Supreme Court New South Wales Medium Neutral Citation: Defined Properties Investment ATF the Defined Property Trust No.1 v National Commercial Finance Pty Ltd [2017] NSWSC 1513 Hearing dates: 3 November 2017 Date of orders: 07 November 2017 Decision date: 07 November 2017 Jurisdiction: Common Law Before: Harrison J Decision: (1) Grant leave to the plaintiffs to file an amended summons by 10 November 2017 if so advised. (2) Direct the plaintiffs to file and serve such further evidence upon which they intend to rely by 10 November 2017. (3) Direct the defendant to file and serve such evidence upon which it intends to rely by 17 November 2017. (4) Order that the defendant, by itself its servants or agents or howsoever otherwise be restrained up to and including 5.00pm on Monday 20 November 2017 from exercising any purported power of sale over the property in Certificate of Title Folio Identifier 41/SP 77109 being the property known as and situate at A5/24-32 Lexington Drive, Bella Vista. (5) Stand over these proceedings before the Common Law Duty Judge on Monday 20 November 2017 (6) Reserve costs. Catchwords: PRACTICE AND PROCEDURE – where first plaintiff seeks time to refinance in order to avoid the forced sale of his property – where defendant opposes the current regime restraining the exercise of a purported power of sale of the property – whether first plaintiff is in a position to secure an alternative financier for the loan – where first plaintiff contends that the receiver was not properly appointed – where the debt owed to discharge the mortgage is in dispute Category: Procedural and other rulings Parties: Defined Properties Investment Pty Ltd (First Plaintiff) George Dimitriou (Second Plaintiff) National Commercial Finance Pty Ltd (Defendant) Representation: Counsel: S Sykes (Defendant) Solicitors: Era Legal (Defendant) File Number(s): 2017/317829 Publication restriction: Nil Judgment 1. HIS HONOUR: By summons filed in court before Kunc J on 20 October 2017, the plaintiff sought an order that execution of a writ of possession be stayed. His Honour made the following orders, among others, on that day: 3. Order that the defendant by itself, its servants or agents be and is hereby restrained up to and including 26 October 2017 from exercising any purported power of sale in respect of [certain property at Bella Vista] or otherwise interfering with the quiet enjoyment of the property by its lawful occupants. 4. Directs the plaintiffs to file and serve an affidavit in support of the summons on or before 24 October 2017. … 7. Directs that the proceedings be returnable before the Common Law Duty Judge on 25 October 2017 at 10.00am. 1. As far as I am aware, his Honour made those, and other, orders upon the basis of unsworn submissions by Mr George Dimitriou, the second plaintiff, and director and sole shareholder of the first plaintiff. 2. The proceedings came before Campbell J on 25 October 2017. On that occasion there was an appearance on behalf of the defendant and orders were made by consent as follows: 1. Adjourn the summons for mention or direction before the Common Law Duty Judge at 10.00am on 3 November 2017. 2. Note the undertaking of the defendant not to exercise any purported power of sale in respect of (including by purporting to take possession of) the property or otherwise interfering with the quiet enjoyment of the property by its occupants until 3 November 2017. 3. If so advised the plaintiffs may provide the defendant with a form of proposed amended summons by 4 pm on 31 October 2017. 4. The costs of the parties may be costs in the summons. 1. Mr Dimitriou swore an affidavit on 24 October 2017. He confirmed that it was his first affidavit in the proceedings. The burden of that affidavit is that the first plaintiff borrowed $650,000 from the defendant secured by registered first mortgage over the Bella Vista property. Mr Dimitriou said this in his affidavit: "19. I was informed that the rate was very reasonable and that a one month interest payment would be included [in the amount advanced]. 20. The loan amount soon became $650,000 and NOT $605,000. I have calculated that $45,000 included the lenders fees a valuation fee and facilitation fee and solicitor fee for drawing up the loan agreement. 21. The facility settled on about 19 July 2017, and I was aware that the month of August interest fee was paid and included at the settlement. 22. In an email that I received from Glynn just prior to the loan advance, I was also informed by Glynn that there was no break out fees and I relied on the content of that email exchange. 23. Having then approached National Commercial Finance to obtain the valuation so that I was able to discharge after 1 month became impossible and so to obtaining a payout and I was informed without any supporting documentation that would enable the lender to account for the payout, led to the amount being more than $900,000. That equates to $250,000 in breakout interest and fees for the period 19 August to 19 October 2017 although I was informed that there was no break out fees and no penalty to discharge the mortgage early. 24. I am yet to receive a breakdown as to how the payout was formulated nor have I received payout figures having request them for some time. I was provided an indicative payout and that amount has exceeded $900,000 from the $605,000 initially advanced. This amount included a receiver fee that was unlawfully appointed and now identified to have a financial involvement in the defendants lending company. 