Fai Properties Pty Limited v John and Evangelia Apostolopoulos [2001] ACTSC 47 (18 May 2001)

Last Updated: 12 April 2002

FAI Properties Pty Limited v John and Evangelia Apostolopoulos

[2001] ACTSC 47 (18 May 2001)

CATCHWORDS

APPEAL - stay of execution pending appeal against award of compensation by Tenancy Tribunal - stay granted on conditions that part of award be paid pending appeal and that sum paid be secured by charge on applicant's property - proposed sale of property charged - sale price insufficient to cover amount of charge - readjustment of rights - creditor with prior unregistered security to be made party to application.

STAY OF EXECUTION - stay granted pending appeal on conditions - assumptions on which conditions based rendered inapplicable by conduct of party - variation of conditions.

No. SCA 79 of 2000

Judge: Miles CJ

Supreme Court of the ACT

Date: 18 May 2001

IN THE SUPREME COURT OF THE )

) No. SCA 79 of 2000

AUSTRALIAN CAPITAL TERRITORY )

BETWEEN: FAI PROPERTIES PTY LIMITED

Appellant

AND: JOHN AND EVANGELIA

APOSTOLOPOULOS

Respondents

ORDER

Judge: Miles CJ

Date: 18 May 2001

Place: Canberra

THE COURT PROPOSES THE FOLLOWING ORDERS:

1. That the applicants join Mr and Mrs Nanitsos as respondents to this application within 48 hours.

2. That the respondent withdraw the caveat.

3. That the applicants complete the sale of the property on or after 25 May 2001.

4. That the net proceeds of the sale be paid into an appropriate trust account to abide further order of the Court.

5. That the net proceeds of the sale be taken to be:

Sale Price: $714,000.00

Less

Agent's commission $6,606.00

C & E Nanitsos $225,000.00

National Australia Bank (est.) $385,000.00

ACT Revenue (est.) $3,000.00

ACTEWAGL $787.82

Bradley Allen $825.00

Registrar General $370.00

Interest due to purchasers (est.) $10,000.00

Vandenberg Reid $890.00 $632,478.82 (est)

Balance $81,521.00 (est)

__________

6. That the costs of application be reserved.

7. That the matter be relisted for 25 May 2001 at 9.30 am.

1. This application raises the usual sorts of difficulties that arise when the liabilities of a party to litigation exceed that party's assets and when the impecunious party stands to make substantial financial gain from another party if successful in the litigation. The difficulties are compounded when, again, as in the present case, there are interested persons who are not parties to the litigation.

2. The applicants (Mr and Mrs Apostolopoulos) succeeded in a claim for compensation in the Tenancy Tribunal against the respondent (FAI). On 3 November 2000 the Tenancy Tribunal ordered FAI to pay $193,000.00 to them. FAI appealed to this Court. The appeal was heard by Spender J and judgment was reserved on 2 May 2001.

3. FAI paid Mr and Mrs Apostolopoulos $50,000.00 on 8 December 2000 pending the outcome of the appeal and without further order. FAI applied for a stay of execution pending the appeal. On 15 December 2000 Higgins J granted the stay on a number of conditions, including conditions that FAI pay a further $90,000.00 on account of the compensation awarded and that Mr and Mrs Apostolopoulos execute a charge over their property at Yarralumla in favour of FAI to secure any order for payment by them to FAI.

4. In accordance with the orders made on 15 December 2000, FAI paid Mr and Mrs Apostolopoulos a further sum of $90,000.00 on 22 December 2000, making a total of $140,000.00 paid on account of the compensation awarded, and they executed the charge. FAI caused a caveat to be placed on the title in order to protect its interest. The property was already subject to a registered mortgage to the National Bank of Australia and a caveat lodged on behalf of a Mr and Mrs Nanitsos.

5. The only substantial asset owned by Mr and Mrs Apostolopoulos is their interest in the property at Yarralumla. They put it up for sale and exchanged contracts with purchasers on 1 March 2001 for a sale price of $714,000.00. It may be noted that the sale price was $14,000.00 above the anticipated value referred to in O 1 of the orders made on 15 December 2000, and that the contract for sale provided for interest payable by Mr and Mrs Apostolopoulos to the purchasers pending completion.

6. However with regard to their indebtedness to Mr and Mrs Nanitsos, referred to in O 4 of the orders of 15 December 2000, Mr and Mrs Apostolopoulos now say that it has grown by some $27,532.00 because of interest and other advances under an unregistered "all moneys" mortgage given by them to Mr and Mrs Nanitsos on 15 October 1997.

