it will be his only application. Also in his favour is: that he made requests before coming to Court through proper channels, that he only seeks a stay for a limited period, and that he has provided evidence explaining the need for that limited period, namely, the delay in availability of alternative accommodation. 25But several arguments are to be weighed against him. I find it difficult to accept Mr Damelian cannot get alternative accommodation. He certainly has a preference, quite understandably, to go into the Whale Beach property, a property which a friend of his has generously made available to him at a rent which may not necessarily reflect its full market value. But I find it difficult to accept that there is no alternative accommodation available to Mr Damelian. His assertion that there is no alternative accommodation for him is unsupported by the kind of direct evidence one might expect: for example that he has made many alternative enquiries and been knocked back. He has said in submissions that he finds it difficult to take a lease because he is a bankrupt. But nor is there any detailed evidence of that having occurred. 26Also against him on this application is the consideration that the grant of a stay will inevitably add at least $74,000 onto the debt owing to the Bank. He is not able to make any offer to meet the accruing interest obligations under the mortgage in the interim period. It is not adequate for him simply to say, that he would like to be accommodated in his old property in effect, at his chosen market rental rate. The Bank is incurring at least $74,000 for the period for which he is offering about $4200, being $700 a week for 6 weeks. 27The next argument Mr Damelian puts, and the Bank has sought to answer, is that the sale is not going to take place for some time. The evidence from the Bank is at least as reliable as the evidence from Mr Damelian, which tends to neutralise this as an argument. I am not able to act either way upon the evidence about whether or not a sale will take place in the next six weeks or two months. But it can be inferred as a matter of commercial common sense that it is likely, if the property is vacated, that preliminary steps will be taken to prepare the McMahon's Point property for sale, steps which would otherwise have to be taken at a much later time. 28The Court put to Mr Damelian in argument whether what was happening here was really that he was facing the prospect of having to move twice rather than once. It does seem that is at the heart of the hardship claimed. He is having to move twice rather than once. He has received an advantageous offer to living in attractive accommodation at an affordable rent. He wants to move straight from where he is, to that place. The cost for him having to move twice, in effect, he says, is about $5,500 worth of interim storage charges (for a minimum of three months) plus $700 a week for the six weeks required before he can move into the other property, totalling $9,700 ($5,500 plus $4,200). Added to this no doubt is the stress of moving twice rather than once. And he is going to have to move soon anyway But if he does not move, at least a further $74,000 worth of interest will accrue. This will result in a further loss to the Bank, as it is conceded that the sale of the McMahon's Point property will not satisfy the Bank's debt.

Conclusion 29Mr Damelian has somewhat set his heart on the advantages of this property at Whale Beach. If I may say so, that is entirely understandable. The property is one that would provide for him a smooth transition from his current attractive McMahon's Point property, to another property in pleasant comparable surroundings. But things have not turned out the way that he expected. That property is not yet available. But it does seem to me that that is not something that should delay the Bank in executing on the writ of possession. And Mr Damelian has really been on notice for 6 months since November 2012 when judgment for possession was entered that this day would come. In addition the loan has been in default since September 2011. There is very substantial accumulated arrears. Leaving aside the complexities of the administration of the rest of Mr Damelian's business insolvency, it is conceded that the sale of this property will not satisfy the Bank's debt. The Bank can be expected to act speedily to sell the property after execution of its writs of possession to minimise the accrual of further losses. 30I am mindful that a decision not to stay this writ would be a stressful one for both Mr Damelian and his wife. But he is reconciled to the fact that this is a decision he must face either now or by 31 July. Difficult though it is, it seems to me that it is a decision that may be in his own best interests to face earlier rather than later. 31For those reasons I decline to grant the stay which is sought. Mr Damelian is a bankrupt. I therefore make no order as to costs against him. 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 June 2013