Stapler Pty Ltd in its capacity as trustee for the Stapler Trust No. 1 v Raheb Property Holdings Pty Ltd in its own right and as trustee for the Robin Raheb Family Trust

1. [1]

   HIS HONOUR: By its amended statement of claim filed on 24 March 2025, the plaintiff seeks the recovery of $450,000.00, together with interest and costs, advanced pursuant to the terms of a loan agreement entered into on or about 21 June 2022 between the former trustee of the Stapler Trust No. 1 and Raheb Property Holdings and Ms Raheb. The plaintiff also seeks an order for the judicial sale of the property located at ** The Grand Parade, Brighton-le-Sands.

Background

1. [2]

   At all relevant times, Ms Raheb has been the sole registered proprietor of the property. On 1 October 2024, her interest in it vested in the eleventh defendant, her Bankruptcy Trustee.

2. [3]

   In addition to Raheb Property Holdings, Ms Raheb and her Bankruptcy Trustee, the following parties remain as defendants in the proceedings:

3. [4]

   Notwithstanding orders made by Pike J on 2 May 2025, no evidence has been served by any defendant.

Relevant facts

1. [5]

   The plaintiff has been the trustee of the Stapler Trust No. 1, previously known as the WholeCap Debt Fund No. XIV Trust 1, since 23 June 2023. Prior to 23 June 2023, the trustee of the Trust was WholeCap Debt Fund No. XIV Pty Limited.

2. [6]

   On or about 21 June 2022, WholeCap entered into a loan agreement with Raheb Property Holdings as borrower and Ms Raheb as guarantor.

3. [7]

   Pursuant to cl 2 of the loan agreement, WholeCap agreed to provide an advance to Raheb Property Holdings up to $450,000.00.

4. [8]

   By cl 6 of the loan agreement, Raheb Property Holdings was required to repay the principal amount of the advance together with any accrued but unpaid interest and all other amounts outstanding but unpaid on the termination date as defined.

5. [9]

   By cl 8.1 of the loan agreement, Ms Raheb irrevocably and unconditionally guaranteed to WholeCap the punctual performance by Raheb Property Holdings of all of its obligations under the loan agreement and irrevocably and unconditionally undertook immediately, on demand by WholeCap, to pay any amount due as if she were the borrower.

6. [10]

   The obligations of Raheb Property Holdings and Ms Raheb pursuant to the loan agreement were secured by a General Security Deed made on 21 June 2022, by which each of these defendants granted a security interest to WholeCap over all of their present and after-acquired property.

7. [11]

   In addition, Ms Raheb granted an unregistered mortgage over the property dated 21 June 2022 to WholeCap in a form suitable for registration under the Real Property Act 1900. The mortgage secured all amounts owing and payable by Ms Raheb to WholeCap, including pursuant to the loan agreement. Ms Raheb was required punctually to pay all such amounts when due. Upon an event of default, defined to include any failure to pay a sum on time, cl 6.1 provided that the mortgage could be immediately enforced.

8. [12]

   WholeCap’s powers upon enforcement included the exercise of any powers that may be exercised by a receiver.

9. [13]

   WholeCap’s interest pursuant to the mortgage was immediately recorded on the title of the property by caveat dated 22 June 2022. When the plaintiff became the trustee of the Stapler Trust No. 1, the name of WholeCap as the caveator was changed to the plaintiff.

10. [14]

    The advance of $450,000.00 took place on 22 June 2022. Accordingly, the termination date under the loan agreement was 22 September 2022. Raheb Property Holdings failed to repay the loan by that date. On 5 October 2022, WholeCap demanded repayment of that amount plus accrued interest. No payment was made in response to that demand.

11. [15]

    On 4 July 2024, the plaintiff made a further demand for amounts owing under the loan agreement from Ms Raheb. No payment was made in response to that demand.

