FEDERAL COURT OF AUSTRALIA

Nugawela v Dudley (No 2) [2020] FCA 135

ORDERS

THE COURT ORDERS THAT:

1.    Orders 1 and 2 of the orders made on 7 February 2020 in this matter are discharged.

2.    The interlocutory application for injunctive relief filed on 6 February 2020 is dismissed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

REVISED FROM TRANSCRIPT

MCKERRACHER J:

1    On 7 February 2020, as a matter of urgency on an ex parte application, I granted very brief interim relief to restrain a possible sale of property in Greenwood (the Greenwood property) in circumstances explained in my brief reasons in support: Nugawela v Dudley [2020] FCA 102. I directed that copies of the papers be served on the Commonwealth Bank, which I was informed was the Bank effecting the sale, albeit that it has become apparent that the seller is actually Bankwest being a subsidiary of the Commonwealth Bank. I also required service of the papers on the respondent, the Trustee in Bankruptcy. Both parties have appeared today to press for the discharge of those orders.

2    The Bank appears by leave through Ms Guy, and the Trustee is represented by Mr Touyz.

3    The relief was granted only until today because it was by no means apparent that the Bank was not exercising a legitimate right. In further support of the relief, the applicant, Dr Nugawela, has filed an additional affidavit today to this effect:

1.    I am the Applicant in these Court proceedings.

2.    I make this further affidavit in support the interlocutory application to be heard on 11 February 2020. Annexures with this affidavit address those annexures listed but not filed with the urgent affidavit lodged late on 5 February 2020. Included in this affidavit are documents handed up in court on 7 February 2020.

3.    Attached to this affidavit and marked with the letters ‘PAN - 1C’ is a true copy of search of the title to the Greenwood Property dated 6 February 2020.

4.    The Annexure “PAN -3” is a true copy of a letter dated 1 September 2017 by the [Trustee] to [me] relating to the proposed lease-back of the Greenwood Property through RSM Australia Partners. The trustee was in contact with my lawyers at the time. Nothing eventuated, and the medical practice continued at the premises.

5.    There are a number of economic advantages to me (and consequentially to the administration of my bankruptcy) inherent in my being able to resume and continue my medical practice at the Greenwood Property. In particular, the licence issued by the local council for the use of the property in operating a medical practice was issued personally to me in 1979 and has continued to date. Annexure “PAN-4”

6.    The Annexure “PAN-5” is a copy of an emails dated 12 December 2017 and 25 June 2018 referring to the proposed sale of the Greenwood property to City Plus Holdings between the lawyer for the Commonwealth Bank (previously Bank West), HWL Ebworth and [Mrs] Nugawela.

7.    The Annexure “PAN-6” +++ already on File wad528

8.    The Annexure “PAN-7” is a copy of an ASIC search of Citi Plus Holdings.

9.    The orders sought by the [Bank] and the [Trustee] at the Supreme Court was for possession only. Any further amendments would be deemed a “fresh step” and outside the jurisdiction of the Supreme Court. This would allow continued occupation of the Greenwood property and continued operation of the medical practice and business there pending settlement and lease-backs approved by the Trustee as noted above. Annexure “PAN-8” is a transcript of the hearing of 21 September 2017.

10.    On 4 October 2017, [Ms] Guy, lawyer for the Bank lodged an affidavit with the Supreme Court confirming agreement with the Trustee as to agreement to seek only possession of the properties. Annexure “PAN-9”

11.    On 5 October 201 7, in the absence of [Dr Nugawela], [Ms] Guy lodged a Minute of Proposed Orders listing “vacant possession” as orders sought, without drawing the amendment to the notice of Justice Allanson. His Honour intended that the order sought was per the affidavit lodged with the court for “possession” the day before, and entered the wording of an “alternative” order (two were handed up) granting “vacant possession” thus inadvertently creating a fresh step His Honour sought to avoid. Annexure “PAN-10”.

4    The Bank, which, as I say, has been given leave to appear, also relies on an affidavit deposed to by Mr Banfield who has explained some of the history which had not been made available to me in the urgent relief sought on 7 February 2020, particularly as to several sets of previous court proceedings.

5    As was common ground, the restraint was sought in respect of the sale of the Greenwood property used by Dr Nugawela as a general medical practitioner . It was explained by the Bank that it was exercising its rights as mortgagee in possession in respect of the Greenwood property, and that Bankwest had commenced mortgagee recovery proceedings in the Supreme Court of Western Australia as long ago as May 2017 against Dr Nugawela for orders for possession of two properties, namely, the Greenwood property and another property in Greenwood. The history of that and other relevant events is set out and described in the Bank’s affidavit as follows:

…

Bankwest’s mortgagee action

9.    On 1 May 2017, Bankwest commenced mortgagee recovery proceedings in the Supreme Court of Western Australia proceedings CIV 1694 of 2017 against [Dr Nugawela] for orders for possession of 2 properties, namely the [Greenwood property] and another property located in Greenwood, Western Australia (Mortgagee Action).

10.    Judgment was entered for Bankwest and orders were made granting vacant possession of both properties to Bankwest on 19 October 2017 - see Nugawela v Commonwealth Bank of Australia [2017] WASC 303. Annexed to this affidavit and marked “DM1” is a copy of that judgment and written reasons.

