The present proceedings (which I shall refer to as "the New Proceedings") were commenced on the afternoon of 23 August 2021 having been filed in the Registry. They concern a property known as 15 O'Donnell Street, Port Kembla NSW 2505 ("the Property"). The Plaintiffs are Mr Steven Murabito, Ms Lila Stojcevski and Ms Bosilka Stojcevska. Mr H Stowe of Counsel, instructed by Mr M Woods, solicitor, appeared for Mr Murabito and Lila. Whether he appeared for Bosilka was left in doubt. Mr AG Martin of Counsel appeared for Ageist Pty Ltd ("Ageist").
I dealt with the New Proceedings on 24 August 2021 in the Duty List and informed the parties at 4:30pm of my determination that the Summons should be dismissed. Mr Stowe indicated that he wished to seek instructions as to whether reasons were required. By email sent to my Associate at 5:20pm on 24 August 2021, he advised that he had those instructions and that reasons were not required. Yesterday at 1:42pm, Lila indicated that she wished to obtain reasons for Tuesday's determination. I therefore now provide my reasons.
On the morning of 23 August 2021, also in the Duty List, I gave judgment in the matter of Ageist Pty Ltd v Lilly (Lila) Stojcevski [2021] NSWSC 1105, which I shall refer to as "the Lila Proceedings". The Lila Proceedings relate to the same property as the New Proceedings. Mr D Carbone (solicitor) appeared in the Lila Proceedings for Lila and Lupco. Mr AG Martin of Counsel appeared for Ageist. I gave an ex tempore judgment in that matter (which I shall refer to as "the Lila Judgment") and ordered the removal, by 3:00pm, of a caveat lodged by Lila and Lupco (caveat AR295470).
Lila and Lupco did not comply with the orders of the Court but the caveat was removed by the Registrar General on 23 August 2021 at 3:45pm, after the Defendants in the Lila Proceedings failed to withdraw the caveat.
There have been other proceedings brought in connection with the Property, to which I made reference in the reasons delivered in the Lila Proceedings.
Steven Murabito & Ors v Ageist Pty Ltd [2021] NSWSC 1102 | Case summary | Zoe
Those other proceedings commenced as a claim by Ageist against Bosilka, Samuel M Holdings Pty Ltd (Receiver and Manager Appointed) ("SMH"), Lila and Lupco. On 19 July 2021, Darke J ordered the removal of the caveat lodged by Bosilka (AR193850) and ordered that Bosilka be restrained from lodging, whether by herself or at her direction, any further caveat on the title to the Property: Ageist Pty Ltd v Stojcevska (Supreme Court (NSW), Darke J, 19 July 2021, unrep) ("the July Judgment").
On 6 August 2021, Henry J ordered the removal of the caveats (AR265339 and AR256711) lodged by SMH and Mr Murabito, Lila and Lupco: see Ageist Pty Ltd v Samuel M Holdings Pty Ltd (Receiver and Manager Appointed) [2021] NSWSC 988 ("the SMH Judgment"). Her Honour also ordered that none of Lila, Lupco and Mr Murabito were permitted to lodge any further caveats in respect of the Property.
In the proceedings before Henry J, Mr Murabito, Lila and Lupco foreshadowed a Cross Summons (see [134], [137]-[138] of the SMH Judgment) and when the matter was before me on Wednesday, 18 August 2021 for directions, Mr Martin made reference to that fact. Lila and Lupco did not provide any affidavits on which they sought to rely in opposition to Ageist's application to have the caveat removed by 10:00am on Sunday, 22 August 2021 and nor did they provide submissions by the same time as ordered by me on 18 August 2021. The Lila Proceedings were listed before me as Duty Judge on 23 August 2021 at 10:00am. At 9:56am on Monday, 23 August 2021, Mr Carbone sent to my Associate by email a Cross Summons for which no leave had previously been sought. I refused to permit him to advance that Cross Summons at the hearing, given the timing of it and the absence of compliance with the orders made on Wednesday, 18 August 2021 and proceeded to deal with Ageist's application for removal of the caveat. That caveat, in the Lila Proceedings, claimed that Lila and Lupco have a beneficial interest in the Property by reason of a contribution of $510,000 made by them towards the purchase of the Property.
