Nest Opportunities Pty Ltd v Eastern Property Alliance Pty Ltd [2020] NSWSC 1835 | Case summary

Background

Between 2015 and 2018, Nest Opportunities and Eastern Property were involved in a joint venture that acquired several sites in Crows Nest for the purpose of consolidating the sites and selling those sites to purchasers for redevelopment.
In the course of those dealings, Nest Opportunities advanced loan funds to Eastern Property.
On 30 April 2019, Nest Opportunities and Eastern Property entered a Deed of Novation of Loan pursuant to which Eastern Property acknowledged that Nest Opportunities had advanced to it $3,364,051 and agreed to repay that amount: 1. as to $2 million by 30 May 2019; and 2. as to the balance, by 31 March 2020.
Mr Adgemis guaranteed Eastern Property's obligations under that deed.
Eastern Property did not pay the $2 million due on 30 May 2019 and, on 26 September 2019, Nest Opportunities commenced these proceedings seeking recovery of the $3,364,051.
The proceedings were settled on 19 December 2019 on the basis that Eastern Property pay Nest Opportunities the amount outstanding by instalments of: 1. $1.5 million on 31 December 2019; 2. $500,000 by 31 January 2020; and 3. the balance of $1,364,051 by 30 June 2020.
It was a term of the settlement that if any of those payments was not made, Eastern Property and Mr Adgemis would consent to judgment for the balance remaining.
Eastern Property paid the instalments of $1.5 million and $500,000.
On 2 July 2020 the parties reached a further agreement extending the time by which Eastern Property should pay the third instalment to 31 July 2020 on the basis that the amount to be paid was $1.4, rather than $1,364,051.
The parties agreed that if $1.4 million was not paid by 31 July 2020, Eastern Property and Mr Adgemis would consent to judgment in that amount.
Eastern Property did not pay the $1.4 million.
That led to Eastern Property and Mr Adgemis consenting to the 11 August 2020 judgment. Because of a typographical error, judgment was re-entered on 17 September 2020.
Since then, Nest Opportunities has taken the following steps to enforce that judgment: 1. On 10 September 2020 it served examination notices on Eastern Property and on Mr Adgemis; both failed to comply with those notices; 2. On 1 October 2020 the New South Wales Sheriff attended Mr Adgemis' property at Rose Bay to execute a writ for the levy of property; the sheriffs did not recover any property to satisfy the judgment debt; 3. On 8 October 2020 Nest Opportunities served on Eastern Property a statutory demand under s 459E of the Corporations Act 2001 (Cth); Eastern Property has not complied with that demand, and has no obligation to do so for a period of six months from the date of service; and 4. On 8 October 2020, Nest Opportunities served a bankruptcy notice on Mr Adgemis; Mr Adgemis has not complied with that notice, and has no obligation to do so for a period of six months from the date of service.
Mr Adgemis did not give evidence on the applications before me.
However, on his behalf, his financial adviser, Mr Damien Hodgkinson, gave evidence that: 1. Mr Adgemis had intended to pay the amount due by Eastern Property to Nest Opportunities from the proceeds of a refinance of the facilities of the Adgemis Group; 2. that the proposed refinancing was scheduled to take place on 31 May 2020; 3. the refinancing fell through for reasons associated with the withdrawal of a tenant from one of the Adgemis Group's company's properties; 4. further refinancing is now in place and this refinancing is expected to be settled by 31 December 2020.
Mr Hodgkinson gave unchallenged evidence that: "Based on my understanding of the refinance and its effect on the Adgemis Group, in my opinion the defendants will be in a position to pay the judgment debt in full immediately after the refinance is completed."
In addition, Mr Adgemis has now given the undertakings to the Court that I have set out. [1]
On behalf of Nest Opportunities, Mr Robertson pointed out that the 11 August 2020 judgment was entered by consent and as a consequence of the failure by Eastern Property to repay a debt that has been long outstanding and has been the subject of renegotiation on a number of occasions.
Mr Robertson also pointed out, obviously correctly, that, as judgment creditor in a substantial sum, Nest Opportunities is entitled to seek immediate payment of it.
Mr Robertson also submitted, again obviously correctly, that Eastern Property and Mr Adgemis were seeking an indulgence from the Court by seeking deferral of the payment of a judgment debt which is otherwise payable immediately.
