ARBEST PTY LTD v STATE BANK OF NEW SOUTH WALES SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL MAHONEY J 24 March 1994, 24 March 1994 [1994] NSWCA 6 Mahoney J This is an application which comes before the court as a matter of considerable urgency. It involves issues of a little complication and I would ordinarily have preferred to reserve my decision to ensure that all of them were adequately referred to in my judgment. However, the basis of the application is that an auction is to take place in respect of the property in question tomorrow and it is necessary therefore that I give judgment immediately. The application is an application on motion for two things: for a stay of execution of the sale of the relevant property, being property at 3A Chatham Road, West Ryde and for an injunction restraining the respondent, the State Bank of New South Wales, from taking further steps to effect a sale by auction or private treaty of that property. In the circumstances the application for stay of execution is, of course, inappropriate and has not, I think, seriously been pressed. It is the application for injunction which is the matter to be determined. The background of the matter is important and I shall state it as shortly as may be. Mr and Mrs Patsiadas have been apparently successful in acquiring over a period considerable real estate. As at 1 May 1989 they were registered proprietors of five separate properties in various parts of Sydney and suburbs, the details of which are listed in the affidavit of Mr Patsiadas of 23 March 1994. I am informed by Mr Cowdroy QC, for the applicants, and I shall assume, that in the course of acquiring and developing a property at Yagoona arrangements were made to borrow moneys from the respondent bank. It was proposed, it is said, to develop that property; moneys were advanced to purchase it; steps were taken towards development; the bank decided it would not advance moneys, or relevant moneys, for the development; and, as a result of that, Mr and Mrs Patsiadas and the company in question, Arbest Pty Ltd, fell into financial difficulties. It is not necessary to pursue the details of that further. The bank has taken mortgage securities over all of the relevant properties, at least those that are relevant for present purposes. The bank in due course proposed to execute upon its rights under the mortgages. It took steps first, as long ago as 1991, to obtain possession of the properties. A claim for summary judgment, I am informed, was made in or about March 1991; an application for summary judgment was made, it is said, on 31 May 1991; the hearing of an application for summary judgment came before Badgery-Parker J in February 1992. Various stays were granted and in due course the bank obtained an order for possession. Various applications were made to the Court of Appeal, for leave to appeal and otherwise. It is not necessary to delay by explaining the details of them. But the net result is that judgment for possession of the properties has been obtained and an application for stay of proceedings was made and refused. 2 UNREPORTED JUDGMENTS In June 1993 the bank, I am informed, issued a writ of possession in respect of the subject property at West Ryde. In June 1993, I am informed, it took possession of the property. Ultimately, the proceedings between the parties came on for hearing before Young J in September 1993. There was not before the court initially any detail of the issues involved in those proceedings and it was during the application today that a copy of his Honour's judgment was tendered to me. As far as I am able to see from the terms of the judgment and what has been put to me, the claim for Mr and Mrs Patsiadas and for the company was - and I take this from the terms of his Honour's judgment - that the bank had made representations to them on which it subsequently, as the judge said, reneged; that it had taken unconscionable advantage of the Patsiadas family and the company; that representations made by the bank were unconscionable under the Fair Trading Act; and that relief should be granted under the Contracts Review Act. The learned judge in a long and detailed judgment made findings of fact. He concluded that there was no misrepresentation and indeed no representation made relevant for present purposes. He dismissed the proceeding. His judgment was delivered on 2 November 1993. A notice of appeal was lodged against the judgment but no application was made for an injunction or for other relief pending the determination of the appeal. No application for expedition of it was made until yesterday afternoon. At some time yesterday an application was made to the Registrar and ultimately to me in chambers for leave to serve short notice of the motion to which I have referred. I granted that leave in view of the impending auction, and it is as a result of that leave that Mr Cowdroy and Mr Bannon are before the court today. Iam conscious of the fact that if the appeal were to succeed and relief were to be given in accordance with the claims of Mr and Mrs Patsiadas and the company then that would or may result in the mortgages being set aside, or some orders being made restraining exercise of the bank's rights under them. In these circumstances, I must look with some care at the application to restrain the sale pending the determination of the appeal. In effect, the application is to maintain the status quo until the issue can be determined. However, Mr Cowdroy for the applicants properly indicated to the court that the application is made, as the documents disclose, only in relation to the West Ryde property and that the basis of the application is that the bank has not taken the proper steps to secure an appropriate price upon the proposed sale of that property. Mr Cowdroy has informed the court, quite properly, that if the position were clear that all proper steps had been taken - I described them as all reasonable steps - to secure that a proper price be obtained on the auction, then he would not be able effectively to press the present application. I shall deal with the matter upon that basis. The claim that has been made is essentially that the bank has not taken proper steps to secure the best price on sale or the proper price on sale at the auction because of the fact that the land has a special value. It is not necessary for me to attempt to detail the special value or the nature of it. I shall assume for the purposes of this submission that this is so; that is, I shall assume that the property does have some kind of special value, having regard to a proposed or possible redevelopment of the land in the vicinity. But there is no evidence which would satisfy me that the bank is not conscious of that matter or that it has not in what URJ ARBEST PTY LTD v STATE BANK OF NEW SOUTH WALES (Mahoney J) 3 it has done taken steps to ensure that on the sale tomorrow proper steps will be taken to achieve a value consonant with that particular advantage, assuming it to exist. The bank has tendered material in an affidavit of Susan Pamela Cross of 24 March 1994. That affidavit annexes correspondence. I have been referred to some portions of it. It displays a consciousness of the claim made for the applicants and some response to it by the bank. It is not, I think, necessary for me to form a final judgment as to whether what has been done is adequate to secure a proper price. That is not a matter which I think can be decided on an application such as this. But the bank is conscious, no doubt, of what has been said and of what is necessary to ensure that in the light of the substance of that allegation, that there is a special value, a proper price is obtained. If the bank does not obtain a proper price and is in default in law in that regard, then of course there are remedies which may be pursued by the applicants as mortgagees or associated with the mortgages in order to obtain damages in that regard. There are a number of other aspects of the matter which ordinarily would require more detailed mention. There has been considerable delay in relation to applications made in the proceedings. I shall not pause to detail that delay. It does not appear that Mr and Mrs Patsiadas or the company have funds sufficient to ensure that any loss suffered by the bank by delaying the sale would properly be provided for. An offer has been made to pay into court $2500, representing costs of the sale, but I am not satisfied that the loss of the bank would be covered merely by that. I do not criticise Mr and Mrs Patsiadas for, if it be so, their lack of money, nor do I criticise the company. But the fact is that if an injunction of this kind is to be granted in circumstances such as the present, one of the matters to which the court would have regard would be the loss which would be apt to be caused to the party restrained in respect of the sale. There have been previous applications for relief of this and other kinds and those applications have in substance been refused. I have not in the circumstances presently pertaining attempted to detail all of those matters. They are matters which in an ordinary case would be referred to at length. It is sufficient for me to refer to some of them and in the way that I have done. Taking into account all of the circumstances, I do not think that as a matter of discretion an injunction should go. It is not suggested that if the bank does not act properly on the sale tomorrow it will not be able to meet any damages which may flow from any suggested default. Mr Cowdroy has submitted that the damages would not be capable of being quantified. I do not understand the basis of that submission. If it be that the bank has not taken proper steps to secure a proper price upon the sale, then the damages which have been suffered can, I think, be quantified in a way normal in such a claim. In all the circumstances, my conclusion is that a case has not been made out for the injunction. I dismiss the application for injunction with costs.