Supreme Court New South Wales Medium Neutral Citation: National Australia Bank Ltd v C & O Voukidis Pty Ltd (No. 3) [2014] NSWSC 711 Hearing dates: 22 May 2014 Decision date: 22 May 2014 Jurisdiction: Common Law Before: Campbell J Decision: (1)The application dated 22 May 2014 is refused; (2)Grant liberty to the fourth defendant to re-apply at short notice, should the circumstances I have outlined in my judgment materially change; (3)Such liberty may be exercised by contacting my associate, with prior notice to the solicitors for the plaintiff; (4)The fourth defendant to pay the bank's costs of and incidental to the application of 22 May 2014 on the ordinary basis. Catchwords: REMEDIES – application for a stay of a writ of possession – whether stay should be granted to allow refinancing Cases Cited: GE Personal Finance Pty Limited v Smith [2006] NSWSC 889. Category: Interlocutory applications Parties: National Australia Bank Ltd (Plaintiff) C & O Voukidis Pty Ltd (First Defendant) Olga Voukidis (Fourth Defendant) Representation: Counsel: P Reynolds (Plaintiff) P Afshar (First Defendant) Mr D Ash (Fourth Defendant) Solicitors: Gadens Lawyers (Plaintiff) JBT Lawyers (First Defendant) Carneys Lawyers (Fourth Defendant) File Number(s): 2012/00082867 EX TEMPORE Judgment 1On 3 April 2014, I ordered summary judgment in favour of the plaintiff bank in respect of two properties which, in my reasons for judgment bearing the medium neutral citation [2014] NSWSC 384, I refer to as the Burwood property and the Drummoyne property. There was a third property the subject of the bank's application as mortgagee, referred to as the Vincentia property. I formed the view in respect of that property there was an underlying defence arguable as a real, not fanciful possibility, that there had been an agreement to release the Vincentia property from the security that had been provided to the bank to secure the very extensive indebtedness of Mr and Mrs Voukidis and their related entities. 2I have before me today an application urgently filed on 22 May 2014, seeking a stay of the writ of possession, which I gave leave to be issued in respect of the Drummoyne property, for a period of six weeks. I will not go through all of the complexities of this case and I accept, as Mr Ash submits, there are many. Some idea of the complexity will be garnered by any reader of my reasons previously referred to. 3One of the many complexities, however, is that Mr and Mrs Voukidis, who - on the evidence before me - have now separated, are parties to litigation initially commenced in the Equity Division of this court but cross-vested to the Supreme Court of Victoria. Those proceedings have been brought by a company called Breakfast Pty Limited who allege substantially, as I understand it, against Mr Voukidis that he misappropriated funds due to them and that they are entitled to trace that money into one or all of the properties that have been the subject of this litigation and, for that matter, other properties referred to in freezing orders which were initially made in this court and are still in force as part of the cross-vested proceedings. 4The Drummoyne property the subject of this application, and the Vincentia property are properties the subject of the freezing order. As I understand the terms of the order, it does not affect the entitlement of the bank to exercise its rights in respect of its prior indebtedness. I interpolate that Vickery J has held that the prior indebtedness of the bank includes the variation of the arrangements which occurred in about October 2010 after the freezing orders were made. 5The essential ground of the stay falls into the second category of stay referred to in the practice note applicable to proceedings in the possession list, and discussed by Johnson J in his influential decision in GE Personal Finance Pty Limited v Smith [2006] NSWSC 889. That is to say, essentially the ground of the stay is that the fourth defendant, Mrs Voukidis, ultimately wishes to refinance the Drummoyne property so as to discharge the debt owed to the bank. 6It is more complex than that. The "total proposal" is described in the affidavit of the fourth defendant's solicitor, Mr Titus, sworn on 14 May 2014. The proposal to pay out the bank requires a number of different steps to be taken. First, the Burwood property has to be sold. The first defendant is the registered proprietor of that property. It apparently has a very interested buyer for the property, and it has come to terms with the bank that involve an interim stay of the writ of possession to enable that sale to be consummated and, if necessary, for leave to be obtained from the Victorian Supreme Court for the sale to proceed with the whole of the proceeds going in discharge of the indebtedness to the bank. I am told that I will be asked to make consent orders in respect of that matter later today. 