25. Having identified the appointment was unlawful I intend filing a summons and stay of the appointment of a receiver due to the unconscionability of the lender and their actions last week." 1. Mr Dimitriou seeks time to refinance in order to avoid the forced sale of the property. It follows that the first plaintiff is not presently in a position to tender the sum required by the defendant to discharge the mortgage or to bring any amount, being less than the sum claimed, into Court. 2. The proceedings came before me on 3 November 2017 in the duty list. Mr Sykes, a solicitor, appeared for the defendant and informed me that it opposed the continuation of the present interlocutory regime. He submitted that there was no evidence that suggested the receiver appointed by the defendant should not proceed in accordance with his authority under the security arrangements pursuant to which he was appointed. Moreover, Mr Sykes submitted that there was no evidence that the first plaintiff was in any position to refinance the loan, despite the passage of time since the matter was first before Kunc J, and despite the fact that Mr Dimitriou has obtained what is referred to as an indicative approval to refinance. 3. I asked Mr Dimitriou to explain the basis for his contention that the receiver was not properly appointed and why he should be further restrained. He said this: "DIMITRIOU: Oh, well, because the representations, when the loan was first advanced there was a prepaid interest for one. In that period of time the lender was facilitating the refinance of that facility with its own other organisation, which is the conforming facility, which is called Chifley. They did not do that. We were then subjected to a default immediately after the first month, which then took the loan terminated, and therefore a figure of $250,000 added to the facility to the initial principal amount, so it made it near impossible to do anything more. In discussions with that particular person there was representations made initially, and there's an affidavit that can support some of those conversations. So I say that, firstly, the appointment of a receiver is invalid, and also I say that the representations that have been provided to us from the onset were representations in deceit tort, and I believe, for the purpose of the defendant acquiring this particular office for their own purpose." 1. Mr Sykes informed me that the amount required to discharge the mortgage is now $903,653.15. When confronted with this information, Mr Dimitriou said this: "DIMITRIOU: Well, I don't understand that, your Honour, because I'm going to dispute that amount. It cannot be possibly correct, even with their own documentation. If I could have the defendant's provide a break up as to how they arose to that figure I can then look at the documents and try to absorb exactly how they could have done that within a month or two months, and hence why I would be requesting these documentation since the receiver turned up on that particular day, and we haven't actually sat back and done nothing. We've actually worked very hard to be able to get even to this day." 1. Mr Dimitriou sought to file in court an amended summons detailing a series of concerns about the calculation of the alleged indebtedness of the first plaintiff and the circumstances in which the receiver was appointed. He also sought to provide me with an unsworn affidavit in support of these matters. I declined to accept these documents. 2. Mr Dimitriou has indicated that he has taken steps to refinance the loan. However, there remains a continuing difficulty concerning his ability to do so having regard to the dispute about the amount that the defendant says is required to discharge its mortgage. The prospect of securing an alternative financier in these circumstances seems to be a remote and diminishing possibility. 3. I am however somewhat troubled that a loan of $650,000 advanced in July 2017 should have apparently become a debt exceeding $900,000 by 3 November 2017. It seems to me that the material before the court at least commands an explanation from the defendant in appropriate detail of precisely how the amount of $903,653.15 is calculated. Mr Dimitriou has sought to characterise his dispute with the defendant about the validity of that calculation as a clog on the equity of redemption. In the present circumstances I take that submission to be a complaint that his ability to refinance the loan is being frustrated or obstructed by his inability to obtain a payout or discharge figure from the defendant that it is, or would be, legitimately able to demand. 4. I also consider that the first plaintiff should be given a limited opportunity to provide evidence of the substantive matters upon which it relies to support the proposition that the sum claimed is wrong and that the first plaintiff is, or will be, in a position to refinance the allegedly "correct" amount. 5. In these circumstances I propose to make the following orders: 1. Grant leave to the plaintiffs to file an amended summons by 10 November 2017 if so advised. 2. Direct the plaintiffs to file and serve such further evidence upon which they intend to rely by 10 November 2017. 3. Direct the defendant to file and serve such evidence upon which it intends to rely by 17 November 2017. 4. Order that the defendant, by itself its servants or agents or howsoever otherwise be restrained up to and including 5.00pm on Monday 20 November 2017 from exercising any purported power of sale over the property in Certificate of Title Folio Identifier 41/SP 77109 being the property known as and situate at A5/24-32 Lexington Drive, Bella Vista. 5. Stand over these proceedings before the Common Law Duty Judge on Monday 20 November 2017. 6. Reserve costs. ********** Amendments 08 November 2017 - Typographical corrections 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: 08 November 2017