Perpetual Corporate Trust Ltd [2021] NSWSC 1567

Supreme Court New South Wales

Medium Neutral Citation: Perpetual Corporate Trust Ltd [2021] NSWSC 1567 Hearing dates: 29 November 2021 Decision date: 29 November 2021 Jurisdiction: Equity Before: Ward CJ in Eq Decision: 1. The funds paid into Court by the Plaintiff, together with any interest that has accrued thereon be paid to Con Peter Kafataris, by a payment to his solicitor, Steven Stefanou. If funds are to be paid by cheque they are to be sent to Steven Stefanou at PO BOX 105 Enmore NSW 2042 in favour of Steven Stefanou & Co Trust Account; if the funds are to be paid by electronic transfer they are to be paid to the Commonwealth Bank account the details of which have been provided to the Court. Catchwords: JUDGMENTS AND ORDERS — Orders — Application for payment of funds out of court Cases Cited: Commonwealth Bank v Estate of late Slieman [2010] NSWSC 661 Re C & L Cameron Pty Ltd – GB Gazzana v Nadalan Enterprises Pty Ltd; AF Gazzana v Nadalan Enterprises Pty Ltd [2012] NSWSC 676 Category: Principal judgment Parties: Perpetual Corporate Trust Ltd (Plaintiff) Representation: Counsel: A Paterson (Applicant)

Solicitors: Steven Stefanou & Co (Applicant) File Number(s): 2021/00215087 Publication restriction: Nil

Judgment 1. HER HONOUR: This is an application by notice of motion filed on 5 October 2021 for the payment out of Court of certain moneys that were paid into court by the plaintiff, Perpetual Corporate Trust Ltd (Perpetual). The applicant, Con Peter Kafataris, has filed, and relies upon, two affidavits sworn by him: an affidavit sworn 21 September 2021 and an affidavit sworn 25 October 2021. The applicant also relies upon an affidavit of service from his solicitor, Steven Stefanou, that affidavit being sworn on 17 October 2021 and a further affidavit of Mr Stefanou sworn on 12 November 2021. 2. The moneys were paid into court by Perpetual in its capacity as first registered mortgagee of certain property in Brookvale and represent the surplus funds after discharge of the amounts owing on its first registered mortgage. At the time of payment into Court, Perpetual identified four parties with potential claims to the funds paid into court. One of those was Mr Kafataris. By deed of loan dated 24 September 2018 in which Mr Kafataris was identified as the lender, it was recited that the borrower and the guarantor had requested the lender to lend to the borrower the sum of $600,000 for the purpose of providing the borrower with working capital and the lender had agreed to advance that amount on the terms set out in the deed. The amount of 600,000 was paid in two tranches (of $200,000 and $400,000), and a mortgage in respect of that $600,000 loan was registered on 8 March 2019. 3. The other parties identified by Perpetual as potentially having a claim to an interest in the property were a company by the name of Instyle Design Interiors Pty Ltd, (claiming an interest under a lease commencing 2016); a company known as ACN 152 546 453 Pty Ltd (formerly known as Hemisphere Technologies Pty Ltd) (in liquidation) (claiming an equitable interest to the value of $160,000); and Ada Avenue Brookvale Pty Ltd (claiming an interest as purchaser under a contract for sale of land dated 22 April 2021). 4. Each of those three parties has been served with the present notice of motion. Both the plaintiff and the third respondent (the ACN entity) have indicated that they do not intend to take any step in the proceeding. The other two respondents have made no communication in respect of the notice of motion, but have had an opportunity to make any submissions or to be heard in relation to it. It would appear that the Ada Avenue Brookvale Pty Ltd (which was claiming an interest as a purchaser under a contract of sale) has been transferred certain property by Perpetual which presumably deals with that claim. It is not clear what the position is in relation to the leasehold interest claimed by Instyle, but Mr Kafataris' affidavit of 21 September 2021 deposes to the fact that he knew nothing about the basis for that caveat and it would appear that it was lodged after the mortgage was registered in respect of Mr Kafataris' moneys. 5. The summons was filed by the plaintiff on 28 July 2021, seeking an order that monies representing the surplus funds from the sale of the Ada Avenue property be paid into Court. Mr Kafataris' claim for moneys that he has advanced is not disputed by any party. The documentation to support his claim in relation to the loan agreement is exhibited to his affidavit sworn 21 September 2021. 6. Where a party seeks payment of funds out of court, the applicant must satisfy the Court of certain matters, which are set out in Re C & L Cameron Pty Ltd – GB Gazzana v Nadalan Enterprises Pty Ltd; AF Gazzana v Nadalan Enterprises Pty Ltd [2012] NSWSC 676 at [121] (referring to Commonwealth Bank v Estate of late Slieman [2010] NSWSC 661 per Slattery J at [8]-[11]): An applicant under UCPR r 55.11 must establish three matters to justify an order for the payment of money out of court. The first is to identify the person who is primarily entitled to any funds paid into court and the basis of that entitlement. It is fundamental that the person be identified from the best evidence available, so that the court can be sure that the person has been given appropriate notice of the application and can if necessary contest it. The second matter that needs to be proved by a claimant is that he or she is not merely an unsecured creditor against the person primarily entitled to the fund but is a person who has an beneficial interest in the very fund that has been paid into court. The same evidence that demonstrates a person's primary entitlement to the funds in court often establishes this second matter. Thirdly, it is necessary for an applicant to identify the other potential claimants to the fund in court and to prove that those persons were notified of its claim. Those persons may consent to the claim. Alternatively, the applicant may prove that those persons either do not have valid claims against the fund or that their claims do not have priority over the applicant's claims. The court requires strict proof as to who has the entitlement to the funds in court. There is a heavy burden placed on a party seeking payment of money out of court under Trustee Act s 98 and UCPR r 55.11. It is necessary for that party not only to prove his or her entitlement to the funds but also to prove that all other potential claimants to the funds in court have been properly notified. Otherwise there is a risk of incorrect payments being made. 1. I am satisfied as to the basis of Mr Kafataris' beneficial interest in the funds paid into Court, and I consider that he has sufficiently identified the other potential claimants to the Court, and notified them of his claim. 2. I do not see that it is necessary to join Mr Kafataris as a defendant to the proceedings. It is sufficient that he is an applicant on the notice of motion that has been filed. I will order that the funds paid into court by the plaintiff, together with any interest thereon, which as at the time of Mr Stefanou's 12 November 2021 affidavit amounted to $148,494.97, be paid to Con Peter Kafataris by way of payment to his solicitor, Steve Stefanou. 3. I should note that Mr Kafataris' affidavit sworn 21 September 2021 deposes that the outstanding sum in respect of his loan together with interest as at 1 September 2021 was $823,036.31, which makes plain that there will be a significant shortfall, but I am satisfied that the money should be paid out to Mr Kafataris and I will make orders to that effect.