Perpetual Corporate Trust Limited v Youssef and Anor

Parties: Perpetual Corporate Trust Limited (Plaintiff)
George Youssef (First Defendant)
A Class Rendering Pty Ltd (Second Defendant)

Representation: Solicitors appearing:
J Yu (Plaintiff)
A Patterson (First Defendant)
Solicitors:
Dentons Australia Limited (Plaintiff)
Edmond Khoury Solicitors (First Defendant)

File Number(s): 2024/00442459

Publication restriction: Nil

JUDGMENT

1. On 28 November 2024, the plaintiff, Perpetual Corporate Trust Limited, (“Perpetual”), commenced proceedings against the defendants, George Youssef and A Class Rendering Pty Ltd, in relation to a loan advance made to George Youssef on or around 28 February 2024. Amongst other orders sought in the statement of claim is an order for possession of land at [REDACTED], Dapto being the land comprised in Folio Identifier [REDACTED]. Perpetual claims alleged default on the part of Mr Youssef in respect of the loan agreement and sought judgment in the sum of $3,191,968.18, being the amount owing by Mr Youssef under the loan agreement as at 13 November 2024. The amount now due, taking into account interest and penalty provisions, exceeds $3.5 million.

2. The second defendant, A Class Rendering, is alleged to have unconditionally guaranteed the punctual payment to Perpetual of all money owing. A Class Rendering was wound up on 31 January 2025, and so is not an active party to the proceedings.

3. Although Mr Youssef initially appointed a solicitor in December 2024 and filed a Defence on 3 January 2025. That Defence was (by consent) struck out by Faulkner J on 4 April 2025 as it failed to disclose any grounds of defence.

4. On 9 April 2025 Perpetual filed a notice of motion seeking default judgment and possession of the property. This order was entered on 11 April 2025. On 23 April 2025 a writ of possession was issued with eviction scheduled for 18 June 2025.

Application for a stay of execution of writ of possession

5. On 13 June 2025 Mr Youssef sought leave to file in Court before the duty judge, Dhanji J, a notice of motion seeking a stay of the writ of possession until 3 September 2025. Dhanji J made facilitative orders providing for Perpetual to file any responsive affidavits by Monday 16 June 2025, and listing the hearing of the notice of motion for 10:00am 17 June 2025.

6. The solicitor who appeared before Dhanji J on 13 June 2025 and before me on 17 June 2025, Mr Patterson, is the same solicitor who appeared on 4 April 2025 and consented to the Defence being struck out.

7. Affidavit evidence filed indicated that on 2 May 2025 Mr Youssef provided a copy of a contract for sale asserting that there was a purchaser for the property but that a four-month settlement and a 2.5% deposit were part of the conditions of that sale. Perpetual’s solicitor raised questions about the transaction because the contract was not unconditional, Mr Youssef had not sought Perpetual’s consent to the terms of sale, and the four-month delay in completion meant that Perpetual would continue to incur a lending shortfall, even if the purported sale of the property was a genuine one that settled on 2 September 2025.

8. Copies of emails attached to the affidavits relied on by Perpetual and Mr Youssef indicated that there was ongoing correspondence between Perpetual’s solicitor and Mr Youssef’s solicitor from 2 May 2025 to 10 June 2025, in which it was made clear by Perpetual that it did not accept the asserted contract for sale of the premises was an “arm’s length” transaction, and that it will be pressing for its right to vacant possession, unless certain information is provided about the proposed sale. Only part of that information was provided. Significant aspects of the request were ignored.

Relevant factors to consider in granting or refusing a stay of execution of a writ of possession

9. The Court has a discretion as to whether to stay the execution of a writ of possession issued in proceedings of this type. There is no prescription for the circumstances in which the power should be exercised. In GE Personal Finance Pty Limited v Smith [2006] NSWSC 889 (“Smith”) Johnson J suggested that in line with Practice Note SC CL 6 (Supreme Court Common Law Division - Possession List) (par 20), there were three broad categories of circumstances advanced on such applications. One is where there is a genuine defence with some merit. The second is where there is evidence of loan refinance. The third is where there is evidence that the property is in the process of being sold.