Evidence

1. [16]

   The plaintiff relies upon the following evidence:

Application to vacate the hearing

1. [17]

   The several matters set forth in the preceding paragraphs represented the state of the proceedings at all times up to and including 3 March 2026. The hearing of the substantive issues was due to commence before me on 4 March 2026 with an estimate of two days. On that day I received notice of an application from Raheb Property Holdings and Ms Raheb by notice of motion which sought the following orders:

   1. (1)

      Pursuant to s 66 of the Civil Procedure Act the hearing set down for 4 and 5 March 2026 be vacated.

   2. (2)

      The first and second defendants pay the costs of the plaintiff thrown away of the hearing up to and including 4 March 2026.

   3. (3)

      First and second defendants have leave to file and serve a defence on a date ordered by the Court.

2. [18]

   The application was supported by affidavits from the following deponents:

3. [19]

   Raheb Property Holdings and Ms Raheb also tendered a proposed defence upon which they each intended to rely in the event that their application were to succeed.

4. [20]

   Having regard to the way in which Raheb Property Holdings and Ms Raheb have approached these proceedings to date, four principal issues would appear to arise:

   1. (1)

      Have Raheb Property Holdings and/or Ms Raheb provided a satisfactory explanation for their failure to defend the proceedings or for the delay in bringing their application to vacate the hearing?

   2. (2)

      Do the applicants on the motion have a bona fide defence to the plaintiff’s claim?

   3. (3)

      Where does the balance of convenience lie between letting the applicants in to defend the proceedings and any prejudice that may be thereby occasioned to the plaintiff in denying its right to enforce its security?

   4. (4)

      What is the significance, if any, of the applicants’ offer to pay the plaintiff’s costs having regard to Ms Raheb’s acknowledgment that she has no funds with which to do so?

Delay

1. [21]

   The plaintiff’s predecessor entered into the loan agreement with Raheb Property Holdings and Ms Raheb on 21 June 2022. An event of default occurred three months later when the date for repayment of the principal sum passed without payment being made. These proceedings were commenced by statement of claim filed on 23 July 2024. The amended statement of claim was filed on 24 March 2025.

2. [22]

   According to his affidavit sworn on 3 March 2026, Joe Nasr, solicitor, is “the solicitor for the first and seventh defendants in these proceedings”. When the proceedings commenced before me, Mr Farrell of counsel, who was instructed by Mr Nasr, announced his appearance for those defendants, as well as Ms Raheb. Ms Raheb’s 3 March 2026 affidavit is witnessed by Mr Nasr. All her affidavits have been prepared by Mr Nasr’s firm. The orders sought in the notice of motion to vacate the hearing date and to file a defence are sought by Raheb Property Holdings and Ms Raheb. Notwithstanding that fact, Mr Nasr is somewhat curiously described on the notice of motion only as the legal representative of Raheb Property Holdings and Mr Raheb. A number of references in Ms Raheb’s first affidavit, which is extracted later in these reasons, suggests otherwise.

3. [23]

   Mr Nasr’s affidavit contains the following paragraphs read by the applicants in support of their explanation for the delay in seeking to vacate the hearing:

4. [24]

   Ms Raheb’s 3 March 2026 affidavit contains the following paragraphs:

5. [25]

   Ms Raheb’s 4 March 2026 affidavit contains the following paragraphs:

6. [26]

   It is timely to observe that on 2 May 2025, Pike J made orders, among others, extending until 16 May 2025 the time for the defendants in the proceedings to file their defences. His Honour ordered, relevantly for present purposes, that, subject to the entitlement of Ms Raheb and her Bankruptcy Trustee to be heard with respect to the form of the relief claimed in prayer 6 of the amended statement of claim (concerning any judicial sale), they were precluded from relying on any defence not filed and served by 16 May 2025. His Honour also excused Ms Raheb and her Bankruptcy Trustee from further appearance until further order or until the proceedings were listed for final hearing.

