Pham v Enterprise ICT Pty Ltd and Others; Pham v Sebie

Supreme Court of NSW|2018-07-02|Before: Slattery J

Plaintiffs: John Bui, Bui Lawyers For Ramzy Sebie: self-represented For Registrar General of New South Wales: Anthony Hugh Foster Booth

Plaintiffs: B Zipser Third defendant: A Rodgers

Plaintiffs: John Bui, Bui Lawyers For Registrar General of New South Wales: Anthony Hugh Foster Booth ENA: Kamal Boutros, Boutros Lawyers Representation: In proceedings 2015/325044:

Plaintiffs: B Zipser Third defendant: A Rodgers

Plaintiffs: John Bui, Bui Lawyers For Registrar General of New South Wales: Anthony Hugh Foster Booth ENA: Kamal Boutros, Boutros Lawyers File Number(s): (2015/325044); (2015/56505) Publication restriction: No

Judgment

This is my seventh judgment in these proceedings. My first judgment was given on 8 November 2017: Pham v Enterprise ICT Pty Ltd and Others; Pham v Sebie [2017] NSWSC 1509. My second judgment was given on 30 January 2018: Pham v Enterprise ICT Pty Ltd and Others; Pham v Sebie (No. 2) [2018] NSWSC 22. My third judgment was given on 29 March 2018: Pham v Enterprise ICT Pty Ltd and Others; Pham v Sebie (No. 3) [2018] NSWSC 381. My fourth judgment was given on 24 April 2018: Pham v Mazen Zraika; Pham v Sebie (No. 4) [2018] NSWSC 566. My fifth judgment was given on 1 May 2018: Pham v Enterprise ICT Pty Ltd and Others; Pham v Sebie (No. 5) [2018] NSWSC 567. My sixth judgment was given on 3 May 2018: Ramzy Sebie v Andy Duong Duc Pham (No. 6) [2018] NSWSC 592. This judgment should be read together with my six previous judgments. Events, matters and persons are referred to in all judgments in the same way that they are in each of my previous judgments.
The first and second judgments set out the history of these unusual proceedings from September 2017 until late January 2018. The third judgment deals with the course of the proceedings between late January 2018 and 29 March 2018. The fourth judgment brings the matter up to 24 April 2018. The fifth judgment covers the period from 24 April 2018 to 1 May 2018. The sixth judgment deals with an application brought by Mr Ramzy Sebie on 2 May 2018 for an interlocutory injunction to restrain the settlement of the Chiswick property scheduled for that day at 2pm.
This judgment deals with two matters. First is the plaintiffs' application for an order for possession of the Chiswick property. The plaintiffs' application for possession was brought by motion dated 15 May 2018 ("the Motion for Possession"), which was first returnable before the Court on 28 May 2018. The hearing of the Motion for Possession was protracted over three days, 28 May, 12 and 14 June 2018, for the procedural reasons that are explained in more detail below.
The second matter for consideration is the plaintiffs' application, in their capacity as cross-defendants, for security for costs of a cross-claim brought by ENA in the proceedings on 1 July 2018. The Court granted leave for ENA to file a cross-claim, which has since been amended to include Ms Musabwasoni as a cross-defendant. But the plaintiffs/cross-defendants say that ENA is a corporate entity with no assets and is unlikely to meet any costs order against it if it is unsuccessful on the cross-claim. The plaintiffs/cross-defendants seek security for costs on the cross-claim and ENA resists the making of such an order.
Because of the complex array of procedural and other applications in these proceedings, the Court has taken the course, once again, of setting out as much of the procedural history as possible, so that if required, it can be efficiently followed by other judicial officers that may have to review aspects of these proceedings.