Between 4:06pm and 5:36pm on 24 August 2021, my Associate received a number of emails from Mr Murabito. Mr Murabito sought to advance a Summons in which he, Lila and Bosilka are named as plaintiffs. An affidavit of Mr Murabito and of Lila were, on 24 August 2021, sent to my Associate in support of the Summons. Mr Murabito is the partner of Lila and also a director of SMH. SMH has, long ago, had a receiver and manager appointed to it (Mr Michael Smith). In the SMH Judgment, Henry J at [9] noted that:
"the plaintiff adduced evidence that the Receiver consented to its application to withdraw the SMHPL Caveat."
At the urging of Mr Murabito, I listed the Summons before me in the Duty List at 3:00pm. Later, my Associate received an email from Summer Lawyers, the solicitors acting for Ageist, advising on what had occurred since orders were made on 23 August 2021. Completion of the contract for sale of the Property did not proceed on 23 August 2021 as scheduled because Ageist's solicitors had become aware of the listing given for the new Summons. I am advised settlement of the contract for sale with the purchaser, Ms Nordstrom, was rescheduled for 9:30am on Tuesday, 24 August 2021, and then again rescheduled for 4:30pm on 24 August 2021.
Mr Stowe quite candidly admitted that the affidavits of Mr Murabito and Lila do not support the grant of interlocutory relief preventing the sale of the Property (see T8.30-36, T9.6-10 and see T10.33-42) on any of the three heads of claim identified, but he contended that the material which had been put forward had been prepared in great haste and there was enough material to support the Plaintiffs being given some time to put forward more material to support their claims. Mr Stowe identified three claims that his clients wished to advance, all of which he maintained if established, would mean that the mortgage of Ageist would not be effective:
1. That Mr Halvagi, a director of H&H MEZZ Pty Ltd ("H&H"), which had held the second registered mortgage that was assigned to Ageist, was aware of Bosilka's life interest in the Property, even after the Property was transferred by her to SMH and made statements to Mr Murabito that induced SMH not to record, on the title, that life interest and/or that Mr Halvagi promised that the mortgage would never be enforced by H&H. This was advanced as a "possible fraud": T13.19. It will be asserted that Ageist knew of the relevant matters.
2. That the assignment to Ageist was part of an attempt to reduce H&H's exposure to liability by reason of the National Credit Code (Cth) and related legislation. I shall refer from hereon to "the Code" as encompassing both.
3. That the Code was breached by Ageist and H&H because they did not have licenses to enter into transactions of the kind involved here.
Mr Stowe accepted that there was no evidence before the Court that Ageist was aware of any of the matters asserted in respect of [11(1)] and [11(2)]. When I pointed out that PTAL is the first registered mortgagee, which is owed an amount of $386,000, he accepted that there was no evidence before the Court to support any allegation that PTAL was not entitled to enforce its mortgage.
Lila's affidavit claimed that it was never intended that the Property be mortgaged in support of the loans that SMH received from H&H and PTAL. Since SMH was at the time of the loans the registered owner and the borrower, and she was not a director of SMH, her perception appears to be irrelevant and this contention was not put by Mr Stowe as relating to the three claims he articulated. Mr Stowe accepted that the registered mortgage was intended to encompass the Property but explained that the Plaintiffs contend that H&H agreed that, or represented that, it would not be enforced: see T23.39-40.
Mr Martin made a number of points:
1. The Summons seeks interlocutory relief and not any final relief. Final relief must be articulated in any claim for interlocutory relief.
2. The evidence that SMH intended to mortgage the Property found in Exhibit 1 is overwhelming. Not only that, but there are certificates of advice given by Mr Carbone, as solicitor, for Lila, Mr Murabito and SMH.
3. Mr Halvagi in his affidavit, filed in response to the Plaintiffs' affidavits, denied the conversations attested to by Mr Murabito.