7The next step involves the fourth defendant getting access to a term deposit referred to in my previous judgment, which has a balance of $1,436,118.95. Those funds represent the surplus over and above the indebtedness to the bank produced by a sale of what I referred to as the other Burwood property. Those funds are surplus, and the bank disavows any entitlement to those moneys. 8The Supreme Court of Victoria has held that those surplus funds are caught by the freezing order, and has refused an application made in February last year that they be released to Mr and Mrs Voukidis for the purpose of reducing their indebtedness to the bank. I referred to that matter in my previous decision. An application for leave to appeal from Vickery J's refusal of that relief was itself refused by the Court of Appeal of the Supreme Court of Victoria on 26 April 2013, and the court's decision has been exhibited to the affidavit of Mr Titus. 9I pause to observe that, having read the decision of Vickery J and also of the Court of Appeal, notwithstanding the matters drawn to my attention by Mr Ash, of the Court of Appeal acknowledging the possibility of a further application on other evidence, it seems at the very least questionable whether access can be obtained to those funds over the objection of the plaintiff in the Victorian proceedings. And in accordance with her obligations, Mrs Voukidis - through her counsel, Mr Ash - has tendered, as exhibit A on the application, a letter from those solicitors confirming what one might expect, that the same stern resistance will be remounted if a further application is made. I am told a further application will be made, and in fact the first defendant to these proceedings has filed a summons in the registry of the Supreme Court of Victoria. And Mr Titus says he has instructed counsel in Victoria to file - I will call it- a companion application on the part of his client, in the next seven days. 10The other aspects of the proposal to refinance involve selling the property at Vincentia, which is not the subject of an order for possession. That property is also the subject of the freezing order in Victoria and, to protect its position, the plaintiff in those proceedings has lodged a caveat. Any seriously interested purchaser who makes any inquiry about the Vincentia property will, of course, almost immediately become aware of that caveat and make inquiries about it. However, I have no doubt that the Vincentia property - or, I assume anyway, for present purposes - is an attractive one and is likely to attract interest in the market, but I think I am entitled to take judicial notice of the consideration that holiday properties are not always quick to sell, especially in the current climate where apparently Australian consumers are not as confident as they once were. 11The evidence before me from Mr Titus - and I accept it, of course, in good faith and as providing a reasonable guide to what could be done if the stay were granted - indicates that the realisation of the Burwood property, the Vincentia property and access to the surplus from the other Burwood property would still leave a shortfall on the present indebtedness of the Voukidis interests to the National Australia Bank. It would be necessary to refinance the Drummoyne property. 12I should now record that I accept that the Drummoyne property is the Voukidis family home. Since their separation, Mrs Voukidis is residing there with her four children, one of whom is an HSC candidate this year. Quite properly, it has been drawn to my attention by Mr Ash that, apart from the prospect of refinancing, the stay is also advanced on the ground of the family hardship that must ensue if the family is evicted from their home and the particular hardship that will befall the child who is an HSC candidate, and I bear those matters in mind. 13The difficulty, however, with refinancing Drummoyne is that if it were sold to pay back the indebtedness to the Bank, it may well be exempted from the freezing orders by operation of clause 10 (d) of the freezing orders. However, a new indebtedness created in respect of that property is likely to be caught by the freezing order, and I accept the force of Mr Reynolds submissions for the bank that, given the history of the matter and given exhibit A, it is unlikely that the plaintiff in the Victorian proceedings would acquiesce in a refinance arrangement which will reduce its capacity, if successful in that litigation, to trace what it says is moneys owed to it into that property. 14I must say that it all seems to me to hinge upon whether or not the Victorian Supreme Court in 2014 would do what it was not prepared to do in 2013, and exempt the surplus funds and the Drummoyne property from the legal effect of the freezing order. Speaking for myself, I feel pessimistic about that prospect, but that is not a matter for me but for a judge of the Supreme Court of Victoria. But the prospect of refinancing depends, it seems to me, almost entirely on the outcome of any application made to the Victorian Supreme Court to release the surplus funds, and especially the Drummoyne property, from the effect of the freezing order. 