Early Background to These Three Sets of Proceedings

The origins and early phases of these three sets of proceedings remain relevant to an understanding of the present application for possession against Mr Robert Sebie. The history of how these proceedings began is set out in some of the previous judgments but is usefully briefly summarised here.
The Phams, the plaintiffs in both of the principal proceedings before the Court, a husband and wife, purchased the Chiswick Property under the 2014 Contract. Mr Robert Sebie, then the sole registered proprietor of the Chiswick Property, was the vendor to the plaintiffs under the 2014 Contract. But Mr Robert Sebie failed to complete the 2014 Contract on the date fixed for completion, 3 December 2014.
So Mr and Mrs Pham sought specific performance of the 2014 Contract against Mr Robert Sebie as first defendant in proceedings commenced on 23 February 2015 (2015/56505), ("the specific performance proceedings"). The second to fourth defendants in the specific performance proceedings were various encumbrances of the Chiswick Property. One of these, ENA, was associated with Mr Robert Sebie, and played a role in this litigation that is explained below in Pembroke J's April 2017 judgment in the proceedings.
At about the same time as the Phams commenced the specific performance proceedings, they also sought to protect their equitable interests in the Chiswick Property as purchasers under the 2014 Contract by lodging a caveat over the Chiswick Property ("the February 2015 caveat").
Between June and August 2015, Mr Robert Sebie took steps to remove the February 2015 caveat without prior notice to Mr and Mrs Pham. Then, and still without notice to Mr and Mrs Pham, Mr Robert Sebie and his brother Mr Richard Sebie arranged the transfer of the Chiswick Property for no consideration from Mr Robert Sebie to Enterprise ICT Pty Ltd ("Enterprise"), through a mechanism further explained in Pembroke J's April 2017 judgment. Mr Richard Sebie is, and was and at all material times, the sole director of Enterprise.
Mr and Mrs Pham found out in October 2015 about the transfer of the Chiswick Property to Enterprise only after it had occurred. Upon discovering that the February 2015 caveat had been removed, Mr and Mrs Pham lodged a new caveat over the Property ("the October 2015 caveat").
The October 2015 caveat again asserted and sought to protect the Pham's equitable interest in the Chiswick Property as purchasers, as had the February 2015 caveat.
Enterprise soon sought to remove the October 2015 caveat. Enterprise served a lapsing notice under Real Property Act 1900, s 74J to trigger its lapsing. In response, Mr and Mrs Pham commenced a second set of proceedings on 5 November 2015 (2015/325044) this time against Enterprise, as first defendant, seeking to extend the October 2015 caveat and restrain Enterprise from dealing with the Property ("the Enterprise proceedings"). Mr Robert Sebie was joined as third defendant to the Enterprise proceedings. Darke J extended the October 2015 caveat on 11 November 2015, until further order.
But Mr Robert Sebie was not the only person interested in the Chiswick Property before its sale to the Phams. Mr Robert Sebie was going through divorce proceedings from his wife, Ms Nadine Musabwasoni. In June 201, Ms Musabwasoni had commenced proceedings in the Federal Circuit Court of Australia, seeking relief under the Family Law Act, s 79 which included a claim on her part to an interest in the Chiswick Property ("the family law proceedings"). In the family law proceedings, Ms Musabwasoni was seeking a division of marital assets of the parties to the marriage to effect a distribution of assets as to 70 per cent to her and 30 per cent to her husband.
Mr and Mrs Pham took the prudent course of joining Ms Musabwasoni as a second defendant in the Enterprise proceedings, so that her interests in the Property would be bound by any relief granted in the Enterprise proceedings: see John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1; [2010] HCA 19 at [131]. Mr and Mrs Pham did not seek specific relief against Ms Musabwasoni.
It was logical for Mr and Mrs Pham's specific performance proceedings against Mr Robert Sebie to be merged with their claims against Enterprise and the other parties to the Enterprise proceedings. This merger was brought about on 15 March 2016 when, with the Court's leave, the Phams filed a comprehensive Statement of Claim in the Enterprise proceedings to consolidate their claims in both proceedings.
The result of these procedural steps is that the Enterprise proceedings (2015/325044) still remain the active proceedings incorporating all the Pham's claims. The specific performance proceedings are now largely concerned with the residual claim for the costs of these proceedings that the Phams make against Mr Robert Sebie before they became aware that he had sold the Chiswick Property to Enterprise.
Darke J case managed the proceedings throughout 2016 in the Real Property List. In mid-2016, Ms Musabwasoni sought by motion to transfer both proceedings to the Federal Circuit Court of Australia under the Jurisdiction of Courts (Cross-vesting) Act 1987, s 5(1). On 8 September 2016, Darke J declined to transfer the proceedings on the grounds that the proceedings were ready to receive a hearing date in the Supreme Court of New South Wales, the interests of a number of parties unrelated to the marriage were involved, the transfer would have involved some wastage in legal costs and there would be no prejudice to Ms Musabwasoni if no transfer order were to be made.
The proceedings were listed for hearing before Pembroke J, commencing 10 April 2017. After Mr Robert Sebie made a failed application for adjournment, Pembroke J heard the matter between 11 and 19 April 2017 and gave judgment on 26 April 2017 ("the April judgment").
Pembroke J made serious credit findings against the defendants to the Enterprise proceedings and drew the following legal conclusions and formulated the following relief. His Honour found that the Phams had an equitable interest in the Chiswick Property under the 2014 Contract. Their interest was not defeasible by the registration of transfer by Enterprise which transfer was fraudulent within the meaning of Real Property Act, ss 42 and 43 (the April 2017 judgment at [57]). His Honour found that the object of the transfer was to cheat the plaintiffs of their existing rights and that ENA's claim seeking possession of the Chiswick property from Mr Robert Sebie was a "dishonest artifice" (the April 2017 judgment at [57]).
His Honour concluded that the plaintiffs, the Phams, were entitled to specific performance, equitable damages and compensation. But his Honour was critical of the utility of Ms Musabwasoni's involvement in the proceedings (the April 2017 judgment at [59] - [60]).
On 10 May 2017, Pembroke J held a supplementary hearing as to the form of final orders. On 15 May 2017, his Honour gave a supplementary judgment and issued final orders ("the May judgment"). The effect of his Honour's May 2017 orders was the following.
His Honour declared that the transfer from Mr Robert Sebie to Enterprise was fraudulent and ordered that the Chiswick Property revest in Mr Robert Sebie. His Honour gave effect to this by cancelling the existing folio and creating a new folio recording Mr Robert Sebie as the registered proprietor (the May 2017 judgment at [3] - [4]).
His Honour decreed specific performance of the 2014 Contract and authorised the Registrar in Equity to execute all documents and take all steps required to ensure performance of the 2014 Contract (the May 2017 judgment at [5]).
Pembroke J's orders were finally executed only on 2 May 2018, after the complex course of these proceedings described in the Court's several judgments this year. These procedural complexities included Mr Ramzy Sebie himself commencing separate proceedings to try and prevent the settlement, the 2 May proceedings, which proceedings were dealt with in my sixth judgment.

