Commonwealth Bank of Australia v Green [2015] NSWSC 1488

Supreme Court New South Wales

Medium Neutral Citation: Commonwealth Bank of Australia v Green [2015] NSWSC 1488 Hearing dates: 9 October 2015 Date of orders: 09 October 2015 Decision date: 09 October 2015 Jurisdiction: Common Law Before: Davies J Decision: 1. Stay application refused. 2. Notice of Motion dismissed. Catchwords: REAL PROPERTY – possession of land – judgment for possession – execution of writ of possession scheduled – late application for stay – contract for sale by mortgagors in April 2015 – failure to complete by purchasers over six month period – prior applications for stay – failure by mortgagors to be frank with court on previous applications about reasons for delay in settlement – absence of evidence from purchasers or their incoming mortgagee concerning readiness for settlement – stay refused Cases Cited: GE Personal Finance v Smith [2006] NSWSC 889 Category: Procedural and other rulings Parties: Commonwealth Bank of Australia (Plaintiff) Brian Green (First Defendant) Helen Jean Green (Second Defendant) Representation: Counsel: R Lewin (Plaintiff) M Churchill (Defendants) M Tovey (Interested Party)

Solicitors: Gadens Lawyers (Plaintiff) Churchill Lawyers (Defendants) Summer Lawyers (Interested Party) File Number(s): 2015/49483

Judgment 1. This is a further application for the stay of a writ of execution which is due to be executed on Monday 12 October 2015. The application was made at about 4.30 this afternoon, Friday 9 October. A more detailed history of the circumstances that give rise to the present application is to be found in the judgment of Bellew J of 16 September 2015. An earlier application for a stay had been made to Bellew J on 9 September and a short stay was granted by him on that day to allow for further evidence that a proposed settlement of the sale of the property by the mortgagors was imminent. The mortgagors had entered into a contract to sell the property in April 2015 as the judgment makes clear. 2. It is not necessary for me to detail the history that Bellew J has set out. It is sufficient only to mention a few matters. 3. The first is that on 25 June 2015 the mortgagors' solicitor, a Mr Churchill, sent an email to the Bank's solicitor, Mr Lewin, which discussed certain matters in relation to the sale. He pointed out some medical difficulties that the mortgagors had had. He went on to say that he had known the mortgagors' family for over 25 years and he also knew the purchaser. He said: "I am assured by the purchaser personally that settlement will proceed." At that time settlement was scheduled for 10 July when a notice to complete was due to expire. 4. The settlement did not proceed. 5. On 7 August 2015 Mr Green wrote to Mr Lewin at Gadens in which he said this: I have been advised today by our solicitor that the purchaser's Bank NAB will be in a position to provide approval evidence to our solicitor Mr Churchill upon authorisation. I envisage that this will happen either today or by Monday. In this regard the proposed settlement is still on track to finalise. The difficulties that the purchasers had in finalising the finance have been overcome now we are told by their Bank. 1. The settlement that was referred to in that letter was a further scheduled settlement for 24 August. 2. On 10 August a solicitor acting for the purchaser, a Mr Vatche Janoyan, sent an email to Mr Green copied to Mr Churchill in which he said: This email is to confirm that we are in receipt of our client's approval for a loan for the above property in the sum of $2,500,000. The approval letter is signed by the executive general manager for the National Australia Bank and dated this date. We are advised we would be in a position to be able to settle this matter by Monday 24 August 2015. 1. That led Gadens to write to the mortgagors' solicitors on 10 August 2015 and to say amongst other things that as a gesture of goodwill their client was prepared to withhold from proceeding with its current enforcement action, which was scheduled to be executed on 11 August, on certain conditions. One at least of those conditions was a written confirmation that settlement of the sale was proceeding on 24 August. 2. A letter was then received by Gadens from the mortgagors' solicitors in response saying that their clients were willing to consent to the scheduling of a further eviction date on a date first available after 24 August, that is the date on which settlement was supposed to take place. 3. On 21 August Mr Janoyan wrote to Mr Green saying this: In accordance with our telephone discussions late yesterday we advise that due to a delay issue remaining with our clients' Bank we will be unable to direct cheques for settlement as requested for settlement Monday 24 August 2015. We expect our clients' issue to resolve with the Bank during this upcoming week, at which time we are advised the Bank will be in a position to settle this purchase. We understand the pressures being experienced by your clients to finalise this settlement and we are confident the settlement will proceed well before the extended eviction date of 3 September 2015. 1. The settlement did not of course proceed and that led to the application to the Deputy Registrar on 2 September. 