Court of Appeal Supreme Court New South Wales Medium Neutral Citation: McMahon v Permanent Custodians Ltd [2013] NSWCA 201 Hearing dates: 28 June 2013 Decision date: 28 June 2013 Before: Basten JA Decision: (1) Permanent Custodians Ltd by itself, its servants and agents, be restrained from auctioning, selling, alienating, leasing or otherwise disposing of the property known as "Wyrallah" 498 Coraki Road, South Gundurimba via Lismore NSW 2480 until 5pm on Tuesday 2 July 2013; (2) Permanent Custodians Ltd by itself, its servants and agents, be restrained from auctioning, selling, alienating, leasing or otherwise disposing of the property known as "Summerdowns" Reynolds Road, Casino 2471 until 5pm on Tuesday 2 July 2013; (3) Direct that these orders be taken out as soon as convenient and served upon Permanent Custodians Ltd and that in any event a form of order be served by email this evening; (4) Reserve liberty to the parties to apply at any time, (5) Direct that the matter be listed before me at a time to be fixed with my associate on Tuesday 2 July, at which time, convenient to the legal representatives of both parties, I will consider the motion further. [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] Catchwords: PROCEDURE - interlocutory issues - injunctions - ex parte - whether applicants should receive interim injunctive relief to prevent respondent from disposing of properties owned by applicants - where applicants defaulted on loans in respect of properties - defaults subject to Farm Debt Mediation Act 1994 (NSW) - primary judge found that valid certificate issued allowing respondent to proceed with enforcement action - applicants filed summons seeking leave to challenge decision Legislation Cited: Farm Debt Mediation Act 1994 (NSW), ss 10, 11 Category: Procedural and other rulings Parties: John Terence Michael McMahon (First Applicant) Robyn Sandra McMahon (Second Applicant) Permanent Custodians Limited (Respondent) Representation: Counsel: G Boskovitz (Solicitor) - Applicants Solicitors: Boskovitz & Associates - Applicants File Number(s): CA 2013/197359 Decision under appeal Jurisdiction: 9111 Citation: Permanent Custodians Ltd v McMahon [2013] NSWSC 769 Date of Decision: 2013-06-28 00:00:00 Before: Davies J File Number(s): SC 2011/400305 Judgment 1BASTEN JA: The matter comes before me ex parte on Friday afternoon in circumstances where the applicants seek interim injunctive relief to prevent the respondent from disposing of two properties owned by one or both of the applicants. The proceedings have a lengthy history which I do not propose to recount. Some of that history is set out in a judgment of Davies J in the Common Law Division, handed down this morning: Permanent Custodians Ltd v McMahon [2013] NSWSC 769. 2Briefly, the two properties the subject of the present application are two of a number of properties which were provided as security for financial accommodation provided by Permanent Custodians Ltd (the respondent) in 2009 and 2010. The applicants defaulted under the loan agreements and mortgages. The defaults were subject to the Farm Debt Mediation Act 1994 (NSW). A notice was given under that Act by the respondent (under s 8) to the applicants as owners of the properties, in response to which they requested mediation in accordance with s 9. On 14 June 2011, the parties attended a mediation and heads of agreement were entered into. One of the heads of agreement (cl 2) provided that the applicants would have until 15 August 2011 to take certain steps either to refinance the loans or to dispose of the properties. As Davies J noted, it was common ground that they had not been able to comply with cl 2 of the heads of agreement by 15 August. 3In accordance with s 11 of the Act, the New South Wales Rural Assistance Authority, constituted by the Rural Assistance Act 1989 (NSW), must give a certificate stating that "the Act does not apply" to a particular farm mortgage if "the farmer is in default under the farm mortgage" and a "satisfactory mediation has taken place", or in effect, the parties had an adequate opportunity to mediate. A certificate must be "in force under section 11" to allow the creditor to proceed to take enforcement action: s 10. In this case a certificate was issued on 11 August 2011, prior to the end of the period of indulgence within which the applicants were entitled to take steps to refinance or dispose of properties. 4In one sense both conditions for issue of a certificate were satisfied once the mediation took place, because the applicants had remained in default under the mortgage, although subject to the indulgence granted by the heads of agreement. It is less clear whether s 11 is intended to operate in circumstances where the liabilities under the farm mortgage have been effectively suspended to allow further time to the mortgagor to deal with the financial situation. 