7. Completion of the sale of the Yarralumla property was fixed for 31 March 2001. However, Mr and Mrs Apostolopoulos were unable to complete the sale because FAI and Mr and Mrs Nanitsos refused to remove their caveats unless and until the amounts secured by the charge and the unregistered mortgage respectively were paid out. Mr and Mrs Apostolopoulos were unable to pay out FAI from the proceeds of the proposed sale because of an anticipated shortfall of some $30,000.00. That shortfall arises as follows (as at 14 May 2001):

Sale Price $714,000.00

Less

Agent's commission $6,606.00

C & E Nanitsos $252,532.14

National Australia Bank $380,081.26

ACT Revenue Office $2,922.43

ACTEWAGL $787.82

Bradley Allen $825.00

Registrar General $370.00

Interest due to buyers $8,607.28

Vandenberg Reid $890.30 $653.622.23

Balance due on settlement: $60,377.77

__________

8. It may be noted that the interest due to the National Australia Bank and to the purchasers continues to increase, as may the amount due to the ACT Revenue Office.

9. Mr and Mrs Apostolopoulos say that whilst the caveat lodged by FAI remains on the title they are unable to complete the sale and that in order to resolve the situation further compliance with the orders of Higgins J of 15 December 2000 be excused and that the following orders be made:

1. That the appellant (FAI) provide a withdrawal of caveat in registrable form in respect of the caveat lodged by it over the property at 27 Mueller Street, Yarralumla in the Australian Capital Territory.

2. The respondent pay into the trust account of Vandenberg Reid the net proceeds of the sale of the property at 27 Mueller Street, Yarralumla in the Australian Capital Territory.

3. The net proceeds referred to in 2 above not to be released until further order of the Court.

4. The respondents pay the appellant's costs of the application.

10. FAI says that the present situation is due to the fault of Mr and Mrs Apostolopoulos, particularly their failure to disclose as at the date of the orders of 15 December 2000 their increasing liability to Mr and Mrs Nanitsos, further their failure to disclose thereafter their decision to exchange contracts with the purchaser on terms by which they incur liability for interest pending completion. FAI further says that it should not have to forgo its security on the assets of Mr and Mrs Apostolopoulos since, in the event of FAI winning the appeal, it will be entitled to a return of the $140,000.00 it has already paid as well as the cost of the appeal. I do not know about costs in the Tenancy Tribunal. However, FAI does not offer any solution to the impasse that has been reached.

11. In general terms, Mr and Mrs Apostolopoulos say that the longer the sale is postponed the less chance FAI has of enforcing any right it may acquire to recover the amount paid and any costs awarded.

12. It is to be observed that the orders of Higgins J on 15 December 2000 were made pending the determination of the appeal and pending further order. They clearly do not finally dispose of the rights of the parties and are amenable to review in the light of changed circumstances.

13. Furthermore, on the material before me, the orders of 15 December 2000 were impliedly made on a shared assumption between the parties and the Court that in the event of the sale of the Yarralumla property the proceeds available to FAI would be at least $90,000.00. It would seem to me that there was a further assumption, or perhaps an assumption implicit in that just mentioned, that Mr and Mrs Apostolopoulos would do nothing to further encumber the property or hinder its sale. By their failure to disclose the arrangements with Mr and Mrs Nanitsos by which it is said that the property is encumbered by a prior unregistered mortgage to the extent of $27,532.14 more than what was disclosed by them or on their behalf at the time the orders were made, Mr and Mrs Apostolopoulos have by their own conduct destroyed the validity of both assumptions. The status quo should be frozen to protect the interests of their creditors and not to suit their convenience.

14. Having been told that Mrs Nanitsos is the mother of Mrs Apostolopoulos, I take into account it has not been shown positively that Mr and Mrs Apostolopoulos are at arms length from Mr and Mrs Nanitsos.

15. In my opinion, despite the prospects of increasing the already substantial cost of this litigation, the status quo is best preserved and the future prospects of the parties are best achieved by orders along the following lines:

1. The applicants are to join Mr and Mrs Nanitsos as respondents to this application within 48 hours.

2. The respondent is to withdraw the caveat.

3. The applicants are to complete the sale of the property on or after 25 May 2001.

4. The net proceeds of the sale are to be paid into an appropriate trust account to abide further order of the Court.

5. The net proceeds of the sale should be taken to be:

Sale Price: $714,000.00

Less

Agent's commission $6,606.00

C & E Nanitsos $225,000.00

National Australia Bank (est.) $385,000.00

ACT Revenue (est.) $3,000.00

ACTEWAGL $787.82

Bradley Allen $825.00

Registrar General $370.00

Interest due to purchasers (est.) $10,000.00

Vandenberg Reid $890.00 $632,478.82 (est)

Balance $81,521.00 (est)

__________

6. Costs of application reserved.

7. Relist for 25 May 2001 at 9.30 am.

16. Subject to counsel agreeing on short minutes of the orders, I shall hear counsel on the form of those orders.

I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Chief Justice Miles.

Associate:

Date: 18 May 2001

Counsel for the applicants: Mr A Tsirimokos

Solicitor for the applicants: Vandenberg Reid

Counsel for the respondent: Mr D J C Mossop

Solicitor for the respondent: Minter Ellison

Date of hearing: 11 May 2001

Date of judgment: 18 May 2001