Supreme Court New South Wales Medium Neutral Citation: Application of National Australia Bank [2015] NSWSC 769 Hearing dates: 12 June 2015 Date of orders: 12 June 2015 Decision date: 12 June 2015 Jurisdiction: Equity Division - Duty List Before: Kunc J Decision: Funds to be paid out to Integrated Growth Solutions Pty Ltd Catchwords: PRACTICE – Claimants to surplus funds paid into Court by first mortgagee – No issue of principle Cases Cited: Integrated Growth Solutions Pty Limited v Campbell [2015] NSWSC 517 Integrated Growth Solutions Pty Limited v Campbell (No 2) [2015] NSWSC 765 Category: Principal judgment Parties: Integrated Growth Solutions Pty Limited (First Applicant) Saada Nassif (Second Applicant) Representation: Counsel: C. Robinson (First Applicant) Saada Nassif (in person) Solicitors: A & J Montgomery Legal (First Applicant) File Number(s): 2015/37605 Publication restriction: No EX TEMPORE Judgment 1. On 6 February 2015 National Australia Bank Limited ("NAB") paid $428,917.90 into Court. That sum represented the surplus proceeds of sale of a property in Bass Hill following the exercise by NAB of its power of sale as first registered mortgagee of that property (the "Property"). 2. The registered proprietor of the Property was Ms Latesha Campbell. 3. The second unregistered mortgagee over the Bass Hill property was Integrated Growth Solutions Pty Limited ("IGS"). IGS sued Ms Campbell in relation to funds said to have been secured by that second unregistered mortgage. Those proceedings were determined by Stevenson J on 29 April 2015 in favour of IGS (Integrated Growth Solutions Pty Limited v Campbell [2015] NSWSC 517). Today I heard an application by Ms Campbell to have Stevenson J's orders set aside on the basis that they were made in her absence. I rejected that application (Integrated Growth Solutions Pty Limited v Campbell (No 2) [2015] NSWSC 765. 4. As part of the orders which Stevenson J made against Ms Campbell, his Honour made the following declarations: (1) A declaration that [IGS] had an estate or interest in the Property pursuant to the charging clause within the loan agreement and mortgage document entered into by the defendant on 6 June 2012; (2) A declaration that [IGS] has an interest in the funds paid into Court in proceedings 2015/37605 being the residue of the proceeds of sale of the Property by the first mortgagee. 1. This judgment concerns the question of who is entitled to the funds that were paid into Court by NAB. 2. There are two potential claimants. The first is IGS. The second is Mrs Saada Nassif. In accordance with the Rules, each of IGS and Mrs Nassif has filed a notice of motion supported by evidence to make out their respective claims. 3. IGS's notice of motion was filed on 5 May 2015 and seeks an order that "the funds paid into Court in these proceedings together with interest accrued thereon, be paid out of Court to [IGS]". IGS's motion was supported by an affidavit of Joselyn Priya Kishore sworn 3 June 2013 and a direction from IGS that those funds be paid to IGS' solicitors. 4. Mrs Nassif's notice of motion was filed on 9 June 2015 and seeks orders to the effect that Mrs Nassif has an interest in the funds that had been paid into Court and that she be paid $66,000 from those funds. Her motion was supported by an affidavit sworn by her on 1 June 2015. 5. The only other possibly interested party in relation to the funds paid into Court is Ms Campbell. The evidence demonstrates that she is on notice of today's application. I proceeded to hear these motions after I had delivered my ex tempore judgment in relation to Ms Campbell's application (see paragraph [3] above). Ms Campbell and her husband left the precincts of the Court at the conclusion of my ex tempore judgment, notwithstanding that I had made clear to all parties that if I ruled against Ms Campbell's application, I would then proceed to deal with the motions concerning the funds paid into Court. 