15In Smith Johnson J pointed out at [18] that: It remains open to a defendant to discharge the debt owing to the plaintiff in its entirety before the property is sold and to recover possession of the property. No doubt, it is personally convenient to a defendant to retain possession of the property continuously rather than lose possession, and then regain it upon discharge of the debt to the plaintiff. It is for this reason that a defendant who is seeking to discharge the debt to a plaintiff will seek a stay of execution of the writ of possession to allow this to be done." At paragraph [19]: If a defendant is contending that there is a realistic prospect of obtaining refinance to discharge the debt, it is reasonable to expect that the defendant will take early steps in this regard and be in a position to provide credible and reliable evidence of available refinancing so as to discharge the total debt. It might be expected that a reasonable plaintiff would facilitate such a process and not run up further legal costs in such circumstances. 16I again acknowledge this case is perhaps not the ordinary case, and it is certainly not a simple case involving one property and the prospect of refinancing. There are, as Mr Ash has argued, complexities which take this case well outside the ordinary run of cases in the Possession List. 17It is perhaps simplistic to categorise this case as a simple refinance case, because of those complexities. However, I must confess that to the extent to which his Honour's judgment assists me - and I believe it does - it is difficult for me to find, even at a relatively low level of probability appropriate to this interlocutory application, that there is a realistic prospect of obtaining refinance to discharge the debt when one considers the complexity of the steps necessary to achieve that goal. 18I think there is force in Mr Reynolds' argument that in any event, on the basis of the evidence of Ms Birkett, it is unlikely the Sheriff will act upon any writ of possession before 1 July 2014. And without any further order from me, in that period of time if the optimism of Mrs Voukidis's legal team is well placed, a decision could be obtained from the Victorian Supreme Court in respect of that key piece of the present puzzle about whether the freezing order can be varied to permit Mrs Voukidis to achieve her goal. 19Moreover, if for some reason there is a delay in the determination of any application that were brought forward, then a refusal of this application today would not stand in the way of a further application in good time to avert the execution of the writ on or after 1 July, if that seemed an appropriate and reasonable step for the fourth defendant to take. 20I am also taking into account the fact that interest is running at a sum which exceeds $1,300 per day. It is not surprising to me, having regard to Mrs Voukidis's circumstances as deposed to in the evidence before me, that she is not in a position to offer to pay a sum of that magnitude on a regular basis as a condition of any stay. However that may be, and however understandable it is at a personal level, that is a factor which I bear in mind in terms of the prejudice to the bank if there is further undue delay. 21I have also taken into account the fact that my judgment was delayed for far too long between February 2013 and 3 April 2014, and nothing was done during that period of time to attempt to bring to fruition the type of rescue passage which is now outlined in Mr Titus's affidavit. Indeed, on the evidence before me, overtures were first made to float this package on 2 April 2014, that is to say, the day before my judgment was due to be handed down. 22That delay on the part of the fourth defendant might well be understandable as well, but had there been some real prospect of achieving what is now proposed, that period of 13 months during which my decision was reserved, could have been utilised to achieve this purpose. In any event, I do not seek to visit my delay upon the fourth defendant but that is an objective fact which cannot, I think, be overlooked. 23In all the circumstances, I think it proper for me to refuse the application for a stay today. As I have made clear, if real progress is made in achieving the goal which would permit Mrs Voukidis to preserve her family home and to pay out the bank, then I will certainly grant liberty to apply on short notice to make a further application in this matter. 24My orders are: (1)The application dated 22 May 2014 is refused; (2)Grant liberty to the fourth defendant to re-apply at short notice, should the circumstances I have outlined in my judgment materially change; (3)Such liberty may be exercised by contacting my associate, with prior notice to the solicitors for the plaintiff; (4)The fourth defendant to pay the bank's costs of and incidental to the application of 22 May 2014 on the ordinary basis. I shall fix the matter for directions in the Possessions List on a date to be arranged with the Associate to the Honourable Davies J. ********** 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 June 2014