10. As observed by Johnson J in Smith, there needs to be evidence tendered on any application for a stay that supports the circumstances alleged. Self-evidently, I interpolate, this is so that the assertions set out in that evidence can be examined by the mortgagee/loan company and evaluated by the Court.

11. In his affidavit of 12 June 2025 read on the application, Mr Youssef urges the Court to accept that the contract for sale will result in a sale in four months’ time in the sum of $3.5 million. On that basis he asks the Court to allow him to remain in the property with his four young children stating that he has had: “a difficult financial situation” which placed him in a “difficult position to maintain the payments to the plaintiff”. He stated that the property has been sold and the contract “unconditionally exchanged” with payment for deposit. He stated that he has a young family, that “his work has been improving” and that:

“… he needs to continue residing at the property with my young family until a date close to the settlement so that I may attempt to find another place suitable for my young family”.

12. This outline of course begs the question as to why, acting as a responsible landowner (and parent), he has not previously attempted to find another place suitable to house his family given Perpetual’s clearly articulated position since early April 2025 that it is entitled to, and requires, possession.

13. A defendant seeking a stay needs to be in a position to explain to the Court his inaction prior to making the application: see Smith at [12]. He can have no expectation of an extended stay on hardship grounds alone, if it is clear that the plaintiff is otherwise entitled to obtain possession of the property: see Smith at [22].

14. As the chronology of events here demonstrates, by the time the eviction order has been sent, a number of processes and warnings and notices have been given and here six months have elapsed since proceedings were commenced clearly outlining the basis for the orders. A defendant cannot simply fail to act, and then provide only partial answers to reasonable requests for information. At the time the statement of claim was filed Mr Youssef had not made any payment to Perpetual for a period of seven months. The proceedings cannot have been a surprise, given that circumstance and the terms of the loan agreement.

15. Despite Perpetual’s position being made clear on 7 May 2025 regarding its attitude to the alleged contract for sale and the specific queries raised, Mr Youssef did not provide most of the requested information and assurances. He did not approach the Court for relief until five weeks later.

Submissions

16. As Ms Yu on behalf of Perpetual submitted, Mr Youssef has been aware of these proceedings since 23 December 2024 when his solicitor filed a notice of appearance. It was not until March 2025 that Mr Youssef informed Perpetual that he intended to sell the property. No evidence was provided as is usually tendered showing the sale process such as an agency agreement and marketing material. Perpetual acted with appropriate diligence and requested a copy of the draft contract for sale. It noted that consent from Perpetual was required before Mr Youssef exchanged any contract for sale. That requirement was ignored.

17. Ms Yu submitted that the timing is also somewhat suspect. On 2 May 2025, nine days after the writ of possession was issued, Mr Youssef exchanged a conditional contract of sale for the property with a Mr Joe Osman. The contract was signed by a person appointed by a power of attorney. Mr Youssef did not seek Perpetual’s consent to the sale terms. The sale contract provided completion would occur in September 2025. The deposit payable was only 2.5% of the sale price, instead of the usual 10%.

18. On 7 May 2025 and again on 22 May 2025 the solicitors for Perpetual wrote to the solicitors for Mr Youssef requesting that he provide records which demonstrate that the sale is no longer conditional, and that he explain why a four-month settlement had been purportedly agreed with the purchaser. Despite these requests Mr Youssef never provided any such records or explanation to Perpetual, or to the Court.

19. Ms Yu submitted that there are further issues with the proposed sale. A title search of the property dated 16 June 2025 records a second mortgagee, “Nurse 4 U”, and a caveator have registered interests against the property’s title. Mr Youssef failed to inform Perpetual (or the Court) whether he has obtained the consent from the second mortgagee or the caveator to the sale contract proceeding to completion. Without the consent of the second mortgagee and the caveator, Mr Youssef will be unable to complete the sale.