7. [27]

   Those orders were made by consent. Critically, on 1 May 2025, Mr Nasr wrote to the solicitor for the plaintiff, as well as for other parties to the proceedings, in these terms:

8. [28]

   Moreover, on 16 May 2025, after these orders had been made, Mr Nasr wrote to the other parties to the proceedings, including the plaintiff, attaching what he described as “the unfiled and unverified Defence of the first defendant”. Mr Nasr was noted as the legal representative of Raheb Property Holdings, the first defendant. In what must clearly have been a typographical error, that defence refers in terms throughout to “the third defendant” when it ought obviously to have been intended to refer to the first defendant. Taking account of that mistake, paragraph 4 of the defence should be noted:

9. [29]

   Without wishing or intending to do injustice to the manner in which, or the terms upon which, Raheb Property Holdings or Ms Raheb propose to defend the proceedings, the particulars listed above would appear to replicate the way in which they now seek to do so. For avoidance of doubt, the proposed defence upon which they seek to rely, was tendered and became Exhibit X1 on the application.

10. [30]

    In my view, none of the matters proffered either by Raheb Property Holdings or Ms Raheb as a basis for not having defended the proceedings or for leaving an application to be permitted to do so until the day before the commencement of the hearing is satisfactory or acceptable.

11. [31]

    The fact that Mr Nasr required open heart surgery does not explain why it was not possible to put in place arrangements by appropriate delegation within his firm or even beyond it to some appropriately qualified solicitor, to ensure that the interests of Raheb Property Holdings and Ms Raheb were properly and adequately protected. Mr Nasr understood and agreed in terms to the making of orders for the filing of defences by both defendants. The onset of Mr Nasr’s “major health crisis” in April 2025 clearly did not interfere with or prevent his firm from consenting to Pike J’s orders made on 2 May 2025 or from preparing and forwarding a draft defence apparently in compliance with those orders on 16 May 2025. I am completely unable to understand, and am somewhat troubled by, Mr Nasr’s assertion that “we were hampered by not having full instructions from our clients” when his consent to the 2 May 2025 orders and the preparation and distribution of the draft defence could, and certainly should, only have been done with specific and detailed instructions to do so. The fact that Mr Nasr’s cousin died in November last year or that he injured his shoulder in January this year hardly excuse a failure to prepare the case for hearing commencing in March this year.

12. [32]

    I have the utmost sympathy for Ms Raheb’s difficulties concerning the health of her son. However, as the way in which Ms Raheb’s representatives have conducted the proceedings before me will demonstrate, they have applied to vacate the hearing upon the basis of what amount to the very same instructions that had been provided to Mr Nasr as long ago as May 2025.

13. [33]

    Mr Raheb told Ms Raheb on 16 May 2025 that Gareth form Mr Nasr’s office had advised him that Ms Raheb would need to put on evidence. I am unable to accept that there was insufficient time to do so between then and when the matter was listed for hearing. Indeed, the matter was set down for hearing by Pike J on 24 October 2025. Mr Watson appeared on that day for the first to seventh defendants. As the transcript for that day reveals, Mr Watson had instructions to agree to a hearing but advised his Honour that he was also instructed to ask for a date not before March 2026. That is what occurred. Significantly, however, the transcript on that day also included the following:

14. [34]

    That discussion needs also to be understood in the light of the orders made by Pike J on 2 May 2025, which included orders 9 and 10 as follows:

15. [35]

    The matters that Raheb Property Holdings and Ms Raheb want to agitate now were clearly in the mix on both 2 May 2025 and 24 October 2025 at the very latest. Raheb Property Holdings circulated a defence which it did not file. It is reasonable to assume, and I find, that the plaintiff proceeded on the basis that the consent orders made on those occasions reflected and represented the attitude to this litigation that Raheb Property Holdings and Ms Raheb had instructed her legal representatives to take. There is no satisfactory explanation for why, in all of the circumstances, the application to vacate the hearing was left until 4 March 2026.

Do Raheb Property Holdings and/or Ms Raheb have a defence?