6. In his reasons of 29 April 2015 Stevenson J set out, and I respectfully adopt, the applicable principles in relation to demonstrating an entitlement to funds paid into Court: 22. The plaintiff seeks an order pursuant to Uniform Civil Procedure Rules r 55.11 that the funds paid into Court be paid out to it, to the extent necessary to satisfy its debt. The authorities show that, in those circumstances, the plaintiff must show three matters, summarised by Slattery J in Commonwealth Bank of Australia v The Estate of the Late Mahmoud Slieman [2010] NSWSC 661 at [8] to [10]: (1) it is the party primarily entitled to the fund and the basis for that entitlement; (2) it has a beneficial interest in the very funds paid into Court; and (3) all other interested parties are on notice of the application. 1. Insofar as IGS is concerned the first and second matters required to be demonstrated, as referred to in the preceding extract from Stevenson J's judgment, are satisfied by reference to the declarations made by his Honour (see paragraph [4] above). His Honour entered judgment in favour of IGS against Ms Campbell in the sum of $653,523. In the absence of any other claimant it follows that IGS is entitled to payment the entire sum held in Court. However, it is necessary to consider Mrs Nassif's claim for $66,000. 2. For Mrs Nassif to succeed in relation to her claim to $66,000 of the funds held in Court it is necessary for her to demonstrate that whatever arrangement she had with Ms Campbell gave her (Mrs Nassif) an interest in the Property and that her interest came into existence before the interest of IGS. Mr Robinson of Counsel, who appeared for IGS, fairly conceded that it was clear from the caveat that had been registered against the Property on behalf of Mrs Nassif asserting her interest (albeit without specifying the amount) that if she had an interest, it was prior to IGS's interest in the Property. 3. Unfortunately for her, Mrs Nassif has been unable to demonstrate that her arrangement with Ms Campbell gave Mrs Nassif an interest in the Property. Mrs Nassif's evidence, set out in her affidavit of 1 June 2015, included: 10. In or about 2008 George [Ms Nassif's son, then in a relationship with Ms Campbell] and Latesha could not meet their mortgage repayment and fell behind. At the time Latesha had no income and George was on Centrelink payments. 11. From 2008-2012 I was making all the repayments on the mortgage and agreed to get my money back when their finances are better or when they sell the house. 1. Mrs Nassif's affidavit includes copies of a deposit book in relation to Ms Campbell's mortgage to NAB over the Property. Mrs Nassif's affidavit does not strictly demonstrate that she in fact made all the payments evidenced by the stamped deposit book. However, for the purposes of these proceedings, I will assume in her favour that she did in fact make all those payments out of her own funds. 2. I gave Mrs Nassif, who appeared with the assistance of her daughter, the opportunity to expand upon the evidence in her affidavit as to the circumstances in which she agreed to assist Ms Campbell with the mortgage repayments. Through her daughter Mrs Nassif informed me that the agreement with Ms Campbell was oral and that it was to the effect that Mrs Nassif would make the mortgage repayments in return for a promise by Ms Campbell to repay Mrs Nassif when she (Ms Campbell) (and possibly George) were in funds to do so or when she sold the Property. The evidence went no further. 3. It is clear that the material which Mrs Nassif has put before the Court today does not demonstrate that she had an interest in the Property. At its highest she has a cause of action against Ms Campbell (which may be statute-barred) for repayment of the mortgage payments that Mrs Nassif made on Ms Campbell's behalf. That is an action in debt. The evidence does not permit a conclusion that the arrangement went any further so as to give Mrs Nassif an interest in the Property. 4. Mrs Nassif has therefore failed to demonstrate that she has any interest in the funds which have been paid into Court. 5. The Court's orders are: 1. The notice of motion filed on 9 June 2015 by Mrs Saada Nassif is dismissed. 2. The funds paid into Court in these proceedings by National Australian Bank Limited together with interest accrued thereon be paid out of Court to the solicitors for Integrated Growth Solutions Pty Limited, being A & J Montgomery Legal. ********** 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: 16 June 2015