20. A Notice to Produce to Court was issued and served by Perpetual on 16 June 2025 (after business hours) requesting production of any correspondence evidencing such consent had been sought. This was not met with a response when called on at the hearing at 10:00am 17 June 2025. When called upon, Mr Patterson advised that instructions had been sought but there had been inadequate time to provide the documents.

21. The solicitors for Perpetual made their own further inquiry about the contract to check whether it was truly “arm’s length”. The affidavit of Lisa Alim sworn 16 June 2025 deposes to having made inquiry with the agent nominated on the contract. Contrary to what is recorded on the contract, the agent told Ms Alim that he did not introduce the purchaser to Mr Youssef. To that extent the contract misleadingly records that a “selling agent” was involved in the sale of the property.

22. Ms Yu placed some emphasis on this, submitting that Mr Youssef has failed to provide any explanation as to why the exchanged contract refers to a selling agent being involved in the sale when that was not true.

23. Mr Patterson’s submissions were in effect confined to hardship, given this is the family’s residence and they do not have alternative accommodation.

Decision

24. It is essential when parties are requesting a Court to exercise its discretion to grant relief in his or her favour that they provide full and truthful explanations of their circumstances relevant to the issues before the Court. Where a party chooses not to respond to reasonable requests for information about a highly relevant proposed transaction, or to provide information that may satisfy the Court as to the genuineness of such a transaction, consequences will follow.

25. When the Court pointed out that this material should have been provided to Perpetual, or at least should be the subject of affidavit evidence now, Mr Patterson suggested that a stay of a few days length should be granted to allow that material to be obtained.

26. The problem with that proposal is obvious. It would, by default, bring about the result Mr Youssef desires which is the postponement of eviction. If that short stay was granted, the Sheriff would not attend as scheduled at 11:00am 19 June 2025. It is common knowledge that there would then be a further period of three to four weeks before the Sheriff could timetable a re-attendance.

27. In circumstances where it was made clear in early May 2025 and again on 22 May 2025 that Perpetual did not accept the proposed sale contract was an “arm’s length” contract, and that it would be pressing for possession, there was silence from Mr Youssef until Perpetual’s solicitor wrote again on 10 June 2025. A further three business days passed after that before the application was made, creating further “urgency”. On one analysis, that dilatory approach could be seen as an attempt to force an outcome by creating a situation of extra urgency and pressure. A simple solution would have been to provide the necessary information evidencing the legitimacy of the asserted sale of contract in May 2025 so that Perpetual could assess it and take instructions accordingly. That was not done.

28. The affidavit of Mr Youssef does not explain how his circumstances will change between now and 2 September 2025, other than that if the sale proposed is genuine, on 2 September 2025, $3.5 million will be available to satisfy the debt. This is barely more than what is currently owed to Perpetual.

29. The affidavit of Mr Dean Asher sworn 16 June 2025 states that as at 13 June 2025 the loan balance was $3,472,837.45, repayment arrears having been incurred in the sum of $417,000.00. Further delay of execution of the writ of possession does nothing other than make inevitable there will be further arrears. Mr Youssef has not made any payments since May 2024. There is no evidence that any payment will be made between now and the asserted settlement date of 2 September 2025.

30. The repercussions of failing to meet the payments was set out with clarity in the loan documents that are in evidence appended to Mr Asher’s affidavit.

31. The Defence filed in January 2025 simply asserted that Mr Youssef was unable to maintain the payments. Obviously that is not a defence.

32. Given the chronology of events and the fact that I too harbour doubts about the genuineness of the alleged contract for sale to Mr Osman, for the reasons raised by Perpetual, and given the absence of any explanation or response to those validly raised issues, I am not satisfied that the stay to 3 September 2025 requested should be granted. There was no date or circumstance that would dictate a valid basis for a shorter stay.

33. Obviously this is a very difficult situation for Mr Youssef and his family but this outcome has been on the table since December 2024, and realistically before that time, when Mr Youssef stopped making payments in May 2024 and the default notice was issued in August 2024.

34. In those circumstances the first defendant’s notice of motion is dismissed.

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