Supreme Court New South Wales Medium Neutral Citation: Orde Mortgage Custodian Pty Ltd v Xu [2023] NSWSC 632 Hearing dates: 22 May 2023 Date of orders: 22 May 2023 Decision date: 22 May 2023 Jurisdiction: Common Law Before: Garling J Decision: Dismiss the amended Notice of Motion filed 22 May 2023. Catchwords: REAL PROPERTY — possession — plaintiff mortgagee's claim for possession — several promises by defendant to pay arrears — where Sheriff has already taken possession — where defendant makes application for urgent stay of plaintiff's possession — whether to grant stay — stay refused Legislation Cited: Not Applicable Cases Cited: Not Applicable Texts Cited: Not Applicable Category: Principal judgment Parties: Orde Mortgage Custodian Pty Ltd (P) Wenfang Xu (D) Representation: Counsel: P Nagam (P) Self Represented (D) Solicitors: TG Legal + Technology (P) File Number(s): 2022/385994 Publication restriction: Not Applicable EX TEMPORE JUDGMENT Background 1. On 22 December 2022, the plaintiff, Orde Mortgage Custodial Pty Ltd ("Orde"), filed a Statement of Claim which claimed possession of a property at 76 John Street, Lidcombe, New South Wales. The Statement of Claim noted that the defendant, Ms Wenfang Xu, was the registered proprietor of the property and that she had obtained a loan from Orde on 8 June 2021. The defendant mortgaged the property as security for that loan. 2. The substance and effect of the mortgage was that if the terms of the mortgage with respect to repayment fixed under the mortgage was not complied with, and if after the requisite notices with respect to default had been issued and there had been no remedying of the default, then Orde was entitled to take possession of the property and obtain a judgment against the defendant for any amount outstanding. 3. The Statement of Claim, together with other documents, were served on the defendant on 19 January 2023. According to an affidavit of a licensed process server, Mr Alexander Taylor, the documents were served personally on the defendant, who identified herself as that person. At the same time, a Notice to Occupier was served on a male occupant of the premises. 4. No Notice of Appearance has been filed on behalf of the defendant. Application for Default Judgment 1. On 7 March 2023, Orde made an application for default judgment. That application was accompanied by an affidavit of an officer of Orde who deposed to all of the relevant facts necessary for Orde to obtain possession. 2. As at 16 February 2023, the total amount owing was in the order of $1.267 million. Interest was accumulating on that debt at about 8%. 3. Default judgment was issued and, on 28 March 2023, Orde made application for the issue of a Writ of Possession with respect to the property. That application was accompanied by all of the relevant material, which established that the debt by that stage had increased to a little under $1.275 million. Subsequent Events 1. I am informed, and accept, that on 12 April 2023 a letter was sent by the solicitors for Orde to the defendant at the property, informing the defendant that the Writ of Possession had issued, that an appointment for the Sheriff to take possession of the property had been made and that the appointment was for 9am on 22 May 2023. The letter gave almost six weeks' notice of the Sheriff executing the Writ. 2. The defendant, who has appeared before me today without representation, says that she did not receive that letter. On 28 April 2023 the solicitors for Orde again wrote to the defendant at the address of the property and also sent a copy of that letter by email to the defendant's email address. The defendant says today that she did not open any email containing a letter from the defendant's lawyers. However, it is plain from her evidence that the email address is one which is presently in use and has been in use for some considerable period in the past. 3. The defendant makes application today urgently, it now being almost 5pm on Monday afternoon, 22 May 2023, for orders in the following terms: "1. That the defendant be granted repossession of the land … situated at and known as 76 John Street, LIDCOMBE, NSW 2141 ('the property'). 2. That the defendant is to refinance the property within six weeks of the date of these orders, and failing which, vacant possession is to be delivered to the plaintiff. 3. Any other order the Court deems fit. 4. Re-entry into property sought." 1. The Notice of Motion was filed today. However, it does appear that yesterday, 21 May 2023, a Notice of Motion was filed by the defendant's solicitor in which an order was sought that the Writ of Possession issued on 6 April 2023 be stayed for a period of five weeks. However, it does not appear that that Notice of Motion was the subject of any urgent application yesterday, or else this morning, before the Sheriff took possession of the property. 2. The defendant, who appears this afternoon, has sworn an affidavit dated 22 May 2023. She deposes to the fact that she is the Director of a business which conducts interior renovations. She does not put in dispute the fact that she purchased the property with the benefit of a mortgage from Orde. She does not dispute that it is a valid mortgage. She notes that she has been in default of payments for quite a lengthy period which seems to have started about August 2022. She says that she became unable to meet the payments due on the mortgage at that time because she had been the victim of a scam. The nature and extent of that scam is unrevealed. 