1. [36]

   The plaintiff contended that Ms Raheb has no standing to defend the proceedings in circumstances where her estate was sequestrated on 1 October 2024 and where her Bankruptcy Trustee is a party to the proceedings and does not seek any orders to be let in to defend. The plaintiff’s submissions were in the following terms.

2. [37]

   By s 58(1) of the Bankruptcy Act 1966, where a debtor becomes a bankrupt “the property of the bankrupt … vests forthwith in … the trustee of the estate of the bankrupt”. That property includes ** The Grand Parade, Brighton-le-Sands as well as “the capacity to exercise, and to take proceedings for exercising all such powers in, over or in respect of property as might have been exercised by the bankrupt for his or her own benefit at the commencement of the bankruptcy or at any time after the commencement of the bankruptcy and before his or her discharge”: s 116(1)(b) of the Act.

3. [38]

   Any claim that Ms Raheb may at one time have had against the plaintiff seeking to be relieved of her obligations under the loan agreement and the mortgage, has vested in her Bankruptcy Trustee. As Allsop P stated in Moss v Eaglestone [2011] NSWCA 404 at [73], “injuries arising as a direct result of infringements of financial or property rights passed to the trustee”.

4. [39]

   In these circumstances, Ms Raheb has no entitlement to depart from the position adopted by the Bankruptcy Trustee, reflected in the orders made by Pike J on 2 May 2025.

5. [40]

   However, more fundamentally with respect to the terms of the defence upon which Raheb Property Holdings and Ms Raheb hope to rely, the evidence in my opinion establishes that at the time that the Raheb interests were proposing to enter into the loan agreement, as well as the time when they did so, they were in substantial financial difficulties and were under great pressure to refinance several ventures for that reason alone. This is apparent from the terms of Ms Raheb’s 5 March 2026 affidavit, the presently relevant portions of which are set out in the SCHEDULE to these reasons.

6. [41]

   The material to which Ms Raheb earnestly deposes in considerable detail does not support the existence of a defence that she and Raheb Property Holdings were induced to enter into the loan agreement by reason of unfair pressure from Mr Rollason or because of fraudulent misrepresentations he made on behalf of WholeCap. It is patently evident that the group of companies that Ms Raheb describes were in severe financial difficulties. Receivers had been appointed to some of them. They were having difficulties paying creditors. There was no prospect that a bank would lend them sufficient funds to refinance their combined accumulated indebtedness. The need to pay for valuations of their several properties in the hope of doing so, was a necessary incident of their parlous state.

7. [42]

   Mr Farrell described it in terms by referring to:

8. [43]

   The following extract from the transcript of proceedings before me is instructive:

9. [44]

   As much as $225,000.00 of the $450,000.00 loan that was agreed to went immediately to pay outstanding amounts owed to sub-contractors. There can be no issue that these defendants received the direct benefit of those monies. The loan was also agreed to as a means of securing, if possible, as much as $13 million to consolidate the group’s total indebtedness. There could have been no realistic prospect of doing so without satisfying ordinary lending criteria, including the provision of reliable valuations for which they would have known they were expected to pay. The fact that the refinancing attempts were not successful does not indicate only that payment of the valuation fees with borrowed funds was somehow induced by unconscionable or unfair conduct.

10. [45]

    It is pellucidly clear that the group had no money to pay for valuation fees and that Ms Raheb was content to borrow money for that purpose. There is no suggestion in anything said by Ms Raheb in her affidavits that Mr Rollason guaranteed that the $13 million would be available if the valuations were paid for. The loan agreement was clearly entered into as the result of a desperation borne of circumstances that were anterior to and unconnected with any conduct by WholeCap.

Balance of convenience

1. [46]

   To the extent that the only security of any value which the plaintiff has is the property at Brighton-le-Sands, the diminishing value of any available equity in that property over time is a significant matter to be taken into account in the exercise of a discretion on the question of whether or not Raheb Property Holdings and Ms Raheb should be let in to defend.