The Plaintiffs' Application for Judgment for Possession

The contract for sale of the Chiswick property was settled on 2 May 2018. Consequent upon that, on 23 May 2018, the plaintiffs, the Phams, became the registered proprietors of the Chiswick property. On 15 May 2018, the plaintiffs filed and served a motion seeking orders against Mr Robert Sebie pursuant to Civil Procedure Act ss 20, 90 and 92 for judgment for possession of the Chiswick property. The motion was returnable on 28 May 2018.
The Motion for Possession was returned before the Court on 28 May 2018. The Court listed argument on the motion for 9.30am on Tuesday, 12 June 2018. As a result of a number of procedural delays, which should be attributed to the Sebies, the motion was not fully argued on 12 June, but the hearing resumed on 14 June 2018 and the matter was completed. The Court gives a short account of the events leading up to the hearing to show that Mr Robert Sebie was afforded procedural fairness.
On 28 May 2018, Mr Robert Sebie was directed to serve his evidence upon the Phams and the Registrar General (who was a party to a different aspect of the motion) by Monday, 4 June 2018. Mr Tony Rogers of counsel, instructed by Mr Kamal Boutros, appeared for Mr Robert Sebie and other parties on 28 May. Mr Robert Sebie was in the court room on 28 May and was well aware of the orders made that day.
Despite the Court's directions, Mr Robert Sebie did not serve any evidence or submissions to oppose the order for possession. But at 1.35am on 12 June, Mr Sebie sent an email to my Associate, which attached by way of purported service his affidavit of 6 June 2018. This affidavit had not been previously served either in draft or unsworn form. As the history of these proceedings shows, this was a reasonably typical event: the Phams and the Court were presented with late evidence from Mr Sebie which had the effect of disrupting the orderly conduct of these proceedings.
The matter was called at 9.30am on 12 June 2018. Mr Robert Sebie appeared in person on that occasion.
Mr Sebie could give no satisfactory explanation why his 6 June affidavit was only served in the early hours of 12 June. The late service of Mr Robert Sebie's affidavit of 6 June put the Phams at a substantial forensic disadvantage. An issue in contest on the possession application was whether Mr Pham had indeed served required notices of the Motion for Possession on the occupiers of the Chiswick property. The positive case that attempted to prove that he had not done so only emerged through the 6 June 2018 affidavit on the morning of the trial. But despite that, the Court allowed the affidavit to be read and encouraged the parties to continue with the contest.
One of the matters in contest was whether, as indicated, the notices to occupier had been served. This was a factual dispute. The Court invited the parties to declare whether they wished to cross-examine one another on that question. Both did.
But Mr Robert Sebie then said that he felt disadvantaged and could not cross-examine without a legal representative. He applied for an adjournment to get counsel. Mr Robert Sebie is an intelligent man. He well understands the Court's obligation to afford procedural fairness. He can take advantage of that requirement for tactical reasons.
The Court granted Mr Robert Sebie an adjournment. But in light of the late service of his affidavit evidence and the ample time available between 28 May and 12 June, the Court was only prepared to grant him a little over a further 48 hours to find counsel. The matter was then listed to resume at 2pm on 14 June.
Mr Ramzy Sebie attended the resumed hearing by telephone on 14 June 2018, despite the fact that Mr Rogers had stated to the Court on behalf of Mr Ramzy Sebie that Mr Ramzy Sebie did not oppose the judgment for possession. But Mr Rogers was no longer representing any members of the Sebie family on 14 June. Mr Robert Sebie represented himself on 14 June, advancing further late evidence, including a statutory declaration of an occupant of the house, a Ms Jade Oswald. But the Court permitted the late evidence to be adduced notwithstanding the difficulties the Phams faced in responding to it. The Court accommodated the problem to a degree by giving directions for the service of written submissions after 14 June.

The Contest on the Application for Judgment for Possession

As registered proprietors of the Chiswick property, prima facie the Phams are entitled to possession. But Mr Robert Sebie, the previous registered proprietor, continues in possession of the property, together with other members of his family and, he claims, a number of other occupiers, under financial arrangements with the Sebie family.
Mr Robert Sebie fields two issues to oppose the plaintiffs' application for judgment for possession. He contends: (a) that the plaintiffs have not complied with UCPR, r 6.8, which Mr Robert Sebie says is a pre-condition to entry of judgment for possession in the plaintiffs' favour; and (b) Mrs Rose Sebie and two other persons who are not members of the Sebie family are tenants in the Chiswick property who have an interest in the property which, by the operation of Real Property Act 1900, s 42(1)(d), defeats the plaintiffs' entitlement to an order for possession as against Robert Sebie.
The plaintiffs dispute both these contentions. In overview, the plaintiffs submit: they have complied with UCPR, r 6.8; compliance with the rule is not a precondition for the issue of a writ of possession; there are other reasons why the Court should not refuse judgment for possession; and Real Property Act, s 42(1)(d) as it applies to the persons in occupation is not impediment to the entry of judgment for possession now.
The plaintiffs' arguments are the more persuasive for the reasons which follow.