3. She deposes that since 2022, she has attempted to make periodic payments where possible. She deposes to the fact that she is now in a position to pay the arrears to the plaintiff. Upon questioning today about that statement, the defendant says that she could make the payment of the arrears, a sum a little over $57,500. She says that she could make the payment by 2pm on Friday this week. It is unclear to me what the source of those funds would be, but so far as I can tell, the funds would be paid from income received by her business. 4. The defendant says that on 17 May 2023, which is Wednesday of last week, she received the letter dated 28 April 2023 from the solicitors for Orde and became aware then that the Sheriff was scheduled to take possession of the property at 9am this morning. She says that having received that letter, she immediately engaged lawyers at Australian United Lawyers who explained the legal basis for the issue of the Writ of Possession. She says that she was not previously aware of the judgment which had been entered against her, to which I have earlier made reference, and thought she could continue to repay the arrears and that by making payments of arrears the matter would be resolved. 5. Attached to the defendant's affidavit, so far as I can make out, are two emails. The first is dated 29 March 2023, and is from the defendant to a company described as JKJH Group. The email is as follows: "Good morning Michael ! This is waterproof bill, we are done 2 time job. So I need pay staff bill and Material fee. Please pay me 80% today. Less money pay 3 time finshing [sic]." 1. That email was forwarded to Orde on 30 March 2023 with an email which read: "Good morning team ! I am waiting for owner sending 80% party fee for me. I pay staff and Material. I can pay [Orde] $20000 at moment. My account have $10980. I push owner now. $54000 job done I can pay off to you." 1. It does not appear from any material which has been placed before me what response, if any, that email elicited from Orde. It was followed by another email, apparently on 5 April 2023, from the defendant to Orde in the following terms: "Good morning team ! Please [charge] from my account $16,000. All job done soon. I will pay off $58,000 end this month." 1. I am informed by the solicitor for Orde that at least in the course of 2023 there have been a number of proposals made by the defendant to Orde to repay the arrears and to refinance the mortgage, but that none of those proposals have come to fruition. That seems to be corroborated by the fact that the email of 30 March 2023 suggested that payments could be made, and that as soon as the money was received, the arrears could be repaid. This was followed by a promise in April that the arrears would be repaid by the end of April. 2. I now return to the position since 17 May 2023, when the defendant accepts that she became aware of the position with respect to the Sheriff taking possession this morning. She says that having become aware of the Sheriff taking possession, and after contacting lawyers, she took urgent steps to refinance the property by engaging her broker and submitting an application for refinance. The earliest email confirming that approach is one provided to the Court dated 19 May 2023, where Mr Wang, the finance broker nominated, said that the brokers were working on the application and were "submitting it to our panel of lenders for consideration". Mr Wang said he would be in touch when an outcome was available, which he expected to be within 14 days. 3. The defendant also says that on 20 May 2023, which was Saturday morning this week, she spoke to a representative, Ms Wang, of Australia Capital Loans Pty Ltd, over the telephone, and that a commercial loan in the sum of $1.3 million would be forthcoming. Ms Wang advised the plaintiff that she would write to the plaintiff directly on Monday, being today, requesting to pay off and discharge the existing loan. I do not understand that to have happened. 4. The defendant tells me that on 21 May 2023, she was provided with a conditional loan approval for $1.38 million from an organisation described as COG Mortgage. She provides a copy of an email which she sent to her lawyer late last night which records a conditional loan approval letter from COG Mortgage, which says that the loan approval is conditional and that it would take five to six weeks to settle. The offered loan is one for 30 years. It would require a first registered mortgage over the property, and it would require a loan-to-value ratio of less than 75%. The effect of that loan-to-value ratio would be that at the time it was entered into it would be necessary for the value of the property to be at least $1.84 million. The only evidence that I have of the value of the property is that the last valuation taken out by the plaintiff in 2021 was that the property was valued at $1.5 million. 5. In light of the various communications to which I have referred, the defendant then said in her affidavit the following: "I am in a favourable position to obtain finance and discharge the debt to the plaintiff as I currently have steady income through my renovation company as well as rental income from the property." 