New South Wales Supreme Court CITATION : Commonwealth Bank of Australia v The Estate of the Late Mahmoud Slieman [2010] NSWSC 661 This decision has been amended. Please see the end of the judgment for a list of the amendments. HEARING DATE(S) : 9/3/10, 12/3/10, 4/6/10, 11/6/10 JUDGMENT DATE : 22 June 2010 JURISDICTION : Equity JUDGMENT OF : Slattery J at 1 DECISION : 1.The sum of $130,699.93 paid into Court by the Commonwealth Bank of Australia in proceeding 2007/00255855 together with interest accrued thereon be paid out to Jody Swift as the administrator of the estate of the late Mahmoud Slieman. 2. No order as to costs. CATCHWORDS : PROCEDURE - miscellaneous procedural matters - funds paid into Court under Trustee Act Part 4 - application for payment out of court - matters to be established - Held: matters required are established - order for payment made out . Real Property Act 1900 (NSW) s 58(3) LEGISLATION CITED : Trustee Act 1925 (NSW), Part IV,ss 95, 98 Uniform Civil Procedure Rules 2005 rr 55.8, 55.9, 55.10, 55.11 CATEGORY : Principal judgment CASES CITED : Bank of NSW v Adams [1982] 2 NSWLR 659 PARTIES : Plaintiff- Commonwealth Bank of Australia Applicant- Jody Swift FILE NUMBER(S) : SC 2010/48858 SOLICITORS : Applicant- Ms Tania Ferizis IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION DUTY LIST SLATTERY J TUESDAY, 22 JUNE 2010 2010/48858 RE COMMONWEALTH BANK OF AUSTRALIA v THE ESTATE OF THE LATE MAHMOUD SLIEMAN JUDGMENT 1 HIS HONOUR: The Commonwealth Bank of Australia Limited, the plaintiff in these proceedings was the mortgagee of a property in Robert Street, Greystanes and another property in Robertson Street, Guildford West. The mortgagor of these properties was Mahmoud Slieman. The bank's mortgages secured financial accommodation that it provided provided to Mr Slieman as borrower. Mr Slieman defaulted on his obligations under the mortgages. The bank exercised its power of sale under the mortgage of the Greystanes property in January 2006 and the Guildford West property in December 2005. 2 The bank completed the sale of the two properties and paid the net settlement proceeds of $130,698.93 into Court pursuant to Part IV Trustee Act 1925 (NSW) in June 2007. The payment was made pursuant to the liberty provided under s 95 Trustee Act to trustees to make such payments into Court. Mr Slieman is missing and presumed dead. Ms Jody Swift now seeks payment of the funds in Court out to her in her capacity as administrator of his estate. 3 This Court has a policy of reducing the risk of identity theft through its published judgements. For that reason neither the address of the Greystanes property nor the address of the Guildford West property are published in full in this judgement. If the precise addresses of the two properties are required then application can be made for access to the Court's file. 4 Mr Sliemann disappeared on 2 February 2003 in mysterious circumstances. He was last seen alive just after getting into a white motor vehicle at about 7:30 that morning. In June 2007 the New South Wales Deputy Coroner conducted an inquest into his disappearance and presumed death. On 5 June 2007 the Deputy Coroner made formal findings that, "Mr Mahmoud Slieman died on about 2 February 2003. Having regard to the further material contained within the evidence before me, the evidence before me does not enable me to make any findings as to the manner and cause of his death. The evidence before me does raise suspicions or suggestions that perhaps Mr Slieman's death was the result of intentional acts by persons or persons unknown." The Coroner recommended that a reward be offered for information, which could lead to the apprehension of the person or persons responsible for the death of Mr Slieman. 5 Ms Jody Swift was the de facto partner of Mr Slieman at the time of his death. She commenced proceedings in January 2008 for a grant of letters of administration of the estate of Mr Slieman on the basis of his presumed death: Probate proceedings 100407/2008 Supreme Court, Equity Division. The file in these probate proceedings has been treated as before me on the present application. In the probate proceedings Ms Jody Swift adduced evidence as to the circumstances of Mr Slieman's disappearance and presumed death. On 9 December 2009 orders were made in the probate proceedings accordance with her summons for presumption of death with leave granted to distribute the estate. Ms Swift became the administrator of Mr Slieman's estate upon his being found presumed dead as at the date of commencement of the probate proceedings, namely on 14 January 2008. As the administrator of Mr Slieman's estate Ms Swift now seeks distribution of the funds that the Commonwealth Bank paid into Court. 6 Once moneys are paid into court under Part 4 and specifically s 98 of the Trustee Act, those moneys become subject to the Uniform Civil Procedure Rules 2005 (UCPR) of the Court. The applicable provisions of the rules of the Court are rr 55.8, 55.9, 55.10, and 55.11. Most relevantly, r 55.11 provides that: "55.11 Proceedings for directions as to payment out of court (1) Funds that have been paid into court may only be paid out of court pursuant to the directions of the Supreme Court. (2) An application for such directions is to be made by filing a notice of motion in the proceedings in which the funds were paid into court." 7 Ms Ferizis, who appears on behalf of Ms Swift, advanced the present application for payment of the funds out of Court pursuant to UCPR r 55.11(2). 8 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. 9 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. 10 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. 11 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. 12 In the present case each of those three matters is now established. As a result of enquiries from the Court Ms Ferizis supplemented the initial evidence on the application. At the time that that this matter was first heard in the Equity Duty list, the Court's file was incomplete and did not show upon what evidence the bank had decided to pay the funds into Court. It proved difficult to obtain supplementary evidence from the bank. I granted leave for a subpoena to be issued to the bank for its file. That file and supplementary papers later located by the Court showed that the bank supported its payment into Court by an affidavit of Jackie Koshaba, a bank officer, sworn on 29 June 2007. 13 The evidence filed clearly establishes that Mr Slieman was the registered proprietor of each of the Greystanes property and the Guildford West property. The title searches of the two properties show this. The evidence also establishes that both properties were sold and after deducting the costs and expenses of sale there was a surplus available for distribution under Real Property Act 1900 (NSW) s 58(3) of $130,698.93. This was the sum the bank paid into Court. The bank paid the money into Court after undertaking its own enquiries to ascertain whether Mr Slieman could be found. Those enquiries proved as fruitless as the police enquiries that had led to this Court's finding that Mr Slieman was presumed dead. 14 The second schedule to the title for each of the properties shows only reservations and conditions in the Crown Grant and a mortgage to the Commonwealth Bank Of Australia. There are no caveats or other encumbrances shown. Ms Ferizis has deposed that she has not been notified nor is she aware of any party claiming an interest in the subject properties or the surplus funds in Court. This is sufficient to establish that there are no competing claimants on the fund in Court. 15 The mortgagor/registered proprietor is the person primarily entitled to any surplus proceeds of sale after the exercise by the Commonwealth Bank of its power of sale over these two properties. The mortgagee holds surplus proceeds of sale, after satisfaction of the first mortgage liability, on trust for the registered proprietor but subject to any other secured interests: Real Property Act s 58(3) and Bank of NSW v Adams [1982] 2 NSWLR 659 at 663-665. 16 In the present case the evidence, which establishes Mr Slieman's entitlement as registered proprietor also, establishes that his estate is entitled to a beneficial interest in those funds. Ms Swift has demonstrated that there are no other known claimants upon the funds in Court and that there are unlikely to be any other claimants. As the administrator of the estate Ms Swift is now the person primarily entitled to stand in Mr Slieman's place to claim these funds in Court and to have them paid to her. Her entitlement extends not just to the principal sum in Court but to any interest accrued thereon. 17 Discussion took place at the hearing as to the form of orders for payment out to Ms Swift. The possibility was raised that specific orders be made directing payment out to individuals nominated by Ms Swift. As Ms Swift applies in her capacity as the administrator of the estate of Mr Slieman, it is sufficient that the orders provide for payment out to her in that capacity. She can then satisfy the various outstanding obligations as administrator of the estate from that fund, once it is received, as she is advised. In the circumstances the Court will make the orders she seeks on her application. Conclusion and Orders 18 In the result therefore I have found that in her capacity as administrator of the estate of Mr Mahmoud Slieman that Ms Jody Swift is entitled to the funds in Court; that there are no other competing claimants to those funds; and, that there is no other obstacle preventing their payment out of Court to Ms Swift. 19 Accordingly I will order as follows: 1. That the sum of $130,699.93 paid into Court by the Commonwealth Bank of Australia in proceeding 2007/00255855 together with interest accrued thereon be paid out to Jody Swift as the administrator of the estate of the late Mahmoud Slieman. 20 It is not appropriate on an application such as the present to make any order as to costs. The practical result will be therefore that Ms Swift will bear the legal costs out of the fund that will be paid out to her pursuant to these orders. ********** 24/06/2010 - reference to proceeding no. - Paragraph(s) 19 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.