The Argument from UCPR, r 6.8

The statutory framework for Mr Robert Sebie's argument that the Phams have not complied with UCPR, r 6.8 and are now not entitled to judgment for possession requires reference to UCPR rr 6.8 and 36.3, provisions dealing with the requirements for various stages of obtaining judgment for possession. The first of these, UCPR r 6.8 provides as follows: "6.8 Originating process for recovery of land to be served on occupier (1) If, when proceedings for possession of land are commenced, a person (the occupier) not joined as a defendant is in occupation of the whole or any part of the land, the plaintiff: (a) must state in the originating process that the plaintiff does not seek to disturb the occupier's occupation of the land, or (b) must serve the originating process on the occupier together with a notice to the effect that: (i) the occupier may apply to the court for an order that the occupier be added as a defendant, and (ii) if the occupier does not so apply within 10 days after service, the occupier may be evicted under a judgment entered in the occupier's absence. (2) For the purposes of subrule (1), documents may be served on the occupier personally or by leaving the documents on the land concerned addressed to the occupier by name or addressed simply "to the occupier". (3) If originating process is amended by the addition of a claim for possession of land, the time at which proceedings for possession of that land are commenced is taken, for the purposes of subrule (1), to be the time at which the amendment is made."
UCPR, r 36.8 provides as follows: "36.8 Possession of land Unless the court orders otherwise, judgment for possession of land may not be given or entered against a defendant in his or her absence unless the plaintiff files an affidavit: (a) stating that, when the originating process was filed or (if the claim for possession arises from an amendment to the originating process) when the amendment was made: (i) specified persons (other than parties to the proceedings) had been in occupation of the whole or any part of the land, or (ii) no persons (other than parties to the proceedings) had been in occupation of the whole or any part of the land, and (b) stating that, as to each person specified in accordance with paragraph (a) (i) (other than a person whose occupation the plaintiff does not seek to disturb): (i) the originating process has been duly served on the person, or (ii) the person has, since the time referred to in paragraph (a), ceased to be in occupation of any part of the land, and (c) in relation to a claim for possession by reason of default in the payment of money, stating particulars of the default."
The contested facts related to whether the Phams had served notices at the Chiswick property in conformity with UCPR r 6.8. Mr Pham's evidence was that, on 15 May 2018, he served the Motion for Possession on Mrs Rose Sebie (Mr Robert Sebie's mother) and any other occupiers of the Chiswick Property. Mr Pham says, and the Court accepts, that on the evening of 15 May 2018, he placed an envelope, which contained the letter to Mrs Rose Sebie and enclosing the notice of motion, in the letter box at the Chiswick Property.
The material Mr Pham left at the property also included a letter dated 15 May 2018 from him to any other occupiers of the Chiswick Property. On the evening of 15 May 2018, I accept he placed the envelope, which contained the letters and enclosing the notice of motion, in the letter box at the Chiswick Property, one in an envelope addressed to "All occupiers of 11 Tutt Crescent" and the other in an envelope addressed to "Rose Sebie". The two letters satisfy the content requirements of UCPR r 6.8.
But Mr Pham had provided earlier notice, that an application for judgment for possession would be made, even before he and Mrs Pham became registered proprietors. In a letter dated 6 April 2018 he notified occupiers of the Chiswick Property that he and Mrs Pham were in the process of obtaining possession of the Property. On the evening of 6 April 2018 he placed an envelope (which contained the letter) in the letter box at the Property. The letter added: "If any person occupies the Property and wishes to oppose the Court making an order in the plaintiffs' favour for possession of the Property, that person should promptly apply to the Court for an order that they be added as a defendant in the proceeding (see rule 6.8 of the Uniform Civil Procedure Rules), and serve a copy of the application on the plaintiffs. If that person does not so apply within 10 days after service of this letter (on 6 April 2018), that person may be evicted from the Property under a judgment made by the Court and entered in their absence: see rule 6.8 of the Uniform Civil Procedure Rules."
The Court accepts that neither Mr Pham nor his solicitor, Mr John Bui, was contacted by any occupant of the Chiswick Property in response to this letter.
Mr Robert Sebie cross-examined Mr Pham. But his challenges to Mr Pham's evidence all failed. The Court accepts Mr Pham's account of these events.
Mr Sebie gave a quite different account of events, so as to found the inference for which he contended, that no one on behalf of the plaintiff had left notices at the Chiswick Property. He said that people he claimed were tenants of the Chiswick Property were not aware of any applications for possession, nor had they been served with any, requests, or letters from Mr Pham about a possession application. He stated that the occupants of the property were not aware that the matter was listed in the Supreme Court for hearing on 12 June 2018.
Mr Robert Sebie denies Mr Pham or anyone else delivered any letter or notice of motion into the letter box of the Chiswick Property on 15 May 2018 or 6 April 2018. Mr Robert Sebie says he checked the letter box every day over this period and confirmed no letters nor any documents of the kind Mr Pham described had been received. I have spoken to the other occupants and tenants at the house. Mr Robert Sebie says that they had confirmed to him that they had received no hand deliveries (or any other receipt) of any documents such as those Mr Pham described on 15 May 2018 or 6 April 2018, or on any other day in May 2018.
Mr Robert Sebie was cross-examined on his affidavit. The Court does not accept his evidence about these events. Mr Sebie also relied on an affidavit of his father Mr Ramzy Sebie and a statutory declaration of Ms Jade Oswald.
In contrast to Mr Pham's stable account of events concerning the delivery of notices to the Chiswick property, Mr Robert Sebie's account was inconsistent and improbable at times. He faced the challenge of rebutting direct evidence that the documents in question had been delivered by Mr Pham to the Chiswick property at particular times. He had to explain how it was that he could have been observing at all times sufficient to exclude the possibility that Mr Pham could have delivered the notices at the times that he did in the way that he did. Mr Robert Sebie advanced a number of methods to attempt this. But in my view, they were all unsuccessful.
Mr Robert Sebie said he checked the letterbox every day. His evidence gave the impression that he also spoke to the other occupants and tenants in the house every day about what had been delivered to them. But to resist the proposition put in cross-examination that one of the tenants might have emptied the letterbox between the time Mr Pham delivered the letters and when Mr Sebie next checked it, Mr Sebie responded by saying that the letterbox was always locked and that the only key to the letterbox was on his key ring. In my view, this account was an invention designed to overcome a problem in Mr Sebie's case. It did not appear in his affidavit. It is highly improbable as a matter of objective fact that all the occupants of the house would have to come to him to get access to their letterbox.
Mr Sebie said that the letterbox was under video surveillance and that an examination of the video showed that at no stage Mr Pham deposited the noticed in the letterbox as he had deposed. Mr Sebie insisted that the letterboxes were on full view to video cameras. But notwithstanding that Mr Sebie's claims footage of a view of the letterboxes on the relevant dates, was not exhibited to the affidavit.
Mr Sebie gave inconsistent evidence about an alleged tenant Ms Somayeh Haydari. She is said to be a tenant at the Chiswick property because her name appears on one of the three tenancy agreements which Mr Sebie advanced. Mr Sebie claims the tenants are not aware of any application for the judgment for possession.
But under cross-examination, a rather different picture emerged. Mr Sebie revealed that he had not spoken with Ms Haydari since April 2018 when she had gone on travels around Australia, leaving only her belongings at the Chiswick property. This account opens up the question whether she is a current tenant at all.
Mr Robert Sebie put contradictory submissions on behalf of his mother and the tenants. On the one hand, he claimed they did not know about these proceedings. But on the other hand, he advanced a document on 14 June 2018 entitled "Submissions on Behalf of Rose Sebie a Tenant". From the style and content of this document it might be inferred that they were in fact aware of the hearing. Indeed, Mr Ramsay Sebie and Mr Robert Sebie advanced submissions to the Court that assumed they were taking instructions from and speaking on behalf of Mrs Rose Sebie.
No evidence was adduced from the tenants. Apart from the problem that Mr Sebie was seeking to advance a case on behalf of the tenants, who had not sought to do so themselves, it would have been a relatively straight forward exercise for tenants in occupation of the property to be asked by Mr Sebie to file affidavits to say that they had not been served with the notices in question. Instead, the statutory declaration of the alleged tenant, Jade Oswald, that Mr Robert Sebie advanced, did not address the question of whether she was aware of the Supreme Court proceedings at all. Similarly, Mr Ramsay Sebie served an affidavit on 5 June 2018 which said nothing about the lack of notice to Mr Rose Sebie.
Mr Robert Sebie's evidence on this question was unsatisfactory and the Court preferred Mr Pham's account and finds that all the notices were served as Mr Pham says.

