New South Wales Supreme Court CITATION : Lava Limited v Avery [2009] NSWSC 177 HEARING DATE(S) : 18 March 2009 JUDGMENT DATE : 18 March 2009 JUDGMENT OF : Price J at 1 EX TEMPORE JUDGMENT DATE : 18 March 2009 DECISION : 1. There be judgment for the plaintiff as against the defendant for the possession of the whole of the land comprised in folio identifier 31/SP70153, being the property known as Apartment 901, Parbury Apartments, 1 Pottinger Street, Walsh Bay, New South Wales. 2. The plaintiff be given leave to issue a writ of possession. 3. The execution of the writ of possession be stayed for a period of six months from today, namely by 4pm on Friday 18 September 2009. 4. The cross-claim be dismissed. 5. The stay of execution of the writ of execution is conditional upon: (a) The defendant commencing proceedings on or before 27 March 2009 against Saree Holdings Limited seeking orders for the discharge of mortgage dealing number AD131541 (the redemption proceedings); (b) The defendant give an undertaking to the court that she will prosecute the redemption proceedings diligently and without delay. 6. The sum of $20,000 paid into court by the plaintiff as security for the costs of the defendant in accordance with orders made by the registrar on 16 July 2008 be released, together with accrued interest, forthwith to the plaintiff. 7. Liberty to either party to apply on three days' notice be granted. CATCHWORDS : Possession proceedings - application for adjournment - order for possession - grant of stay on terms LEGISLATION CITED : Civil Procedure Act 2005 s 56, s 57, s 58 CATEGORY : Procedural and other rulings PARTIES : Lava Limited Leanne Maree Avery FILE NUMBER(S) : SC 13418/07 COUNSEL : M Condon (Plaintiff) R Alkadamani (Defendant) IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISON PRICE J 18 March 2009 13418/07 Lava Limited v Leanne Maree Avery JUDGMENT 1 HIS HONOUR: Leanne Maree Avery (the defendant), by a notice of motion filed in court yesterday, seeks orders that the hearing of the proceedings be vacated on such terms, if any, as the court deems just. A hearing of the proceedings had been listed to commence before me yesterday and then for the following two days. 2 The defendant is the registered proprietor of the whole of the land contained in certificate of title folio identifier 31/SP70153, being the property known as Apartment 901, Parbury Apartments, 1 Pottinger Street, Walsh Bay (the property). On 19 May 2006 the defendant entered into a loan agreement with Lava Limited (the plaintiff). Schedule B to the loan agreement disclosed that the principal sum of $NZ1,500,000 was to be repaid on or before the final payment date, which was defined to mean 19 May 2007. The loan was to be secured by a first registered mortgage on the property. The mortgage was registered on the title of the property which identifies the defendant as the mortgagor and the plaintiff as the mortgagee. The mortgage was allocated dealing number AC441383. 3 By a statement of claim filed on 4 July 2007 the plaintiff sought an order for possession of the property which was founded on the claim that the defendant had defaulted on her obligation to repay the moneys secured by the mortgage. The defendant filed a statement of defence and a statement of cross-claim, which were amended and filed with leave pursuant to a court order made on 6 November 2008. 4 In the amended defence the defendant admitted that the secured moneys were advanced but pleaded that the secured moneys had been repaid as set out in paragraph 7 of the defence. Shortly stated, the defendant pleaded in that paragraph that the plaintiff should be taken to have exercised an option to acquire five million shares in a New Zealand listed company, Plus SMS Holdings Limited, at a price of $NZ1,750,000, which the defendant was entitled to treat as a set-off against the secured moneys. The defendant in the cross-claim sought a declaration that the secured moneys had been repaid and orders for the discharge of the mortgage and delivery up of the certificate of title. 5 Counsel for the defendant informed the court yesterday during the application to vacate that the amended defence and cross-claim were withdrawn. 6 In an affidavit sworn 16 March 2009 the defendant states at paragraph 9 that she has agreed to pay all moneys claimed by the plaintiff under its mortgage, including those costs and expenses which it alleges it has incurred. She further states that she has arranged finance with the Commonwealth Bank of Australia for an amount of $A2 million through a mortgage broker. A copy of the loan approval appears at pages 73 to 74 of annexure LMA-1 to the affidavit. 7 There is, however, a second mortgage which is registered on the title to the property. The mortgagee is identified as Saree Holdings Limited (Saree Holdings). It seems that the defendant entered into a loan agreement with Saree Holdings on 1 March 2006 and the mortgage on 19 September 2006. This mortgage was allocated dealing number AD131541. It is necessary for the second mortgage to be discharged before the defendant's financing from the Commonwealth Bank can be finalised. 8 It appears there is a dispute between Saree Holdings and the defendant as to whether any moneys are owing under the second mortgage. The defendant points to a copy of a release and discharge of the mortgage (pages 69 to 72 of annexure LMA-1) which she says were executed by John Sorensen, the sole director of Saree Holdings, at the same time as the loan agreement and second mortgage and contends that the purpose of the arrangement was to encumber the property to its full value because of proceedings in the Family Court of Australia. It was never intended, the defendant says, that moneys be advanced by Saree Holdings and none, she claims, were. Mr Sorensen, it seems, has refused to discharge the mortgage and it appears that it is Saree Holdings' position that moneys are owed by the defendant under the loan agreement which the second mortgage secures. 