5The applicants argued that they were not relevantly in "default" once the heads of agreement, which had resulted from the mediation, were taken into account, as at the date that the certificate was issued. If that be correct, then the applicants say that the certificate was ineffective or void, and accordingly the respondent has not been released from the constraints imposed by the Farm Debt Mediation Act. That argument was rejected by Davies J on the basis that the applicants were at all stages in default under the farm mortgage. The fact that it was not open to the respondent to take enforcement action prior to 15 August was said to be a separate issue which did not affect the validity of the certificate. The primary judge found the certificate to be valid and effective so as to permit the respondent to proceed with enforcement action after, but only after, 15 August if the applicants had not by then complied with the heads of agreement. It was common ground that they did not comply, therefore enforcement action is now available to the respondent. That would appear to require that the certificate not be "in force" until 15 August, but that it was contingently capable of becoming "in force" on that date. How that happened was not discussed. (I have not seen the certificate.) 6The applicants seek to challenge that decision and they have filed a summons seeking leave to appeal in this Court. They say that the properties in question have been on the market for some time, in the sense that they have been with an agent and that there are notices for sale available and, to their understanding, as I am informed by their solicitor, there are parties interested in purchasing the properties. The properties are rural properties and are presumably of significant value, certainly the debt was in a significant amount, although I am not aware how much is currently outstanding. 7I have so far indicated the circumstances as Mr Boskovitz has explained them to me from the bar table and as I have been able to glean them from the judgment the subject of the proposed appeal. Given the urgency of the matter I am happy to act on the basis of his recounting of his instructions. He also informs me that attempts have been made to obtain the presence of the respondent in Court this afternoon, both by email and telephone at approximately 2.30 this afternoon, and afterwards at the suggestion of the Registrar, at about 4.30, in an attempt to obtain undertakings which would allow the matter to be dealt with in a less urgent manner next week. Those attempts to contact a responsible person at the solicitors for the respondent having been unsuccessful, the matter must proceed ex parte this afternoon. 8Mr Boskovitz also indicates that he has instructions to give an undertaking as to damages as a condition of an interlocutory injunction, and I accept that undertaking. 9The potential disadvantage which might flow from the respondent not being in a position to proceed with any disposal of rural properties over the weekend is limited, in circumstances where I would only allow the injunction to operate until an opportunity has been granted to allow the respondent to attend in Court. I propose to therefore grant an injunction until 5pm on Tuesday 2 July 2013 in the terms proposed in the notice of motion which has been filed by the applicants. 10Upon the applicants, by their solicitor, giving the usual undertaking, I make the following orders: (1) Permanent Custodians Ltd by itself, its servants and agents, be restrained from auctioning, selling, alienating, leasing or otherwise disposing of the property known as "Wyrallah" 498 Coraki Road, South Gundurimba via Lismore NSW 2480 until 5pm on Tuesday 2 July 2013; (2) Permanent Custodians Ltd by itself, its servants and agents, be restrained from auctioning, selling, alienating, leasing or otherwise disposing of the property known as "Summerdowns" Reynolds Road, Casino 2471 until 5pm on Tuesday 2 July 2013; (3) Direct that these orders be taken out as soon as convenient and served upon Permanent Custodians Ltd and that in any event a form of order be served by email this evening; (4) Reserve liberty to the parties to apply at any time, (5)Direct that the matter be listed before me at a time to be fixed with my associate on Tuesday 2 July, at which time, convenient to the legal representatives of both parties, I will consider the motion further. ********** 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: 02 July 2013