Olde v Metro Surf Australia Pty Ltd

N J Beaumont (Plaintiffs) No appearance for First Defendant B DeBuse (Second Defendant) Solicitors:

Gadens (Plaintiffs) McKells (Second Defendant) File Number(s): 2012/154665

Judgment 1HIS HONOUR: This is an application by summons pursuant to which the plaintiffs, who have been appointed by the National Australia Bank as receivers of a particular property which is known at xxx xx xxxxxxx xxxxxxx Unanderra, seek possession of that property from two defendants, Metro Surf Australia Pty Ltd and Obnova Concrete Pty Ltd (Obnova). 2The first defendant, which I will call "Metro" has not appeared on the hearing. There is no actual evidence of any right of that company to occupy the premises. No lease has been tendered. However, correspondence in evidence does refer to a lease but in any event it states that if there were a lease it terminated on 31 May 2012 so that any right under that lease has now gone whether or not any rent which was payable under it was paid up to date. If there were a lease any rights have gone and there is no suggestion there are any other rights and there is no argument put forward by Metro Surf. Metro Surf has no right to occupy that property. 3Obnova is in occupation of the subject property in that it has a considerable amount of very heavy material and perhaps site office buildings on the premises, all of which can be moved but some of which is extremely heavy and will require heavy machinery to lift. 4The only evidence of any entitlement in the second defendant to be on the property really came by the oral evidence given in Court today by Mr Miroslav Davidovic in that he said that when the particular property was purchased the equipment of the second defendant was put on to it and he said that from time to time some payments were made, presumably in the nature of a license fee, to the registered proprietor if moneys were available for that. 5If that is the position, which I accept it was, then it could do no more than convert what was otherwise a gratuitous license into a contractual license. It could not convert it into any leasehold interest, registered or unregistered. 6The plaintiffs gave notice to Obnova on 8 March 2012 to vacate the premises by 12 March 2012. They gave a second notice by letter dated 1 May 2012 seeking removal of all goods from the property by no later than 15 May 2012. Nothing happened as a result of those letters and these proceedings were then commenced on 15 May 2012. 7The registered proprietor of the land in question is a company V & M Davidovic Pty Ltd. That company mortgaged the land to the National Australia Bank Limited under mortgage registered number AD 111884. Pursuant to its rights under that mortgage, the Bank appointed the plaintiffs receivers of the mortgaged property. 8Under the terms of the mortgage the receivers have the right to do all things which the Bank as mortgagee could do including taking possession of the property and doing anything that a receiver of property could do under the Corporations Act. 9The mortgage provides that unless there is a statement otherwise receivers appointed would be the agents of the mortgagor company and not of the Bank. The receivers were appointed by deed of appointment on 6 March 2012. The appointment did not state otherwise so that they were appointed as receivers but as agents of the mortgagor. It is in that capacity that they bring these proceedings. 10Counsel for the second defendant has stated as a first argument that as they did not state that they were bringing the proceedings as agents for the mortgagor then the proceedings were bad in form. I do not think that is the position. The summons does state that they brought the proceedings as receivers and managers of the land and, in my view, they were entitled to do so even if it could have been more clearly expressed. 11The next argument put forward is that as the receivers were agents of the mortgagor then whatever rights the defendants had in accordance with whatever agreements they had with the mortgagor bound the receivers. I think that is clearly the position and is established as such in Magar v Arab Bank Australia Limited; Bournelis v Aldi Petroleum Pty Ltd [2010] NSWSC 553. However, the difference between the facts of that case and the case now before the Court is that in that case there was a tenant pursuant to an unregistered lease which was granted after the mortgage had been granted. The position as found by the Court was that as between mortgagor landlord and the tenant the lease was binding, although it was not binding as between mortgagee and tenant. Thus, if receivers appointed as agents for the landlord/mortgagor took proceedings to obtain possession from the tenant, those proceedings would fail as the mortgagor was bound as between it and the tenant to recognise the lease. 12In the instant case there is no lease. It is not suggested as between the plaintiff and second defendant that there ever was a lease. What is suggested is that there was a license to occupy the premises. I accept that there was a license. There is some question as to whether or not it was gratuitous. Until evidence was given in Court this morning there was no evidence that it was a contractual license. The evidence as to some payments from time to time when moneys were available may have turned it into a contractual license but in the circumstances all that would have meant was that whereas the license was not immediately terminable on notice it was terminable on giving reasonable notice. That seems to me to be the position here at best for the second defendant. 13The question then is what is reasonable notice. I do not think that the notice which was given under the first letter was reasonable, particularly as the plaintiffs themselves have said it would take about four weeks to clear the property. On that basis it was not reasonable to give four days' notice to vacate and remove all possessions from the property. 14The second notice gave slightly more time, namely, from 1 May 2012 until 15 May 2012, a period of two weeks which in itself on the plaintiffs' evidence was not sufficient. 15The general law is that if a license is terminated with notice but the time is not sufficient, nevertheless that is a notice of termination but a reasonable time must be fixed and I propose to follow that. 16Lastly, I should say that I have been referred to two cases, namely, Norwich Union Life Insurance Society v Preston [1957] 2 AER page 428 and Haniotis v Dimitriou [1983] VR 495 which hold that in a case such as this the giving of possession under an order for possession requires the person against whom the order is made to clear the property so as to give proper vacant possession of it and not leave its equipment in the property. 17It has been argued by Mr DeBuse that at the present time the premises are locked and secured by the receivers. That is hardly an argument as no effort or contact has been made by the second defendant seeking to have the premises opened up so that their material can be taken away, and it could hardly be said that it would be in their interests to leave the premises open and therefore their equipment, heavy as it is, available to anybody who decided to remove it for themselves by way of theft. 18The final question is what is a reasonable time. The plaintiffs say four weeks because that is the time they said would at least be required to clear the site, and the second defendant says three months. 19The difficulties for the second defendant really are to find some site to which the material can be moved, to hire the necessary lifting equipment and trucks to get the equipment off the site and, presumably, to have money to do so but no evidence of financial difficulty has been given. 20The property has been advertised for auction on 7 June. In my view it would not be reasonable to require the second defendant to vacate by that date. Thus if the auction is to proceed presumably the contract will have to provide for settlement to take place at a period which is some days after the date on which I propose to order that possession be given. 21While it may seem to be just taking a middle course, it seems to me that a period of six weeks will be sufficient for the defendant and in some ways is quite generous to it as it has taken no action up to the present time, as I understand it, to make arrangements to move. 22Order that the defendants give possession of the land comprised in Certificate of Title Folio Identifier 67/608085 to the plaintiffs by 13 July. Liberty to apply as to enforcement of the order. The defendant to pay the plaintiffs' costs. Exhibits can be returned.