The Trust Company (PTAL) Limited v Samuel M Holdings Pty Ltd

Submissions of the Director

1. Although the notice of motion foreshadowed an attack on the validity of the appointment of the receivers and managers, it was made clear before me that that was no longer pressed, and that it had arisen as a result of a slip in the notification of that appointment by the receivers and managers to the Director.
2. What was pressed, however, was the proposition that the service upon the receivers and managers was insufficient, and failed to comply with the Uniform Civil Procedure Rules NSW 2005 (the UCPR). Rules 10.1 and 10.2 were in particular relied upon.
3. The anterior submission was that the appointment of the receivers and managers to the Company as a whole was not authorised by mortgage 622 and its memorandum. It was said that the appointment of the receivers and managers, especially if only to the particular parcels of real property and not to the Company as a whole, did not derogate from the need for there to be separate service upon the residual manifestation of the Company at its registered address, or at least upon the Director or directors.
4. In those circumstances, it was said, the consent judgment of this Court was a "nullity", and must be set aside.
5. It was also submitted that, in some sense, the receivers and managers had not complied with the obligations arising from their roles.
6. Quite separately, it was said that the writ of possession should be further stayed by me, above and beyond the period of its postponement since 11 March this year. That is because, it was said, a comprehensive sale is imminent that will satisfy the debts of both the plaintiff and the assignee of Mezz.

Determination

1. Construing mortgage 622 and its memorandum as a whole, I am satisfied that the Company granted a right to Mezz to appoint receivers and managers to the entirety of its assets, if the Company defaulted in its repayment obligations to Mezz. At the hearing, counsel for the Company (as manifested by the receivers and managers) took me in detail through the memorandum in order to establish that proposition, and that pathway need not be repeated here. In my opinion, there is no sense in which the limited references in the mortgage to the parcels of real property "trumps" the more expansive references to far broader assets in the memorandum.
2. It follows that I do not accept the submission that the appointment by Mezz of the receivers and managers to the entirety of the assets of the Company was beyond power.
3. That legal determination is, however, unnecessary to my ultimate determination. Whether the receivers and managers were appointed to all of the assets of the Company, or merely to the parcels of real property, the claim for possession by the plaintiff pertained only to the latter. It is an entirely orthodox analysis to say that the receivers and managers were the agents of the Company with regard to that real property, even though, in truth, they were appointed pursuant to a mortgage that was designed to protect the interests of Mezz. They were and are the "external administrators" of the real property that is the subject of the claim for possession.
4. There is no dispute that they were validly served with the statement of claim of the plaintiff. In my opinion, they were the "active party" to the litigation for the purposes of the UCPR. I do not accept that there was a separate requirement upon the plaintiff to serve some other manifestation of the Company, or its directors. Notably, counsel for the Director did not invite me to any authority of any Court in support of that specific proposition.
5. Separately, the receivers and managers of the second mortgagee consented in a judgment permitting the first mortgagee to have possession, no doubt with an eye to sale in an effort to recoup debts owed to each creditor. There is nothing troubling about that step, nor on the evidence any suggestion of a lack of bona fides on the part of the receivers and managers.
6. Finally, there is no warrant in these circumstances to delay further the execution of the writ, for the following reasons.
7. First, counsel for the Director made it clear, as I have said, that there was no challenge to the validity of the appointment of the receivers and managers, at least as it pertained to the real property the subject of the claim for possession.
8. Secondly, no substantive defence to the indebtedness, nor to default, nor to the validity of the mortgages, was foreshadowed.
9. Thirdly, the receivers and managers having been validly appointed to the real property, the Director and those associated with him have no authority to sell the property in any event.
10. Fourthly, there is a caveat on title filed by a third mortgagee (to which I have not previously referred, in the interests of conciseness) that would forestall any such sale in any event.
11. Fifthly, I am not satisfied that a proposed corporate purchaser is a third party at arm's length.
12. Sixthly, default in the debt owed by the Company to the plaintiff is said to have occurred as long ago as 2 September 2019, and possession was first sought on 14 November 2019, almost exactly six months ago.
13. Seventhly and finally, if resolution of this dispute could have occurred by way of a complete payout, it surely should have come to fruition between 11 March and 6 May 2020, a period of eight weeks.
14. In summary then: I do not believe that service of the claim for possession was deficient; I therefore do not believe that the consent judgment should be set aside; and I do not believe that the writ of possession should be further delayed for any separate reason.

Costs

1. Because of the various contingencies of result, I decided at the hearing that the question of costs should be resolved subsequently in Chambers. Having said that, the usual rule is that costs follow the event, with the result that one might expect them to be ordered in favour of the plaintiff and perhaps the Company against the Director. But counsel for each of them made it clear that they would rely on the security document itself in order to recoup their costs, if they were successful before me.
2. If I have misunderstood, or the situation has changed since the hearing, each of those parties has leave to file dot point written submissions about costs of no more than three pages in length within one week of today. The Director will then have leave to file submissions with identical characteristics within one week thereafter. Any dispute about costs will then be resolved by me in Chambers.

Orders

1. I make the following order: 1. The notice of motion of Mr Steven Murabito of 11 March 2020 is dismissed.

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: 14 May 2020