However, as it appears unlikely that funds will be available to pay the judgment otherwise than from the current refinancing of the Adgemis Group facilities, and in light of the undertakings given by Mr Adgemis, I am persuaded to make an order deferring payment of the judgment until 15 January 2021.
However, I am also persuaded that Nest Opportunities should have leave to issue a writ of sequestration immediately after 15 January 2021, if the judgment is not by then paid.
Mr Dawson submitted that a writ of sequestration could not be issued until an order was made fixing the time by which payment of the 11 August 2020 judgment should be paid.
Mr Dawson referred to 19th Century authority [2] where Wills J said: "Further, it seems a very great question whether a writ of sequestration would apply at all for a mere non-payment of money." [3]
However, UCPR r 40.2(1) provides, without qualification, that a judgment for the payment of money may be enforced by sequestration of the property of the person bound by the judgment.
Mr Dawson also referred to more recent authorities suggesting that, in some circumstances, a writ of sequestration will not issue until a time has been fixed for compliance with the order in question. [4]
However, neither of those authorities was concerned with the judgment for the payment of a sum of money.
The effect of UCPR r 36.4 is that the 11 August 2020 judgment took effect on the date upon which it was made.
In my opinion, in those circumstances, it is not a condition precedent to the issue of writ of sequestration that the Court fix a time of payment of the judgment.
I accept that restraint must be exercised before granting leave to issue a writ of sequestration.
However, I am persuaded in the special circumstances of this case that leave should be granted.
UCPR r 40.7(1) provides that a judgment is not enforceable by sequestration unless a sealed copy of the judgment has been served personally on the person bound by the judgment. Nest Opportunities has not served a sealed copy of the 11 August 2020 judgment on Mr Adgemis.
UCPR r 40.7(5) provides that a court may dispense with personal service.
This is also a power to be exercised with caution.
Mr Dawson drew my attention to intermediate appellate authority to the effect "any judge asked to exercise the power should hasten slowly" and that: "Compliance [with the requirement for personal service] may not be waived unless the judge is satisfied beyond reasonable doubt by admissible evidence that the person charged with the order was well aware of his or her obligations under the order and the consequences of breaching it." [5]
In this case, a matter relevant to whether personal service of the judgment should be dispensed with is that the judgment was entered with Mr Adgemis' active and informed consent. [6] He has also filed a motion seeking to have payment of the judgment debt deferred. He is obviously well aware of the judgment. He is also most ably represented and I have no doubt that he understands the consequences of noncompliance with the judgment.
Accordingly I propose to make an order dispensing with service.
I note the undertaking given to the Court by the second defendant: 1. to ensure that the Plaintiff is paid the Judgment Debt (including any interest accrued to the date of payment) on or by 15 January 2021; and 2. not to make, or permit the first defendant to make, any further application under Civil Procedure Act 2005 (NSW) s 107 for deferral of payment of the Judgment Debt or to pay it by instalments.
I will mark the email sent to my associate by Mr Adgemis' solicitor setting out that undertaking as MFI-1.
I order: 1. Pursuant to s 107 of the Civil Procedure Act 2005 (NSW), that payment of the sum of $1,400,000 ordered to be paid by the defendants to the plaintiff pursuant to the judgment entered on 17 September 2020 be deferred until 15 January 2021. 2. Pursuant to UCPR r 40.7(5), that the requirement that the plaintiff personally serve a copy of the judgment on the second defendant pursuant to Civil Procedure Rule 40.7(1) be dispensed with. 3. Pursuant to UCPR r 40.3(1), that the plaintiff have leave to issue a writ of sequestration over the property of the second defendant in the form annexed and marked "A" to the plaintiff's notice of motion of 29 October 2020. 4. That such writ not to issue until 16 January 2021 and only then on proof to the Registrar that the judgment entered on 17 September 2020 remains unpaid.
I will hear the parties as to costs. My preliminary view is that the defendants should pay the plaintiff's costs of both applications.

Nest Opportunities Pty Ltd v Eastern Property Alliance Pty Ltd

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