2. On 1 September Mr Janoyan wrote to the mortgagors' solicitors saying inter alia: This letter is to confirm that following the resolving of an outstanding issue as previously communicated to you our client instructs us that its Bank is now in a position to finalise the settlement of the $2.5 million purchase of the above property. Given the urgency with which this matter is being dealt with by all parties, the Bank has indicated it will be in a position to settle this transaction within seven to ten days from today's date. 1. At no time until the present application was made before me had the mortgagors or anyone on their behalf disclosed to the Bank, or, for that matter, any of the caveators in relation to the property, that the approval of the NAB on 10 August was a conditional approval. The letter which has been tendered on this application says: We have conditionally approved your loan for $2,500,000. In order to get final approval we just need to verify the information in your application and confirm that the security is acceptable. 1. The other significant information that was never made available to the Bank or the caveator was the information that now appears in an affidavit read on this application by Martin Alan Churchill sworn 9 October 2015. Mr Churchill is the solicitor for the First and Second Defendants, the mortgagors. In that affidavit Mr Churchill says the following: 1. I am the Solicitor for the First & Second Defendants (Brian and Helen Green) in the above proceedings. 2. Over the past two (2) years I have been the Solicitor for a Party involved in obtaining 'The Commercial Rights' to exclusive distribution in Australia and New Zealand of the Energy Drink called "Playboy Energy Drink". My client has been and is in confidential negotiations with the drink supplier and for distribution outlets. I will be in Melbourne on Wednesday, Thursday and Friday of next week for proposed meetings with the "7/11 Group, Woolworths and Dan Murphys". We are also planning a meeting with the Victorian Racing Club to do the Australian Launch of the product during the 2015 Melbourne Cup. 3. The Green family made the connections for my clients in respect of the Energy Drink. I understand that the Green family have invested some substantial money into the business venture. I am not aware of the precise terms of the agreements which are 'Commercial in Confidence'. 4. The purchaser in the current property transaction is connected with the principal person involved in the Energy Drink Rights. My understanding is the delays in funding have partly arisen from the need to acquire the Australian and New Zealand Rights for the product. These Rights have been obtained. The negotiations were being conducted on a 'Commercial in Confidence' basis at all times. 5. I have been involved in large property transactions in three (3) capital cities in Australia recently for the Party directly involved in the Energy Drink Rights. I have also been involved in commercial deals with the same party in China and Russia. 6. It is the intention of the Party with the Energy Drink Rights to have discussions with Brian Green (First Defendant in these proceedings) concerning their rights and their expectations regarding the Energy Drink and it's (sic) exclusive distribution in Australia and New Zealand. The intention was to have those discussions after the settlements on the Green family Property, at XX Carrington Parade, Freshwater, New South Wales. The intention was to have these discussions whilst the Greens were not under duress of the mortgage/ Property transactions. The Party is aware that Brian Green's (sic) and his wife are in considerable ill health. 7. The focus had been to obtain the commercial rights to the Playboy Energy Drink in Australia and New Zealand. They have been obtained. The delay in financing the Sale of Carrington Parade Property is partly attributable to the need to meet the Energy Drink acquisition. The processes were outside the control of the Greens. 8. I understand that funding from the National Australia Bank has been obtained at 90% of valuation and all loan conditions have been met. The Loan Mortgage Insurance was the final issue to be addressed, the parties will be in a position to settle. 9. The Contract for the Property at Carrington Parade was always correct with regards to 'Vacant Possession'. The Greens are selling with Vacant Possession. They are proposing to execute an Occupancy Agreement with the incoming purchasers in which I was not involved. I did not involve myself in any of these negotiations partly due to the potential for a conflict of interests and partly due to time constraints. 