11.    On 6 November 2017, [Dr Nugawela] filed an appeal in the Supreme Court of Western Australia Court of Appeal proceedings CACV 106 of 2017. The appeal was dismissed on 23 April 2018 - Nugawela v Commonwealth Bank of Australia [2018] WASCA 70. Annexed to this affidavit and marked “DM2” are copies of those orders and written reasons.

12.    On 30 April 2018, Bankwest applied to enforce the Judgment via a Property (Seizure and Delivery) Order dated 18 May 2018 (PSDO) and the Sheriff executed that order via an eviction at the [Greenwood property] on 21 June 2018. Bankwest secured possession of [the Greenwood property] at that time. Annexed to this affidavit and marked “DM3” is a copy of that PSDO.

13.    On 20 June 2018, [Dr] Nugawela filed an application pursuant to the Civil Judgments Enforcement Act 2004 (WA) for a suspension order in respect of the PSDO. The application was heard by Registrar Whitby on 25 June 2018 and was dismissed. Annexed to this affidavit and marked “DM4” is a copy of those orders.

14.    On 26 October 2019, Bankwest (as mortgagee in possession and following the marketing of the [Greenwood property] for sale) entered into a contract for sale of the [Greenwood property] (Bankwest Contract). Settlement under the Bankwest Contract was scheduled to be effected on 10 February 2020, but has been placed on hold following the assumption described above at paragraph 7 above and pending further orders of this Honourable Court. Annexed to this affidavit and marked “DM5” is a copy of that contract for sale. The purchaser under the Bankwest contract is a bona fide third party purchaser.

Other Contract for Sale

15.    On or about 27 November 2017, Kellie Ward, formerly a collections officer employed by Bankwest, received an email from Mrs Nugawela. The email attached a copy of an offer and acceptance for the sale of the [Greenwood property] from [Dr Nugawela] to CityPlus Holdings Pty Ltd as trustee for the Shimizu Family Trust dated 30 November 2017 (Other Contract). Annexed to this affidavit and marked “DM6” is a copy of the Other Contract.

16.    On 12 December 2017, HWLE exchanged emails with Mr Dudley and Tony Drayton on behalf of Mr Dudley, regarding the Other Contract. Mr Drayton advised that the sale was not authorised by Mr Dudley and on 12 December 2017, [Ms] Guy of HWLE sent an email to [Dr Nugawela] advising him of the same. Annexed to this affidavit and marked “DM7” are copies of those emails.

Mrs Nugawela’s interest in the [Greenwood property]

17.    On 28 September 2017, [Mrs] Nugawela ([Dr Nugawela’s] ex-wife …) registered caveat N729618 over the certificate of title for the [Greenwood property] to notify of her interest in the [Greenwood property] pursuant to orders made in the Family Court of Western Australia on 23 March 2016. Annexed to this affidavit and marked “DM8” is a copy of that caveat.

18.    Mrs Nugawela did not participate in the Mortgagee Action.

19.    On 21 June 2018, Mrs Nugawela commenced an urgent application in this Honourable Court in proceedings WAD 272 of 2018 for an injunction to stay the eviction scheduled to occur that day. The application was heard by the Honourable Justice Banks-Smith on 21 June 2018 and was dismissed - Nugawela v Commonwealth Bank of Australia [2018] FCA 960. Annexed to this affidavit and marked “DM9” are copies of those orders and written reasons.

Settlement of Bankwest’s MIP sale

20.    On 12 December 2019, HWLE wrote to the solicitors for Mrs Nugawela advising that:

(a)    the [Greenwood property] had been sold;

(b)    settlement was expected on 16 January 2020;

(c)    there would be no surplus proceeds of sale available to Mrs Nugawela under her caveat;

and

(d)    requesting that they arrange for a withdrawal of caveat to be signed and returned to HWLE.

Annexed to this affidavit and marked “DM10” is a copy of that letter.

21.    HWLE (and Bankwest) did not received a response to that letter.

22.    On 15 January 2020, Bankwest lodged an application pursuant to section 138B of the Transfer of Land Act 1893 (WA) for the Registrar of Titles to issue notice and remove Mrs Nugawela’s caveat from the certificate of title for the [Greenwood property]. Mrs Nugawela did not obtain or serve orders to extend the operation of the caveat.

23.    The caveat was removed from the certificate of title on 5 February 2020.

24.    Annexed to this affidavit and marked “DM11” is a copy of the Certificate of Title for the [Greenwood property] as at today.

25.    Bankwest is now ready willing and able to settle the sale of the [Greenwood property] pursuant to Bankwest’s Contract and subject to further orders made from this Honourable Court.

6    Dr Nugawela says that he will be prejudiced by the sale due to his inability to practise medicine at the Greenwood property and that this could all have been avoided if the Trustee had approved the earlier sale.

7    Nothing in the materials put before me indicates, so far, that the Trustee should have done anything other than he has. The Trustee would have no interest, power or responsibility to prevent the bank from exercising its lawful powers as mortgagee to sell the Greenwood property.

8    Such remedies as may be open to Dr Nugawela, as a bankrupt, to review the powers of the Trustee remain open. In the meantime, there is no reason why the Bank should not be in a position to exercise its powers. If Dr Nugawela has suffered some damage in consequence of any action of the Trustee, that is a matter for him to pursue in due course, but the Bank should not be prevented in the meantime from carrying out its lawful activity.

9    In those circumstances, para 1 and para 2 of the orders made on 7 February 2020 will be discharged. I refuse any further relief of an injunctive nature. The application is dismissed.

Associate:

Dated:    14 February 2020