Nolan Meats Pty Ltd v Fazlic[2013] QDC 335

DISTRICT COURT OF QUEENSLAND

1. [1]
   HIS HONOUR:   The applicant is Nolan Meats Proprietary Limited. Nolan Meats seeks a declaration that it has an equitable charge over property situated in 157 Logan Street, Eagleby against the interest of the first respondent, Asim Fazlic, and orders for sale pursuant to section 38 of the Property Law Act 1974.^[1]  I am satisfied on the evidence that on the 18th of November 2004, Mr Fazlic entered into a written credit application agreement with Nolan Meats. This agreement, by its terms and conditions, provided that Mr Fazlic “hereby charges in favour of the company, Nolan Meats, all property, both real and personal, with the amount of its indebtedness to the company until discharged”.

2. [2]
   In addition, clause 5 of the agreement provides:  “The company (Nolan Meats) reserves the right to charge:  (a) interest on any overdue accounts at the rate of two per cent per month until payment calculated on monthly balances, (b) all costs associated with the collection of overdue accounts, including but not limited to legal fees, on a solicitor/own client basis and collection of agent fees.”  I am also satisfied that Nolan Meats has obtained a judgment against Mr Fazlic for the supply of goods pursuant to that agreement. That judgment was entered in the Magistrates Court on default of Mr Fazlic filing a notice of intention to defend on 13 March 2013. The judgment was for $2748.59, inclusive of $50.42 of interest, to the 13th of March 2013 and $974.10 for costs. I am satisfied that Mr Fazlic has not discharged the debt.

3. [3]
   Nolan Meats now seeks to enforce the debt as it clearly has not been paid by Mr Fazlic. It has been held that to constitute a charge in equity, it is not necessary that any general words of charge be used. It is sufficient if the Court can fairly gather from the language of the instrument that the intention of the parties is to constitute the property referred to as a security, per Philippides J in Boral Resources Queensland Proprietary Limited v Andrew and Another [2010] QSC 491 at paragraph 4. Clearly, in this regard the intention of the parties to the agreement is plain and objectively ascertainable. The plain reading of the agreement yields a conclusion that Nolan Meats holds an equitable charge on the property against the interest of Mr Fazlic.

4. [4]
   I should say here the evidence shows that Mr Fazlic and his wife are joint tenants as owners of the property at 157 Logan Street, Eagleby. I am satisfied that Nolan Meats comes within the definition of co-owner in the Property Law Act,^[2] that is, that word means “an encumbrancee of the interest of a joint tenant or tenants in common”. It also defines co-ownership as being “whether at law or in equity”. See section 37 of the Act.^[3]  Section 3 through schedule 6 also defines encumbrancee as “including every person entitled to the benefit of an encumbrance”. Encumbrance is also defined as “a mortgage in fee or for a lesser estate or interest and a trust for securing money and a lien and a charge of apportion, annuity or other capital or annual sum”. I am satisfied that Nolan Meats’ equitable charge is within the meaning of encumbrancee and thus a co-owner for the purposes of section 38 of the Act.^[4]

5. [5]
   It has been said in authorities that whether the Court will order a statutory trustee for sale to be appointed is a matter of discretion. See Re Permanent Trustee Nominees Canberra Limited [1989] 1 Qd R 314 at 321 per Connelly J. Also Daubney J in Official Trustee and Bankruptcy v Cameron [2008] QSC 89 at paragraph 22. As has been observed, the section refers to “the Court may on application appoint the trustees for the statutory trust for sale”. In this matter I am satisfied that Mr Fazlic owes the money and has sought to have it paid by reference to bankruptcy, that is, the creditors have had a meeting and therefore it is argued Nolan Meats comes within the expression of creditors and therefore must seek to be paid whatever sum is made available to the creditors.

6. [6]
   However, I am satisfied that Nolan Meats is a secured creditor. I’m also satisfied that nothing has been demonstrated by Mr Fazlic that would cause me to not order as sought by Nolan Meats. The money has been owing for quite some time and although in the submissions of Mr Fazlic it was said he would apply for an instalment order, today, I have not been given any evidence that he has done so. While the sum involved may be not large, nevertheless, it seems to me it is due and owing and Mr Fazlic freely entered into the agreement that provided for an equitable charge on his property. I am satisfied the circumstances have arisen whereby, in the exercise of my discretion, I should order that trustees be appointed for the statutory trust of sale and that I should make the declaration as sought.

7. [7]
   I am also satisfied that Mr Combis and Mr Denoris, who are chartered accountants and registered as official liquidators, are proper people to be appointed for this purpose. I’m satisfied there is nothing that ought persuade me against making an order under section 38 of the Act.^[5] The submissions that have been made by Mr Fazlic – in particular, one submission is that Nolan Meats was not the person in the agreement because the ACN number was not duplicated in the agreement when it was previously mentioned in the agreement as another number – does not persuade me that I should stay my hand. I am satisfied Nolan Meats was at all times the party to the agreement and there’s no reason to think otherwise. The incorrect ACN number I accept is just an error. Further, I consider because the judgment has been entered in the Magistrates Court, Mr Fazlic is estopped from going behind the agreement in these circumstances. Therefore, I was given a draft order the last time the matter was before me and today, for these reasons, I make an order as per the draft.