The Pre-Conditions for Judgment for Possession

Mr Robert Sebie's argument that the Phams have not complied with UCPR, r 6.8 has overstated the provision. The key relevant provision in my view is UCPR, r 36.8, which provides that the Court may not enter judgment for possession "against a defendant in his or her absence" unless the plaintiff files an affidavit specifying certain things. UCPR, r 36.8 in substance requires the plaintiff seeking judgment to depose that the originating process has been served on any person who was in occupation of any part of the land when the claim for possession arose.
This is not a case where judgment for possession of land is given or entered against Mr Robert Sebie "in his absence". He was present throughout all the argument relating to the contest about the judgment for possession. He filed affidavits on the contest for the judgment for possession. He put submissions against the entry of judgment for possession, including about the effect of UCPR, rr 6.8 and 36.8. The purpose of UCPR, r 36.8 is to deal with applications for default judgment for possession in a way that gives some protection to occupiers of the land who may be indirectly prejudiced by the failure of the defendant being evicted from warning sub-tenants, licensees or other occupiers of the default proceedings.
But such considerations do not apply here. The case was fully defended. The Phams have satisfied the Court that they have served the occupiers. Were it to be found that UCPR, r 36.8 did apply, the Court would "order otherwise" and enter judgment for possession because of the efforts the Phams have made to notify the occupiers.
Two footnotes to this conclusion are necessary at this point. First, "proceedings for possession of land" were relevantly "commenced" in this case when the plaintiffs filed their 15 May 2018 Motion for Possession. The Court has found that that originating process has been served on the occupiers, together with the notices required by UCPR, r 6.8. The Court is accordingly also satisfied that there is no obstacle to the entry of judgment for possession of the land because there has been compliance with UCPR, r 36.8(b)(i) in this case.
There is a second matter. These reasons were delivered a few hours after the orders were made. Due to the exigencies of a busy Duty List, reasons could not be delivered at the same time as the orders were made. Mr Robert Sebie did not attend the making of the orders. But that does not mean within UCPR, r 36.8 that judgment was entered in his absence. He was fully aware of the proceedings, and was notified of the judgment delivery date and time. Moreover, in the related application for security for costs, Mr Ramzy Sebie sought to file written submissions before 2pm today, indicating his awareness of the date and time for judgment. Incidentally, the Court declined to have regard to those submissions as the only legal representative of ENA, Mr Boutros, was not the author. The Court will not hear submissions from the client as well as from the client's lawyer. Mr Boutros is still the solicitor on the record.
But the Court should also enter judgment for possession for other reasons. Mr Rogers of counsel on 12 June 2018 indicated that Mr Ramzy Sebie did not oppose judgment for possession. Mr Ramzy Sebie's affidavit indicates that Mrs Rose Sebie has sufficient notice of the claim on the Motion for Possession to enable her to appear and oppose it if she wished. Apart from some identified occupiers under contract, other persons in the Chiswick property appear to be family members only.

The Argument from Real Property Act, s 42(1)(d)

