Defined Properties Investment ATF the Defined Property Trust No.1 v National Commercial Finance Pty Ltd

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:

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.

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:

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:

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.

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.

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:

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:

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.

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.

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.

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.

In these circumstances I propose to make the following orders: