In the matter of Concrete Injector Bolts Pty Ltd [2012] NSWSC 820

Supreme Court New South Wales

Medium Neutral Citation: In the matter of Concrete Injector Bolts Pty Ltd [2012] NSWSC 820 Hearing dates: 19 July 2012 Decision date: 19 July 2012 Jurisdiction: Equity Division Before: Slattery J Decision: Funds in Court paid out to the plaintiff. Catchwords: PROCEDURE - Trustee Act 1925, Part 4 - Uniform Civil Procedure Rules, r 55.11 - former registered proprietor claims surplus offer mortgage sale - claim for funds to be paid out of Court - whether claimant has satisfied elements to be established. Legislation Cited: Trustee Act 1925, Part 4 Uniform Civil Procedure Rules 2005, r 55.11 Cases Cited: Bank of New South Wales v Adams [1982] 2 NSWLR 659 Re La Trobe Capital & Mortgage Corp Ltd [2009] NSWSC 1118 Category: Principal judgment Parties: Plaintiff: - Concrete Injector Bolts Pty Ltd Representation: Counsel:

Plaintiff: - D. Neggo Solicitors:

Plaintiff: - Atanaan Ilango, Stacks the Law Firm File Number(s): 2012/157260 Publication restriction: No

EX TEMPORE Judgment 1Mr Hayrani Tabak was killed on 10 February 2004 in an industrial accident. He left no will. His wife Mrs Sevgi Tabak was granted letters of administration of his estate on 26 March 2007. 2Prior to his death, the late Mr Tabak was the sole shareholder and a director of a company Concrete Injector Bolts Pty Limited. The company manufactured bolts used on building sites to insert waterproofing chemicals into concrete walls. Unfortunately, as a result of Mr Tabak's death, the company was not able to meet its mortgage obligations on certain real property that it owned. 3At the time of Mr Tabak's death the company owned a property in Mount Ousley Road, Mount Ousley ("the Mount Ousley property") over which it had granted a mortgage to the National Australia Bank ("NAB"). That mortgage went into default in November 2007, a little over three years after Mr Tabak's death. That same month, the NAB sold the property by auction. On the mortgagee sale the NAB received $428,493.32 net proceeds. From that the NAB satisfied its mortgage, leaving a surplus of $157,119.12. The NAB exercised its entitlement under Trustee Act, Part 4 to pay that sum into court, pending resolution of any contests that were to take place among the competing claimants for that sum. 4The plaintiff company now brings this claim for the payment of that sum out of court, together with accrued interest. In the four years since the money was paid into court, I am told by counsel for the plaintiff that interest in excess of $30,000 has accrued, so the sum paid out is approximately $190,000, if the plaintiff is successful. 5The principles that apply on applications such as this are well established. The application is brought pursuant to Uniform Civil Procedure Rules 2005, r 55.11. In Re La Trobe Capital & Mortgage Corp Ltd [2009] NSWSC 1118, I identified the three elements usually necessary to be proved in a case such as this. 6First, the registered proprietor must be properly identified. That has clearly been done in this case through the Certificate of Title of the Mount Ousley property. The company, Concrete Injector Bolts Pty Limited, the former registered proprietor was deregistered and has been reregistered in order to make this application. 7Secondly, it is necessary for an applicant to prove that the claimant is not merely an unsecured creditor in respect of the fund but has a proprietary interest in it. It is well established that surplus funds arising after sale by a mortgagee are held on trust by the mortgagee for the registered proprietor: Bank of New South Wales v Adams [1982] 2 NSWLR 659. There is no issue here that the plaintiff has such a proprietary entitlement to the funds in court. 8Thirdly, it is necessary for an applicant to prove who are the other potential claimants against the fund in court and to prove that those persons have been notified of the claim. It is necessary to have evidence: as to what has happened to those claims; whether they have been settled; whether they have been withdrawn; or whether they are going to be contested. 9The usual starting point for this last task is to look at the certificate of title to see if any caveats were lodged against it at the time of the relevant mortgagee sale. Here there were two caveats lodged, one by Peter Terry Nominees Pty Limited and another by Bulent Tabak, a relative of the deceased. By means I will shortly explain, the plaintiff has demonstrated to the court's satisfaction that both these claims have been withdrawn or settled. 10The claim by Peter Terry Nominees Pty Limited has been withdrawn. Solicitors acting for Peter Terry Nominees Pty Limited indicated to the solicitors for the plaintiff in August 2011 that Peter Terry Nominees' caveat had been withdrawn on completion of the sale and "our client has no interest in any of the net sale proceeds". That is sufficient to prove withdrawal of that claim. 11Bulent Tabak's claim has been settled. The plaintiff through its counsel Mr Neggo today has tendered a letter of the law firm Heard McEwan Legal of 18 July 2012 (Exhibit A). I am satisfied this law firm acts for Mr Bulent Tabak. The firm's letter states: "We confirm that our client has now agreed to abandon his equitable interest in the property located at [the Mount Ousley property] and his claim to a portion of the $157,119.12 (plus interest) held in the Supreme Court which is subject to the plaintiff's application, listed for hearing before his Honour Justice Slattery on 19 July 2012. We confirm that the parties have now agreed to settle their dispute giving rise to our client's equitable interest in the property thereby resolving our client's claim. Accordingly, our client consents to the orders sought in the plaintiff's summons dated 15 May 2012." 12This is sufficient evidence in my view of the compromise of Mr Bulent Tabak's claim. 13It is often desirable to have some evidence that the plaintiff does not believe there are any other claimants to the fund in Court. Although there is no evidence here to the effect that the plaintiff was unaware of any other claimants to the fund, such a conclusion may be indirectly inferred. The plaintiff has given some evidence about the unsecured creditors of the company. They include the Australian Taxation Office ("ATO") and the Australian Securities and Investments Commission ("ASIC"), in both cases for quite small amounts of money. Nevertheless, the evidence shows that the claim by the Australian Taxation Office is uncertain and may perhaps be larger. Neither the ASIC or the ATO have been notified of this application. In case either of them seeks to assert a proprietary interest in any of the funds in court, I will direct that they be notified of this application before the funds are released. 14I am prepared to make the orders sought. But I will stay those orders for 28 days pending notice being given to the ATO and to ASIC of this application. Notice can be given through the provision of these reasons for judgment to the proper officer at each of ASIC and the ATO. 15Accordingly, I make the following orders and directions:- 1.Order that the funds of $157,000, $119.12 paid into court in proceedings brought by the National Australia Bank 2008/277459 plus interest be paid out to the solicitors for the plaintiff, Stacks the Law Firm 2.I direct the solicitors for the plaintiff to notify the proper officers of the Australian Taxation Office (ATO) and the Australian Securities & Investments Commission (ASIC) of these reasons and of these orders by 5pm on Monday, 23 July 2012 and to file evidence of such notification to my Associate by Friday, 27 July 2012. 3.I stay the making of Order 1 for 28 days until 16 August 2012. 4.The matter to be dealt with in chambers on 16 August 2012 on the basis that if evidence of compliance with these orders has been filed and no notification is received from the ATO or ASIC, the Court will lift the stay in chambers that day and notify the plaintiff of that result. 5.Grant liberty to apply.