When the Motion for Possession hearing resumed on 14 June 2018, Mr Robert Sebie put a written submission to the Court entitled, "Submissions on Behalf of Rose Sebie and the Tenants". Mr Zipser on behalf of the Phams correctly took the point that Mr Robert Sebie had no authority to appear on behalf of any tenant or occupier of the property. To allow him to do so would be to accommodate a potential spoiling action by him on behalf of tenants or occupiers, who in response to notices served upon them had not themselves taken the steps to move the Court for orders. Mr Robert Sebie cannot act for any person in occupation. He has no proper authority to come before the Court and speak on their behalf.
But despite that, the Court will briefly deal with the submissions that were put. The submissions are not persuasive for the reasons which follow.
Mr Robert Sebie argued in the written submission that Mrs Rose Sebie and the other tenants in the property could resist an order for possession because they "had better title than Mr and Mrs Pham" to occupy the Chiswick property. Mr Robert Sebie referred to a two year residential tenancy agreement between himself and Rose Sebie commencing on 15 January 2018. Moreover, the evidence indicates that there were two rental agreements made between Enterprise ICT Pty Ltd, a former registered proprietor of the property and two non-family member occupiers.
Mr Robert Sebie's contention that these various tenancy agreements and Real Property Act, s 42(1)(d) are an obstacle to the entry of judgment is misconceived. The statutory provision is set out below.
Real Property Act, s 42 provides as follows: "42 Estate of registered proprietor paramount (1) Notwithstanding the existence in any other person of any estate or interest which but for this Act might be held to be paramount or to have priority, the registered proprietor for the time being of any estate or interest in land recorded in a folio of the Register shall, except in case of fraud, hold the same, subject to such other estates and interests and such entries, if any, as are recorded in that folio, but absolutely free from all other estates and interests that are not so recorded except: (a) the estate or interest recorded in a prior folio of the Register by reason of which another proprietor claims the same land, (a1) in the case of the omission or misdescription of an easement subsisting immediately before the land was brought under the provisions of this Act or validly created at or after that time under this or any other Act or a Commonwealth Act, (b) in the case of the omission or misdescription of any profit à prendre created in or existing upon any land, (c) as to any portion of land that may by wrong description of parcels or of boundaries be included in the folio of the Register or registered dealing evidencing the title of such registered proprietor, not being a purchaser or mortgagee thereof for value, or deriving from or through a purchaser or mortgagee thereof for value, and (d) a tenancy whereunder the tenant is in possession or entitled to immediate possession, and an agreement or option for the acquisition by such a tenant of a further term to commence at the expiration of such a tenancy, of which in either case the registered proprietor before he or she became registered as proprietor had notice against which he or she was not protected: Provided that: (i) The term for which the tenancy was created does not exceed three years, and (ii) in the case of such an agreement or option, the additional term for which it provides would not, when added to the original term, exceed three years. (iii) (Repealed) (2) In subsection (1), a reference to an estate or interest in land recorded in a folio of the Register includes a reference to an estate or interest recorded in a registered mortgage, charge or lease that may be directly or indirectly identified from a distinctive reference in that folio. (3) This section prevails over any inconsistent provision of any other Act or law unless the inconsistent provision expressly provides that it is to have effect despite anything contained in this section."
If the alleged tenancy agreements are valid and the tenants satisfy the conditions in Real Property Act, s 42(1)(d) the tenants may be able to enforce some rights against the Phams. The exception to indefeasibility in Real Property Act, s 42(1)(d) is to save short-term tenants the expense of registration by giving them security of tenure against later registered proprietors. But that does not stop the plaintiffs having judgment for possession against Mr Robert Sebie. All the provision does is to give tenants some temporary rights against the Phams should they choose to exercise them. So far, despite notice having been given to them, they have not sought to do so.
Moreover, the other alleged tenancy agreements involving the two non-family members were made with Enterprise ICT Pty Ltd, not Mr Robert Sebie. It is doubtful that as against Mr Robert Sebie these persons are more than mere licensees and may not be able to use Real Property Act, s 42(1)(d) against the Phams in any event.
Finally, notice of the unregistered tenancy is a pre-requisite to affording protection to a tenant under Real Property Act, s 42(1)(d), a registered proprietor who takes without notice of the tenancy holds free of it. The first notice that the Phams had of the alleged tenancy agreements was when they were served with Mr Robert Sebie's affidavit on 12 June 2018. They cannot satisfy the notice requirement.

Costs

The plaintiffs have been wholly successful on this contested application for judgment for possession. It has been hard fought and many arguments have been raised against the entry of judgment. Costs should follow the event. The Court will order that Mr Robert Sebie pay the Phams' costs of, and incidental to, the Motion for Possession.

Next Steps - The Court of Appeal and A Writ for Possession

The Phams have foreshadowed that they will soon seek a writ for possession. But Mr Robert Sebie and Enterprise ICT Pty Ltd have lodged an appeal to the Court of Appeal against Pembroke J's orders in May 2017. It is quite likely that if the Court were now to issue a writ for possession a stay would be applied for until the Court of Appeal proceedings were concluded. So the Court will decline to proceed with the application for a writ for possession at this stage. That matter will be stood over to a date to be fixed in October of this year.
But the entry for judgment for possession represents a material date for appeals for the running of time to appeal from a number of my decisions, if the time has not already commenced to run. I have decided that I will ask that this judgment be referred to the Registrar of the Court of Appeal who is managing the appeal against Pembroke J's judgments and orders of April and May 2017. Mr Robert Sebie and Mr Ramzy Sebie have, at various times, indicated that if the Court makes orders against them on the various applications before me, that they will appeal. So it is likely, therefore, that this judgment, and the many that preceded it, will soon find their way to the Court of Appeal.
The Sebie parties have a tendency to generate multiple applications at first instance. This has been difficult to manage. I have endeavoured to remain the judge dealing with those applications because of the difficulties in reacquainting other judicial officers with the complexities of these proceedings. The avoidance of multiple applications and hearings in this matter is highly desirable for the efficient administration of justice.
Whilst it is obviously a matter for the Court of Appeal rather than for me as the trial judge, it would greatly assist the future trial management of these proceedings if it were possible for any appeals from this judgment to be dealt with at the same time as any appeals from Pembroke J's judgments. Whilst it is appreciated that no appeal has yet been brought from this judgment, this comment is warranted because the inevitability of an appeal has been foreshadowed.
I will direct my Associate to forward a copy of these reasons, with particular reference to this paragraph, to be drawn to the attention of Registrar of the Court of Appeal.