10. The Greens have been pressing the purchaser to settle the matter. I now see that the obstacles have been removed. (emphasis added) 1. More significantly than the fact that that information was not disclosed to the Bank is the fact that it was never disclosed to the Deputy Registrar or Bellew J when earlier applications for a stay were made. The matter was put to the Registrar and Bellew J along similar lines to what had been put to the Bank in the correspondence, namely, that there were difficulties in relation to finalising the finance from the Bank. 2. Whether or not there were those difficulties, the affidavit of Mr Churchill now makes it abundantly clear that settlement could never have proceeded on 10 July or 24 August, nor probably in September, because of the matters that are now contained in his affidavit. The matter was amplified by Mr Churchill in his submissions to me as follows: CHURCHILL: That is the relevance of my affidavit of 9 October explaining that there have been some underlying business transactions in which the purchasers have been associated with the Greens in commercial in confidence negotiations, which I've been involved in, in respect of energy drinks, providing energy drinks, and those were what they were prioritising. I wasn't acting for them, I was acting for a party related to that, but they are connected. I have outlined that in my affidavit and the reason for the delay is they have been concentrating on their efforts on ensuring they had that large scale commercial transaction going ahead. That has happened because I have been given instructions to proceed further with distribution outlets and the reality is that that appears to have been the obstacle. HIS HONOUR: Well, was that information provided to Bellew J in September? CHURCHILL: Not, it wasn't. It was commercial in confidence and I couldn't do that. HIS HONOUR: Well, it's commercial in confidence today but you have told me about it. CHURCHILL: And it has progressed further because it was commercial in confidence while negotiations were pending to obtain the rights. Those rights have now been obtained. The Greens contributed to that, as set out in my affidavit, and the purchaser is a person, the purchaser Mr Kagara (sic Caggiano) is a person connected with those people who have those property rights for the drink and that is partially why they have stepped in to say "we will buy the property and we'll sort out our commercial dealings later". That has been, their concentration has been on getting the funding together for the commercial rights. That's been the delay and they have now overcome those problems and they have now addressed it with the bank and they are certain they have got those funds available to the bank. That's the reality. They have been in a position they have been worried about losing commercial opportunity and they were assisting the Greens because they knew the Greens had assisted them. In my affidavit it sets out there's going to be a meeting between the Greens and the principal of that person to sort out prospective rights that flow and they have been involved in this from an early stage. It's been very delicate negotiations; we've been worried about losing the rights and they have been obtained. I'm, as I indicated in my affidavit, I've got a trip down to Melbourne for Wednesday/Thursday/Friday to discuss about distribution outlets. (emphasis added) 1. As appears in that extract, Mr Churchill informed me, when I asked why this had not been previously disclosed, that because of his involvement for another party the matters were commercial in confidence. It does not appear to have occurred to Mr Churchill in those circumstances that he was in a very obvious position of conflict that resulted in the matter not being put to the Registrar on an ex parte application or to Bellew J in a manner which can be considered frank or in accordance with appropriate professional obligations. 2. Mr Brian Green, one of the mortgagors, has sworn an affidavit of 9 October 2015. In many respects that affidavit bears a striking resemblance to the affidavit Mr Green swore on 1 September 2015 on his first application for a stay. In that affidavit of 1 September 2015 he referred in paragraphs 7, 11, 12, 15 and 18 to the settlement of the sale being imminent to justify the application for the stay sought. It goes without saying in the light of what I have already disclosed that there was nothing said in that affidavit about the matters that now appear in Mr Churchill's affidavit. 3. It is concerning that paragraph 15 of that affidavit says this: The sale of the Property is now to be completed by "7 to 10 days' time". The loan from the NAB has been previously confirmed with the Purchaser's lawyers. The issues which have led to delays in settlement have now been cleared and it would now follow that settlement will be completed by that nominated and imminent time period. Should the settlement not be completed by that date then, as indicated the Purchaser's lawyer is prepared to attend Court in order to detail the required further time to finalise the transaction. 1. It is possible that Mr Green was unaware of the other difficulties the purchaser had in finalising finance as a result of the matters set out in Mr Churchill's affidavit although I note what he says about the Greens' connection with the purchaser in paragraphs 3 and 9 and what he said to me in submissions (paragraph 16 above). However, one may reasonably infer, and I do so, that the affidavit was prepared by Mr Churchill (his firm's name appears on the front page) and he has, in any event, witnessed Mr Green's execution of it. Mr Churchill allowed that affidavit to be put forward which said nothing of other reasons that are now said to be the real reasons for the delay. 2. That evidence was relied upon to obtain a stay ex parte from the Deputy Registrar. Such a stay should never have been sought without notice to Gadens who had been acting for the Bank and with whom Mr Churchill had been communicating. The stay should not have been granted by the Deputy Registrar because judgment was entered by consent and not by default. 