4. In a claim to injunct a mortgagee from exercising its power of sale, a minimum requirement is that that party pay into Court the debt that is the subject of the mortgage: see Goater v Commonwealth Bank of Australia [2014] NSWCA 265 at [70]-[74] per Ward JA (as her Honour then was) ("Goater").
5. The matters advanced by Mr Stowe as evidence that could be called in due course to establish Ageist's liability for whatever H&H is said to have done are mere speculation. Further, the assertion of conversations with Mr Halvagi are said to have occurred in 2017 - the transaction the subject of the loans by H&H was in February 2019.
6. The material put forward by the Plaintiffs does not establish a prima facie case or that there is a serious question to be tried in order to justify an injunction preventing sale.
7. Even if it could be established that Ageist or H&H were in breach of the Code that does not mean that the mortgage is invalid or unenforceable: see s 333 of the Code, which provides:
"(1) A failure to comply with any requirement of this Act does not
affect the validity or enforceability of any transaction, contract,
instrument or other arrangement.
(2) Subsection (1) has effect subject to any express provision to the
contrary in:
(a) this Act (including regulations made under this Act); or
(b) regulations referred to in subsection (3).
(3) Regulations may provide that a failure to comply with a specified
requirement referred to in subsection (1) has a specified effect on
the validity or enforceability of a transaction, contract, instrument
or arrangement."
1. No undertaking as to damages has been proffered and there is no material which would enable any confidence that the undertaking would have any value. I should note that Mr Stowe responded stating that he had instructions to give the usual undertaking as to damages, but he accepted that there was no evidence before the Court to show that the undertaking had any value.
In relation to the claimed life interest of Bosilka, I drew Mr Stowe's attention to what is found in the judgment of Adamson J in The Trust Company (PTAL) Ltd v Samuel M Holdings Pty Ltd [2020] NSWSC 863 at [4]:
"The first applicant, Ms Siljanovska, deposed that she came to occupy the O'Donnell Street property because she had been persuaded to transfer her home to the defendant to allow it to build townhouses. In return she was told that she would receive lifetime rights to live in one of the townhouses erected on the property. Even accepting this to be correct she would, at best, have a bare equity or equitable interest in the O'Donnell Street property. Her interest would necessarily, by reason of the law of priorities, rank after the interest of the plaintiff, who is the registered mortgagee. Accordingly, whatever claim she may have against the defendant, the second mortgagee, or any other third party, would not give her a right which would stand in the way of the plaintiff enforcing the writ of possession arising from the mortgage granted to it by the defendant."
The reference to Ms Siljanovska is, it seems clear, a reference to Bosilka. The proceedings before Adamson J concerned Bosilka's unsuccessful attempts to prevent PTAL from obtaining possession of the Property in July 2020 and are referred to at [43] of the SMH Judgment. Mr Stowe said that he was instructed that the reasons do not reflect accurately what Bosilka had told the Court in those proceedings. Even were that so, she has been on notice of the intention of, at least PTAL, to exercise its rights under its mortgage since June 2020.