The Cross-Defendants' Application for Security for Costs

After the Court's sixth judgment, ENA was permitted to file a cross-claim seeking to assert an equitable charge over the Chiswick property pursuant to various documents that it claims were executed between itself and Mr Robert Sebie to secure ENA's alleged funding of the purchase of the Chiswick property. An amended cross-claim has now been filed to join Ms Musabwasoni, because she is a claimant competing with ENA for the fund in Court which has resulted from the sale of the Chiswick property. ENA now seeks to propound this amended cross-claim.
The plaintiffs/cross-defendants (who will often be referred to in this section of these reasons just as the Phams) foreshadowed before the filing of ENA's cross-claim and amended cross-claim that they would make an application for security for their costs against ENA. The Court permitted the Phams to amend their existing Notice of Motion of 15 May 2018, and on 10 July 2018 they filed their Amended Notice of Motion pursuant to the UCPR, r 42.21 seeking orders that ENA give security in respect of the Phams' costs of the amended cross-claim in an amount to be determined by the Court ("the Security for Costs Motion"). An opportunity for written submissions was given to which the parties spoke on Wednesday, 11 July 2018. This application has been brought on quickly. On 1 July 2018 ENA first filed its cross-claim joining the Phams as cross-defendants. But ENA is not a defendant. The Court gave leave for the cross-claim to be filed notwithstanding that ENA is not a defendant in the Enterprise proceedings. ENA is in every sense of the word a corporate plaintiff pursuing a claim against the Phams on this cross-claim.
The Phams security for costs evidence is in short compass. Mr Andy Pham swore an affidavit on 10 July 2018 together with a supplementary affidavit of 11 July 2018. ENA did not serve any evidence on the application.
On 2 July 2018, the Court had directed ENA to file and serve evidence in response to the security for costs application by 5pm on 10 July 2018. Throughout preparation for and hearing of the Security for Costs Motion, Mr Boutros represented ENA. There have been difficulties with ENA's representation previously.
But ENA filed no evidence and gave no substantive response to the orders to produce. On 2 July 2018, the Court ordered ENA to produce by 5pm on Monday 9 July 2018 "all financial information requested by the plaintiffs of Mr Boutros by email dated 7 June 2018". The Phams request of 7 June 2018 was for financial statements showing ENA's financial position in 2015, 2016 and 2017, as the most recent evidence available before the hearing as to ENA's financial position was as old as 2014.
Through Mr Boutros, ENA did ultimately read some evidence in response. Most of that evidence read is irrelevant. But Mr Boutros and Mr Zipser on behalf of the Phams referred to select parts of it in their submissions. ENA's affidavit evidence on the Security for Costs Motion was the affidavits of Robert Sebie of 10 July 2018; Ramzy Sebie 16 February 2018; Robert Sebie 21 February 2018 and of Ramzy Sebie on 27 February 2018.
This case does not call for extensive discussion of the principles in relation to the application for security for costs under UCPR, r 42.21 and the other sources of jurisdiction for such applications. There are many sources of modern judicial authority summarising the principles. I have most recently done so in Lex Fitness Pty Ltd ATF Lex Family Trust v Australian Fitness Management Pty Ltd; Australian Fitness Management Pty Ltd v Lex Fitness Pty Ltd ATF Lex Family Trust [2017] NSWSC 157. Those principles are applied here. The Phams' submissions are persuasive. There is reason to believe that ENA will be unable to pay the Phams' costs should ENA be unsuccessful on the cross-claim. The Court reaches that conclusion for the following reasons.
ENA's paid-up share capital is only $1,000. Despite an email requesting information on 7 June 2018, and the Court's orders on 2 July 2018, ENA has not produced financial statements or tax returns for the 2016 and 2017 financial years. No explanation for the non-production is provided. ENA has a substantial existing liability to the Phams for costs.
Despite the Court's prior warnings to ENA of the importance of filing up to date financial evidence, the additional affidavit evidence filed and read at the hearing did not throw any light upon ENA's financial position after 2014. And even the evidence which was adduced raises more questions that it answers. ENA's financial statements for FY2014 show that it had cash assets of $722,737. A bank statement for ENA shows that it had cash at bank on 10 July 2015 of $31,919.48, and on 14 July 2015, $452,619.48. Then, by 17 July 2015, after various transfers out of its account, it only had cash to the credit of that account of $97,759.79. That material is three years old and demonstrates substantial liquid assets. But being liquid, those assets are easily transferrable. And no account in the last three years has given any indication about ENA's holdings of such assets.
The Court may take into account a wide range of relevant considerations on such an application: UCPR, r 42.21(1)(a). Some of these factors assume more importance on the present application than others.
First, ordinarily courts ignore or place little weight upon the consideration of the prospects of success of the plaintiff's claim. At this stage of such an application, the final claim is undetermined and any assessment of its merits must be speculative. But this case is unusual. ENA seeks to prove through the amended cross-claim that it made a secured loan by agreement between itself and Robert Sebie in September 2005. Mr Robert Sebie who was the sole director of ENA at the time of this alleged transaction and a party to the alleged secured loan agreement conducted his defence against the Phams in the trial before Pembroke J in April 2017 on the basis that ENA had made this agreement with him. But after a four day trial in which Mr Robert Sebie called many witnesses, including an IT expert, Pembroke J found that the alleged secured loan agreement that Mr Robert Sebie put forward was a fabrication. The Court considers that ENA's prospects of success on the amended cross-claim are low. And I have already considered that some of the documents upon which ENA relies to propound this cross-claim are inherently suspicious. On the other hand, even without this consideration being put into the balance, in my view, an order for security would be made because of the many other factors that support it being made.
Second, no offer has been made to meet ENA's potential liability for costs on the cross-claim, either by Mr Robert Sebie or Mr Ramzy Sebie offering personal guarantee to pay those costs. Mr Ramzy Sebie now holds himself out as the sole active director of ENA. He would benefit from ENA's claim were it to be successful. Other evidence before the Court shows that Mr Ramzy Sebie owns residential real estate in New South Wales other than the Chiswick property. So he presumably has some capacity to provide a guarantee of substance but he has not done so.