1. In the next paragraph she said: "The property is currently leased to international students and upon the execution of the writ they have been unable to retrieve their belongings and have nowhere to stay on short notice." 1. The affidavit records her address at a residential unit in Chatswood. However, when she appeared before me this afternoon, the defendant said that she was not living there, that she had rented that property out and that she had been living at the property at Lidcombe. Those statements do not sit comfortably with the material that was otherwise before me. 2. The Sheriff took possession of the property at 9am this morning. As one would expect consistently with that approach, the locks have been changed so that access to the property is not possible by the defendant in the absence of one or another form of court order. There is no material before me indicating whether any request has been made to Orde or to its solicitors to authorise the Sheriff to allow access to the property for the tenants to remove any of their belongings. It is not unknown to the Court that, where possession has been taken by the Sheriff, subject to appropriate arrangements the Sheriff will permit supervised access to anybody excluded from the property to obtain their belongings. Discernment 1. The basis of the application for an order for repossession and allowing the defendant to re-enter the property is that the Court would then adjourn the proceedings for six weeks and, during that time, the defendant would have the opportunity of refinancing the property. The extent of the equity in the property is not clear. It can be accepted that in the period since the valuation was taken in 2021 properties generally in Sydney have increased in value, but it can also be accepted that in the last six to nine months many properties have decreased in value. The Court has no idea what the position is with respect to the property at Lidcombe, and accordingly is unable to draw any conclusion that there is significant equity in the property which would not be entirely diminished by an adjournment of six weeks or so. Nor, whilst considering the valuation, is the Court in any position to determine that the value of the property would be sufficient to meet the conditions of the conditional loan approval from COG Mortgage to which I have referred, that is to say, whether the property would have a valuation of $1.84 million. I am simply unable to know if that is right or not. 2. In short, the defendant comes to the Court in circumstances where she has known about the claim since January 2023 when the Statement of Claim was served upon her in person. Subsequently, she has made proposals which have not come to fruition. Notwithstanding her denials, I think it likely that prior to 17 May 2023, the defendant had notice of the appointment of the Sheriff to take possession of the property. I think she was reminded of that by her tenants bringing to her attention on that day the notice with respect to the Sheriff's appointment, and no doubt asking her what she proposed to do about that. 3. It is not at all clear why, from the time she received notification on 17 May 2023, no application was made to the Court until shortly after 4pm this afternoon. The Sheriff has come and has taken possession. No request has been made to the Sheriff to allow people to remove their belongings. Nor is it at all clear to me that the promises advanced by the defendant, namely to pay the interest arrears of $57,500 by 2pm on Friday, is likely to come to fruition. 4. The defendant informed Orde in March 2023 that she would pay the funds. In April 2023, she said she would pay them by the end of April. Now she says she will pay them by the end of this week. But there is simply nothing at all which would give me any confidence that that is what would occur. Whether the plaintiff ultimately sources the funds will depend on what arrangements she can make. It is unlikely, as it seems to me from a general knowledge of these matters, that the property will be sold within the next six weeks. After all, it has to be prepared for sale, a proper sales marketing campaign has to be formulated, an agent has to be instructed, and the property then marketed, before it can be sold. 5. The plaintiff, if she turns her mind to it and undertakes diligently an exercise of obtaining alternate finance, will no doubt be in a position in due course to repay the mortgage and to re-take possession of the property. But that is something that may or may not happen in the future. I am asked to interrupt the plaintiff's possession, to which they clearly have a legal entitlement, on the basis of nothing more than an unsubstantiated promise to pay sums in the future. This is not the first such promise. This is one of many such promises, none of which have come to fruition. The defendant provides no material to give me any confidence that her promised repayments will come to pass. 6. In those circumstances there is simply no basis for an order at this stage allowing the defendant to re-take possession, and there is certainly no basis at this stage for this Court allowing a period of six weeks further from now for the defendant to refinance the property. 7. In those circumstances, there is nothing more I can do other than to dismiss the Amended Notice of Motion filed 22 May 2023. Orders 1. I order that the Amended Notice of Motion filed 22 May 2023 be 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: 15 June 2023