Kolevski v Timber Creek Holdings Pty Ltd (No 2)

1. [1]

   I delivered judgment in this matter on 16 May 2025: Kolevski v Timber Creek Holdings Pty Ltd [2025] NSWSC 487 (the Judgment (J)). I made orders for the possession and sale of the Shell Cove property and the Port Kembla property, although the orders in relation to the Port Kembla property were stayed for the reasons explained at J[259]-[260]. The orders made on 16 May gave effect to my principal conclusions that (a) Nick and Lena had entered into a loan and security agreement with Timber Creek under which Timber Creek held both properties as equitable mortgagee, (b) Nick and Lena were in default under that agreement and (c) Nick and Lena had not tendered payment to discharge the equitable mortgages.

2. [2]

   These same conclusions meant that it was appropriate to order that the amended statement of claim be dismissed. That pleading had relevantly sought orders for the properties to be transferred to Cameron or to some other person at Nick and Lena’s direction in return for payment of an amount of money. The factual basis for relief of that kind was not made out. I did not accept that the agreement between the parties was as described in the plaintiffs’ evidence, nor did I accept that the plaintiffs had ever been ready, willing and able to complete such a transfer as they alleged.

3. [3]

   I also directed the parties to make submissions as to costs, which they have now done. Additionally, Timber Creek has made an application for some additional orders to give effect to the relief granted on 16 May.

4. [4]

   On 20 May 2025, Timber Creek filed a notice of motion for additional orders as follows:

5. [5]

   The application was brought within the time specified by the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) r 36.16(3A).

6. [6]

   The plaintiffs do not dispute that the Court has power to make the supplemental orders sought. Their submission was limited to the contention that the Court should not, in the exercise of its discretion, make such orders. That contention was based largely on the proposition that relief of the kind now sought had not been sought to begin with and was in fact contrary to the defendant’s primary case.

7. [7]

   I am satisfied that the Court has power to make the orders sought because they are in aid of the enforcement and ‘working out’ of the orders made on 16 May: Australian Competition & Consumer Commission v The Shell Company of Australia Ltd (1997) 72 FCR 386; [1997] FCA 73 at 395 (Drummond J); Phillips v Walsh (1990) 20 NSWLR 206 at 209-210 (McLelland J).

8. [8]

   I am also satisfied that it is appropriate in the exercise of my discretion to make the orders sought. The orders made on 16 May mean that Timber Creek is now empowered to deal with the properties in its capacity as equitable mortgagee. This will entail dealings with third parties. It is appropriate for it to do so with the benefit of a declaration to that effect, namely a declaration that makes clear the capacity in which it is dealing. The proposed orders address that matter.

9. [9]

   The fact that these declarations are inconsistent with Timber Creek’s primary case is nothing to the point. They are entirely consistent with its alternative case, which I accepted. Timber Creek should not now be denied appropriate supplemental relief only because that relief aids its success on an alternative case.

10. [10]

    The plaintiffs submit that they have had a measure of success and that the parties should pay their own costs of the proceedings. They point out that Timber Creek succeeded on the basis that it is an equitable mortgagee, which was the proposition at the heart of the plaintiffs’ case and which, as part of its principal case, Timber Creek resisted.

11. [11]

    I accept that the plaintiffs have had that measure of success in the proceedings. However, their success was not as ‘considerable’ as they submit. It was not such as to warrant a departure from the ordinary rule that costs should follow the event. Nor was their success a sufficient reason to depart from the rule that Timber Creek’s costs be paid out of the mortgaged property: UCPR r 42.25(1). As already mentioned, the conclusion that Timber Creek was a mortgagee reflected an alternative case presented by Timber Creek and was based on my acceptance of Timber Creek’s evidence. As I made clear, my conclusions as to what was said in the critical discussions between Nick and Ken were overwhelmingly based on the defendant’s evidence, not the plaintiffs’. Although there were some very limited respects in which I found the plaintiffs’ evidence to be consistent with the inherent logic of events, I generally rejected the plaintiffs’ evidence for reasons of it being unreliable. I also rejected Cameron’s evidence as to having been – and continuing to be – ready, willing and able to discharge the equitable mortgages.

12. [12]

    I was therefore not willing to grant any of the relief in the amended statement of claim: J[264]. I do not consider that the conclusions I reached on the real issues in dispute reflect a considerable degree of success by the plaintiffs.

Orders

1. [13]

   The Orders of the Court will be as follows:

   1. (1)

      The orders made on 16 May 2025 in these proceedings be varied pursuant to the Uniform Civil Procedure Rules 2005 (NSW) (‘UCPR’) rr 36.16(1) and (3A) by the insertion of orders 5A and 5B:

   2. (2)

      Order 7 made on 16 May 2025 in these proceedings be varied pursuant to UCPR rr 36.16(1) and (3A) to read as follows:

   3. (3)

      An order for the plaintiffs to pay Timber Creek’s costs of the proceedings.

   4. (4)

      An order for the plaintiffs to pay Timber Creek’s costs of the Notice of Motion filed 20 May 2025.

   5. (5)

      An order under UCPR r 42.25(1) for Timber Creek’s costs of the proceedings to be paid out of the mortgaged property, being the ‘Shell Cove Property’ and the ‘Port Kembla Property’ as defined in the orders made on 16 May 2025 in these proceedings.