Application by Westpac Banking Corporation – Charara v Konneh; Konneh v Charara; Cellnet Group Limited v Aravanis [2015] NSWSC 1084

Application by Westpac Banking Corporation – Charara v Konneh; Konneh v Charara; Cellnet Group Limited v Aravanis [2015] NSWSC 1084

The guarantee and indemnity executed by Mr Konneh created an equitable charge over his land securing Cellnet's debt. Cellnet's charge was created before Mr Charara's alleged interest and no postponing conduct was established. The District Court of Queensland judgment debt had not been set aside or overturned, Cellnet's secured interest survived bankruptcy, the duty paid on the caveat did not limit the security to $16,000, insurance recovery did not extinguish the debt, and s 440J of the Corporations Act 2001 (Cth) did not invalidate the judgment. Because Cellnet's secured judgment debt exceeded the amount paid into Court, the whole fund was payable to Cellnet.

Jurisdiction
Australia
Judgment Date
07 August 2015
Procedural Posture
Common Law Proceedings Concerning Distribution of Surplus Funds Paid Into Court Following Sale of Mortgaged Property / Determination of Three Notices of Motion for Payment Out of Funds Paid Into Court
Outcome
Application by Charara dismissed; application by Konneh dismissed; funds paid into Court by Westpac Banking Corporation ordered to be paid to Cellnet Group Ltd.
Legal Topics
['priorities Between Equitable Interests' 'distribution of Surplus Mortgagee Sale Proceeds' 'equitable Charge Created by Guarantee' 'trustee Act Payment Into Court' 'secured Creditor Rights in Bankruptcy' 'effect of Voluntary Administration on Enforcement of Director Guarantee' 'costs of Interlocutory Subpoena Motion']
['equity' 'real Property' 'bankruptcy' 'corporations' 'civil Procedure'] ['priorities Between Equitable Interests' 'distribution of Surplus Mortgagee Sale Proceeds' 'equitable Charge Created by Guarantee' 'trustee Act Payment Into Court' 'secured Creditor Rights in Bankruptcy' 'effect of Voluntary Administration on Enforcement of Director Guarantee' 'costs of Interlocutory Subpoena Motion']

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Procedural Posture

Common Law Proceedings Concerning Distribution of Surplus Funds Paid Into Court Following Sale of Mortgaged Property / Determination of Three Notices of Motion for Payment Out of Funds Paid Into Court

Legal Issues

  1. 1 ['Whether Cellnet Group Ltd had an equitable charge over the land securing the judgment debt owed by Mr Konneh.' "Whether Cellnet's equitable interest had priority over Mr Charara's later claimed interest." 'Whether the Court should go behind the District Court of Queensland default judgment on asserted grounds of fraud or denial of natural justice.' "Whether Cellnet's claim was barred or affected by Mr Konneh's bankruptcy." "Whether Cellnet's claim was limited to $16,000 because of the duty paid on its caveat." "Whether any insurance recovery or tax treatment by Cellnet extinguished or reduced Mr Konneh's debt." 'Whether s 440J of the Corporations Act 2001 (Cth) invalidated or affected the District Court judgment against Mr Konneh.' "What costs order should be made in relation to Cellnet's motion to set aside the subpoena and notice to produce."]

Ratio Decidendi

The guarantee and indemnity executed by Mr Konneh created an equitable charge over his land securing Cellnet's debt. Cellnet's charge was created before Mr Charara's alleged interest and no postponing conduct was established. The District Court of Queensland judgment debt had not been set aside or overturned, Cellnet's secured interest survived bankruptcy, the duty paid on the caveat did not limit the security to $16,000, insurance recovery did not extinguish the debt, and s 440J of the Corporations Act 2001 (Cth) did not invalidate the judgment. Because Cellnet's secured judgment debt exceeded the amount paid into Court, the whole fund was payable to Cellnet.

Court Disposition

Application by Charara dismissed; application by Konneh dismissed; funds paid into Court by Westpac Banking Corporation ordered to be paid to Cellnet Group Ltd.

Orders

  • ["That Mr Charara's application by notice of motion filed 7 May 2014 be dismissed." "That Mr Konneh's application by notice of motion filed 27 May 2014 be dismissed." 'Pursuant to s 98 of the Trustee Act 1925, that the money paid into court by Westpac Banking Corporation be paid to Cellnet Group Ltd.' "No order as...