9 The defendant seeks an adjournment to enable redemption proceedings to be instituted to obtain a discharge of the second mortgage so that the loan from the Commonwealth Bank can be finalised with a discharge of the first mortgage. Counsel for the defendant put to me that if I was not mindful to grant the adjournment or to grant it on terms the defendant did not oppose orders being made granting possession of the property to the plaintiff and for leave for the issue of a writ of possession to be granted, the execution of which was to be stayed pending the determination of the proposed redemption proceedings. 10 It was further submitted that the defendant did not oppose an order that she pay the plaintiff's costs of the proceedings and would give an undertaking to prosecute the redemption proceedings diligently. The defendant, I was also informed, did not oppose the release of the sum of $20,000 which had been provided by the plaintiff as security for the defendant's costs as ordered by the registrar on 16 July 2008. On the other hand, counsel for the plaintiff put to me that the plaintiff did not disagree with most of the orders proposed. The principal areas of difference, as I understood them to be, were the length of the proposed stay and a condition of the stay, as suggested by the plaintiff, that the defendant pay any arrears of interest that are owing and such interest as might accrue on a daily basis. The plaintiff, furthermore, sought an indemnity order as to costs. 11 In considering the present application the court must seek to act in accordance with the interests of justice (s 58 of the Civil Procedure Act 2005), and in so doing I have regard to the provisions of ss 56 and 57 of the Civil Procedure Act. 12 I am satisfied that the defendant has recently taken steps to obtain finance from the Commonwealth Bank to repay the moneys owing to the plaintiff. It is evident that the defendant's refinancing is dependent upon the discharge of the second mortgage. The sole observation that is appropriate to make about the proposed proceedings for redemption is that its ultimate resolution, even if prosecuted diligently, is likely to take some time. 13 It is not in the interests of justice to grant the application to vacate without the imposition of terms, as the plaintiff would not have been advanced from its present position and would thereby be prejudiced. 14 As it has been put to me that the defendant does not oppose the making of orders for possession and for the issue of a writ of possession, the defendant's application in reality is not for an adjournment of the proceedings but for a stay of the writ of execution. The defendant has withdrawn her defence and cross-claim and it serves no purpose to adjourn the proceedings when there is no opposition to the orders sought in the statement of claim. The application for adjournment is refused. 15 Considerations of the interests of justice lead me to conclude that the execution of the writ should be stayed to enable the proposed proceedings to be instituted. In my opinion a stay of six months should be granted on terms. The interests of the plaintiff will be protected by the order for possession and the issue of the writ of execution. 16 The purchase price of the property in 2006 was $A3,700,000. Whilst there is no evidence of the current value of the property, the defendant's present indebtedness to the plaintiff is in the principal sum of $NZ1,500,000 together with accrued interest in the sum of $NZ411,162.80. The value of the property, it seems to me, will cover the loan and accrued interest. 17 The plaintiff proposed as a condition of a grant of stay that the defendant be ordered to pay the accrued interest. In the defendant's affidavit filed in Court today the defendant states that she is unable to make any repayments. Whilst there is some uncertainty as to the defendant's financial circumstances, I accept that at the present time she is unable to make repayments of interest. The plaintiff is not prejudiced, as an order will be made for possession. 18 I intend to reserve my decision on the basis of a cost order and consider the submissions made by the parties in oral argument today. 19 Having considered the affidavit of Donald Gibson affirmed 4 June 2008 I find that the plaintiff is entitled to an order for judgment for possession. 20 Accordingly, I make the following orders: 1. There be judgment for the plaintiff as against the defendant for the possession of the whole of the land comprised in folio identifier 31/SP70153, being the property known as Apartment 901, Parbury Apartments, 1 Pottinger Street, Walsh Bay, New South Wales. 2. The plaintiff be given leave to issue a writ of possession. 3. The execution of the writ of possession be stayed for a period of six months from today, namely by 4pm on Friday 18 September 2009. 4. The cross-claim be dismissed. 5. The stay of execution of the writ of execution is conditional upon: (a) the defendant commencing proceedings on or before 27 March 2009 against Saree Holdings Limited seeking orders for the discharge of mortgage dealing number AD131541 (the redemption proceedings); (b) the defendant giving an undertaking to the court that she will prosecute the redemption proceedings diligently and without delay. 6. The sum of $20,000 paid into court by the plaintiff as security for the costs of the defendant in accordance with orders made by the registrar on 16 July 2008 be released, together with accrued interest, forthwith to the plaintiff. 7. Liberty to either party to apply on three days' notice be granted. ********** 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.