3. The matter came before Wilson J on 9 September. A further stay until 16 September was granted and the matter was adjourned to Bellew J as Duty Judge on 16 September 2015. Her Honour's reasons for granting the further stay are not available, but it is clear that nothing in the affidavits available to her Honour disclosed anything about the Energy Drink negotiations. 4. A further application was made to Bellew J by Notice of Motion filed 11 September 2015. The affidavit of Mr Green sworn on that day asked for a further stay on the basis of an imminent settlement and because of the hardship that would be caused to the mortgagors if they were to be evicted. Paragraph 4 of that affidavit relevantly reads: I have spoken this date with my solicitor - Martin Churchill, who has been in contact with the purchaser's solicitors – Citilawyers. Citilawyers - Mr Vatche Janoyan has confirmed his instructions that finance has been approved by a major bank - National Australia Bank. I am informed further by my lawyer - Mr Churchill that he was told by the purchaser's solicitor words to the effect that; "we expect the settlement confirmation documents either today, or by Monday (14 September, 2015), at which time we will notify you urgently of their arrival and we will then be able to have the matter given a firm date for settlement." 1. Although settlement was said to be imminent on 11 September, not only did settlement not occur but there is no evidence before me of what has happened between 11 September and now. 2. In his affidavit of 9 October Mr Green has annexed a further letter from Mr Janoyan of City Lawyers who act for the purchasers. Considerable emphasis has been placed on this letter on behalf of the mortgagors for why a further stay should be granted. The letter says in its entirety: Re: XX Carrington Parade, Freshwater, NSW 2096 Dear Sirs, I spoke to Phone Souriyavong from the National Australia Bank (Bank) this afternoon to discuss the status of the loan. I was advised that the only outstanding procedure to finalise the loan is to sight the availability of funds in the amount of $520,000, which comprises the 10% balance and stamp duty which will be required to be paid on settlement. The Bank has advised that if we provide the proof of funds by Monday, the loan will be approved by Wednesday and the final loan documents will be ready to sign on Thursday 15 October 2015. Therefore, I would expect settlement on the next 7-10 business days from Monday. Further, I clarified that Lender's Mortgage Insurance (LMI) is no longer an issue. I also spoken to my client and he instructs me that he previously provided the proof of funds, he will provide the information again by Monday morning. The loan amount approved is 90% of the valuation of $2.8m, which we understand will pay out the mortgages on settlement. 1. Mr Janoyan has not sworn an affidavit on this application. It is perfectly clear that he was in a position to do so because he witnessed Mr Churchill's signature on his affidavit of 9 October 2015. 2. I have considerable doubts about accepting the veracity of what appears in Mr Janoyan's letter of 9 October 2015 when he has not given evidence before me to explain the extremely misleading email he forwarded to Mr Green on 10 August in relation to the Bank's approval of $2,500,000 without ever indicating that it was a conditional approval. 3. That is the first problem for the mortgagors. 4. The second problem is this. The letter says, if it is to be accepted, that the Bank has advised that if the purchaser provided proof of funds, that is, the funds to comprise the 10 per cent balance from what is being lent by NAB to purchase the property, by Monday the loan will be approved by Wednesday. Mr Janoyan, as the letter notes, says that the purchaser has previously provided proof of the funds but he will provide the information again by Monday morning. 5. There is no letter from NAB or any other evidence to confirm that if proof of funds is provided by the purchaser on Monday the loan will be unconditionally approved. Nor is there any evidence from the purchaser to indicate that he or it (there seems to be some doubt about who the purchaser is) will be able to demonstrate the proof of funds that the Bank requires. Indeed, the only material from the Bank about the loan is the letter of 10 August 2015 conditionally approving the loan. 6. The history of this matter suggests to me that the further letter from Mr Janoyan of 9 October is simply another attempt to delay this matter. I have no confidence from any evidence that I have that the NAB'S loan will become unconditional on Monday or at any time thereafter, nor that settlement will occur at any time in the near future. The misleading way these applications have been put to the Court earlier strengthens my opinion in that regard. 7. There is no other basis put forward apart from hardship to the mortgagors to justify a stay but as Johnson J made clear in GE Personal Finance v Smith [2006] NSWSC 889, hardship alone is unlikely to result in a stay unless there is some solid indication that something will happen in the future to bring about a settlement or a refinancing to justify a stay. 8. There is no evidence on this application to justify a further stay in the matter and the Notice of Motion is dismissed.