2. [47]

   The uncontested evidence suggests, having regard to the secured creditors ranking ahead of the plaintiff, that there will be insufficient funds available upon a sale of the property to pay the plaintiff’s debt in full.

3. [48]

   Mr Farrell made the following submissions on this issue:

4. [49]

   The balance of convenience does not favour any order that would delay the sale of the property.

Costs

1. [50]

   Ms Raheb has acknowledged that she is not in a position to pay the costs that she accepts must be ordered against her or Raheb Property Holdings if the orders she seeks are made. To that extent any offer or undertaking to pay such costs is worthless.

Order

1. [51]

   It follows in my view that the application of Raheb Property Holdings and Ms Raheb must be dismissed with costs.

Judicial sale

1. [52]

   As already noted, Raheb Property Holdings has not filed a defence. There is no issue that WholeCap entered into the loan agreement and advanced money to Raheb Property Holdings or that the monies so advanced have not been repaid. The plaintiff is entitled to a money judgment against Raheb Property Holdings.

2. [53]

   The principles governing an application for judicial sale of real property were summarised by McGrath J in Bizcap Au Pty Ltd v Vo [2025] NSWSC 518 at [32]-[35]:

3. [54]

   By reason of its mortgage, the plaintiff has an equitable charge over the property. It seeks an order for judicial sale to enforce its equitable charge: King Investments at [81]. Notices under s 57(2)(b) of the Real Property Act or s 111(2)(b) of the Conveyancing Act 1919 are not required before the Court can exercise its equitable jurisdiction to order a sale in such circumstances: King Investments at [84].

4. [55]

   The expert valuation evidence of Mr Bridges as to the value of the property is that its market value as at October 2025, was $6,700,000.00.

5. [56]

   The NAB as first registered mortgagee is a party to the proceedings: viz, King Investments at [92]. The sum owed to the bank as at 22 August 2024, was $4,189,088.33.

6. [57]

   The only party who appears to oppose the making of an order for the sale of the property is Mr Raheb. However, he has filed no evidence in support of his assertion that he is the beneficial owner of the property. In any event, he has not attempted to address how that asserted position could affect the rights of an equitable chargee without notice. Similarly, he has adduced no evidence capable of establishing his allegations made with respect to the National Credit Code, even assuming (incorrectly) that he had standing to raise such matters.

7. [58]

   In these circumstances, the only issue of substance concerns the terms upon which the sale of the property ought to be conducted.

8. [59]

   Because the value of the property is apparently sufficient to satisfy the first registered mortgagee, it is appropriate that the conduct of the sale be given to the plaintiff: King Investments at [122]. The NAB’s interests are further protected by fixing a reserve price for the property at an amount not less than the sum owed to it or as otherwise agreed or determined by me.

9. [60]

   I am informed by counsel for the plaintiff that it is proposed that all costs and expenses associated with the sale of the property and the plaintiff’s legal costs of bringing it to sale in these proceedings be paid in priority to all other claims. The plaintiff’s entitlement to those sums is pursuant to an equitable lien over the fund constituted by the proceeds of the sale arising “by operation of law, under a doctrine of equity as part of a scheme of equitable adjustment of mutual rights and obligations”: Hewett v Court (1983) 149 CLR 639 at 645 per Gibbs CJ. Such a lien arises here by way of principles analogous to that stated by Dixon J in In re Universal Distributing Co Ltd (in liq) (1933) 48 CLR 171 at 174 and affirmed in Stewart v Atco Controls Pty Ltd (In Liq) (2014) 252 CLR 307 at [11]-[23]. As the Court stated in Stewart at [16]:

10. [61]

    It is anticipated that following payment of the costs and expenses referred to in prayer 6 of the amended statement of claim, the NAB’s secured debt is to be paid and the balance of the sale proceeds paid into Court to determine issues as to the priority of the various encumbrancees (if any). In these circumstances, I will direct the plaintiff to bring in short minutes of the orders it proposes.