Friend v Reavill Farm Pty Ltd

The defendants apply by a notice of motion filed in court yesterday seeking in substance that all enforcement actions are stayed.

The background to the proceedings is set out in the judgment of Harrison J in Friend v Reavill Farm Pty Ltd [2018] NSWSC 1321 given on 29 August 2018. In that judgment, Harrison J found that the defendants entered into a loan agreement and mortgage on the 27th of July 2016 to borrow $785,000 for a twelve month period. Defaults occurred during the twelve month period, but the principal default relied upon by the plaintiff in seeking summary judgment against the defendants was a failure to repay the principal on 26 July 2017. Justice Harrison gave judgment for possession of the properties and judgment in the sum of $879,556.24.

The defendants applied to stay execution of the judgment to enable them to refinance the loan. Justice Harrison said at [9]-[10] of his judgment:

Nevertheless, his Honour stayed execution on the possession judgment until 7 September 2018.

At some point, it appears the plaintiffs obtained a writ to seize goods of the defendants to enforce the monetary judgment they obtained.

On 30 November 2018, the solicitors for the plaintiffs wrote to the defendants saying that execution of the writ of possession would be effected unless payment of the full amount outstanding was received. That appears to have led to a further application by the defendants for a stay. That application came before Harrison J on 3 December 2018. That application was based on what was said to be an offer of finance evidenced in a letter from the defendants' broker Axiom Mortgage Solutions dated 30 November 2018. That letter said that the broker confirmed a loan approval from investors in two amounts totalling approximately $950,000, with settlement to occur on or before 22 December 2018.

Justice Harrison refused the further stay, and in an email from his Associate to the parties subsequently noted that the defendants indicated that they would be in a position to discharge all existing indebtedness to the plaintiffs with the assistance of a refinancier by no later than 4pm on Friday 14 December 2018.

That finance did not become available by that date, and when further threats were made by the plaintiff to enforce their judgment the present application was made seeking until 22nd December 2018 in accordance with the same letter from Axiom.

When the proceedings were before me yesterday, I made enquiries about the execution of loan documents and mortgage documents. I was informed by Belinda Nott, who was authorised to appear on behalf of the defendants, that it was not possible for these documents to be signed until settlement figures had been provided by the plaintiff. There was a condition set out in the letter from Axiom which required copies of the most recent loan statements to confirm payout figures. Ms Nott informed me that there were no loan statements, but it was necessary for her to obtain a payout figure.

In her submissions both yesterday and this morning, Ms Nott asserted that Mr Champion, a director of the defendants, in a conversation with Sandra Binney of the plaintiffs’ solicitors, had sought a payout figure. She said that the lenders will not generate loan documents until a payout figure is provided.

In an affidavit sworn 18 December 2018, a draft of which was forwarded to the defendants yesterday, the solicitor for the plaintiffs, Kelly Waring, says that on 17 December she received an email from Belinda Nott at 7.25am which stated:

Mr Champion has sworn two affidavits in support of the present application, the second of those being this morning, 18 December 2018. Mr Champion says nothing in that affidavit to contradict what Ms Waring has said that the first time settlement figures were sought was in the email from Ms Nott yesterday at 7.25am, nor does he say anything about any other conversation with Ms Binney where settlement figures were requested by him. Mr Champion says nothing in his affidavit to suggest that the lack of a payout figure was the cause of any delay in obtaining the finance.

More significantly, Ms Waring relates a conversation yesterday with the broker, Mr Steve Goodman, where Mr Goodman said this:

The solicitor asked Mr Goodman if the lender had a solicitor that she could talk to. Mr Goodman said:

Ms Waring subsequently sent an email to Mr Goodman yesterday referring to their conversation and asking:

Mr Goodman replied in an email this morning saying:

The plaintiffs resist any further stay being granted. They need to remove the defendants’ goods which are still on the land so that it can be appropriately marketed. Whilst accepting that marketing is not likely to take place over the immediate Christmas and New Year period, the plaintiffs say that if they are not in a position to remove the goods from the land during the course of this week it is likely that the marketing of the property will be delayed by about a month.

In my opinion, the material put forward does not provide any certainty that a refinance will take place either by 22 December, by Christmas, by the 21 day period that Mr Goodman seeks, or at all. No material is available from the prospective lenders. A broker is ordinarily the agent of the borrowers and not the lender, and in that sense the letter from the broker cannot be held in that way to bind the lenders to this uncertain arrangement. Mr Goodman says nothing in his conversations with Ms Waring or in his emails to suggest that the lenders will not generate loan documents until a payout figure is provided. That is not, ordinarily, how this type of arrangement works. Mr Goodman suggests in his email that a final commitment has not been received from the prospective lenders.

The debt has been outstanding for almost eighteen months. The defendants have been given a number of opportunities in the past to refinance in order to pay out this debt to avoid the land being taken from them and sold. This refinance has not been forthcoming.

Justice Harrison considered virtually the same application on 4 December 2018 and refused it. At that time the arrangement was that there would be a payout by 14 December. The fact that the same lenders still do not appear to have made a commitment to the refinance some 18 days after the broker’s letter, as Mr Goodman asserts, is only a further indication to me of the unlikelihood of this finance ever eventuating.

For those reasons, the notice of motion by the defendants must be dismissed. The defendants should pay the plaintiffs’ costs.