Third, the Phams are not in any way responsible for ENA's current financial position. ENA elected not to be involved in the proceedings before Pembroke J to attempt to secure its interest in the Chiswick property. Its current circumstances are entirely a product of its own forensic approach. Mr Boutros did not propound a case on behalf of ENA, rightly in my view, that the Phams had brought ENA to this pass.
Fourth, it cannot be concluded that an order for security for costs would stifle the proceedings. For such a consideration to be given weight, ENA would ordinarily have to show that those persons who might be expected to be a source of funds for ENA were unable to do so, such that the order for security would itself preclude the possibility of the case being advanced. ENA has not called evidence to justify such a conclusion.
Finally, ENA also argued that it could offer the monies now in Court after the sale of the Chiswick property as security for costs. But this argument is not persuasive. Whether or not ENA is entitled to these funds is at best speculative. And both the Phams and Ms Musabwasoni have strong competing claims to substantial parts of the funds in Court.
The Phams sought to argue that were the amended cross-claim to proceed they would be prejudiced because ENA declined the opportunity afforded to it to participate in the proceedings before Pembroke J. I do not think this can be considered on the security for costs application. It may provide a defence to the Phams as cross-defendants on the basis of Anshun estoppel. But in my view, it is not a relevant consideration in deciding whether security for costs should be ordered.
For these reasons, the Court will order security for the cross-defendants' costs. The amount of security to be ordered must now be determined. This was not the subject of much contest.
Mr Andy Pham, the first plaintiff, is a solicitor. Through his experience as a legal practitioner he has been able to estimate, as he does by his affidavit of 10 July 2018, that the Phams' costs in defending the cross-claim brought by ENA would be at least $210,000. I accept his evidence.
The Phams submit that quantification of any security that should be ordered in their favour should not just assume that a costs order on the ordinary basis might be made against ENA were it to be unsuccessful. The Phams cite a number of situations in which both Pembroke J in May 2017 and I in November 2017 have made indemnity costs orders against Mr Robert Sebie. The Phams also submit that if a Defence to the cross-claim succeeds on the basis of an Anshun estoppel because ENA did not take the opportunity afforded to it to litigate this matter before Pembroke J, then there is a reasonable prospect of the Court concluding that ENA's amended cross-claim is an abuse of process and in the ordinary course an indemnity costs order will therefore be made against it.
The Court can indeed infer in this case that there is some prospect of an indemnity costs order being made. But this is not strongly influential on the Court in its calculation of the appropriate amount of security. The Court is not prepared to assess the security on the basis that the Phams are likely to get an indemnity costs order. But the Court should ensure that the Phams' ordinary costs are adequately covered by the order.
The Court is also in the position to assess security for costs in this case on the basis of the Court's own experience of the way the proceedings have been conducted in the last nine months. A feature of these proceedings with which Mr Ramzy Sebie and Mr Robert Sebie are associated is that lawyers are changed, and adjournments are sought, documents are served at the last minute. As a result excessive amounts of procedural time is spent attempting to control the Sebie's conduct of proceedings. The Court therefore accepts Mr Pham's evidence that the hearing of ENA's cross-claim will run for at least the same number of days as the trial before Pembroke J in April 2017. Indeed, I would not be surprised if the trial ran a little longer.
In my view, costs of ENA defending the cross-claim are likely to be at least $210,000. Costs on the ordinary basis could be in the order of up to 85% of that on about $175,000. In my view, particularly because of the unpredictable nature of this litigation and the prospects of interlocutory hearings generated by the conduct of the Sebie parties, it would be appropriate for a substantial security for costs award to be made at the beginning of the proceedings and the Court will order about 60% of those costs, about $100,000 to cover the period up to the commencement of the trial.
But the Court will grant liberty to the Phams should their pre-trial costs substantially exceed their current estimates to return to the Court to seek more pre-trial security at or before the same time as they seek security for costs in relation to the trial itself.
The Phams have been successful on their application for security for costs. Costs of this application should follow the event in the ordinary way: Hoffmann v Challis (No. 2) [2016] NSWSC 269 at [22] per Campbell J. The Court will order ENA to pay the Phams' costs of and incidental to their application for security for costs.

Conclusion and Orders

Accordingly, the Court makes the following orders and directions: 1. Judgment for the plaintiffs for possession of the Chiswick property [folio identifier not published]. 2. Order the defendants to pay the plaintiffs' costs of the contest in relation to the judgment for possession of the Chiswick property. 3. Order that the proceedings on the amended cross-claim brought by ENA Developments Pty Limited ("ENA") be stayed against the plaintiffs/cross-defendants unless before 4.00pm on 27 July 2018 the cross-claimant, ENA, provides acceptable security for the potential costs liability of ENA to the plaintiffs/cross-defendants in the amount of $100,000.00, on account of the cross-defendants' costs to be incurred up to the commencement of the hearing of the amended cross-claim. 4. The cross-defendants have liberty to apply for future security to cover the hearing of the amended cross-claim when it is set down for hearing. 5. The cross-defendants have further liberty to apply for greater security for costs, if their legal costs exceed by more than 10% those estimated in the course of this application. 6. Order that the costs of the cross-defendants' motion for security for costs will be the cross-defendants' costs in the cause. 7. Refer a copy of these reasons to the Registrar of the Court of Appeal.

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: 13 July 2018

At a glance

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Judgment (18 paragraphs)

Cases Cited (10)

Cited By (8)