It is Mr Murabito, Lila and Bosilka who have sought an urgent hearing (and indeed, on an ex parte basis, which did not occur) and they ought to have been in a position to put all of the material that they assert establishes a prima facie case justifying injunctive relief: Australian Broadcasting Corporation v O'Neill (2006) 227 CLR 57 at [65] per Gummow and Hayne JJ, with whom Gleeson CJ and Crennan J agreed. I do not think it is appropriate to give the Plaintiffs the indulgence of more time to put whatever material they have before the Court to establish a threshold for relief, particularly since the urgency to which Mr Stowe refers is self-induced because each of the matters said to be the subject of complaint have been known to the Plaintiffs for a long time. I therefore refuse the relief sought on the basis conceded by Mr Stowe that the material advanced does not support the relief sought. Further, however, there are additional reasons for refusing any injunctive relief, namely:
1. The Plaintiffs appear to have advanced the claims that they did advance and having failed on each of them, they now seek at an extremely late stage to advance a new and different claim that could have been protected by registration of an interest (in the case of the claimed life interest) long ago or to have been the subject of injunctive proceedings whenever the Plaintiffs become aware that PTAL and/or Ageist were proposing to exercise their rights under the 1st and 2nd mortgages (i.e. at the latest June 2020). Their delay, in my view, is significant and sufficient to preclude any entitlement to injunctive relief: see Capgemini US v Case [2004] NSWSC 674 at [40] per Campbell J; see also JD Heydon, MJ Leeming and PG Turner, Meagher, Gummow and Lehane's Equity: Doctrines and Remedies (5th ed, 2014, LexisNexis) at [21.375]. I do not accept Mr Stowe's submissions that the Plaintiffs were entitled to advance all of their other claims (whether through caveats or otherwise) and leave the present claims in abeyance should the myriad of other claims fail. This is antithetical to the dictates of justice, the appropriate use of Court resources and, I would add, the requirements of ss 56-60 of the Civil Procedure Act 2005 (NSW). I note too that Mr Stowe informed me that an argument of the kind now put forward as the second ground was advanced in other proceedings between the Plaintiffs and Ageist involving a different property: see T11.45-T12.4. Mr Stowe, again candidly, indicated that whilst not reaching a concluded view, Robb J did express scepticism as to whether the arguments advanced by the Plaintiffs or their proxies would succeed.
2. Ageist and the purchaser, Ms Nordstrom, have been endeavouring to complete the sale since February 2021 which has been thwarted by many caveats lodged by the Plaintiffs or at their direction. Ms Nordstrom is a third party bona fide purchaser for value who purchased the Property at a time when no caveats had been lodged by the Plaintiffs, who is being put under pressure by her current landlord and whose interest must be taken into account in the balance of convenience.
3. Bosilka claimed, in the proceedings before Darke J, that she has an interest in the trust of which SMH is a trustee (see the July Judgment) and now asserts that she has a life interest although no affidavit from her was read in support of the Plaintiffs' present application. Lila and Mr Murabito claimed before Henry J that Bosilka had entered into a contract with Ageist to purchase the Property in December 2020: see [54]-[64] of the SMH Judgment. I formed the view in relation to the caveat in the Lila Proceedings that it was not a bona fide caveat and there is reason to doubt the bona fides of the new claims particularly having regard to the orders for removal of caveats made by Darke J and Henry J, and the conclusion of Darke J that Bosilka had no reasonable basis to maintain the caveat before his Honour in that case.
4. The claim that H&H and Ageist entered into the loan agreement in breach of the Code or its attendant legislation raises, as Mr Martin submitted, a number of issues including what would be the consequence if a breach were established and Mr Stowe was unable to advance any submissions in relation to the Code issue: T12.8-13.
5. In any event, there is no evidence that PTAL was not licensed or that it was in breach of the Code. It is entitled to have the Property sold to recover the debt owed to it and that debt is $386,000. H&H lent $400,000 and the debt is now said to be approximately $1,000,000. The Property has since been sold to Ms Nordstrom for $650,000.
6. The absence of any evidence of the worth of the undertakings given by the Plaintiffs is a very relevant matter as well: see Winau Australia Pty Ltd v LCC Property Development Pty Ltd [2021] NSWSC 612 at [18]-[20]; and see JD Heydon, MJ Leeming and PG Turner, Meagher, Gummow and Lehane's Equity: Doctrines and Remedies (5th ed, 2014, LexisNexis) at [21-410].
I should add that in relation to Mr Martin's submission that to prevent the sale, the Plaintiffs would have to pay into Court the mortgage debt in accordance with Inglis v Commonwealth Trading Bank of Australia (1972) 126 CLR 161 at 164-5, discussed in Goater, there are, as Ward JA (as her Honour then was) noted (at [76]), exceptions to the rule and given the possibility that one of the exceptions might apply if the Plaintiffs were to make out a prima facie case, I do not found my decision on that basis.
Accordingly, in my view, the Plaintiffs' Summons should be dismissed and the Plaintiffs should pay Ageist's costs.
[2]
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Decision last updated: 01 September 2021