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| Luxe Studios is now at 279 - 283 Liverpool Street Photo: SiN Images |
Philip Beazley of Beazley Singleton Lawyers, confirmed yesterday that he will file an appeal on behalf of Toppi against the June 13, 2014 judgement of Nicholas Manousaridis.
The judge ruled last week that the period for compliance with a bankruptcy notice served on Lavin by Toppi and her husband Neil Cunningham on November 29, 2013 be extended for a fourth time to allow Lavin to make an application for special leave to appeal to the High Court.
Lavin is seeking to appeal the decision of the NSW Supreme Court of Appeal, which last month dismissed her application to have an earlier judgement ordering her to pay Toppi $871,016.56c overturned.
The earlier judgement, handed down on September 12, 2013, gave Toppi and Cunningham the green light to serve Lavin with the bankruptcy notice but by the time they did, Lavin had already filed an appeal.
Since then, Lavin has applied to have the period for compliance with the bankruptcy notice extended three times while waiting for her appeal to be heard. In the course of obtaining extensions, Lavin has also won an order staying execution of the Supreme Court judgement. But the Court of Appeal dismissed her application on May 23, 2014.
According to the Manousaridis judgement of June 13, the extensions in the notice compliance period have been essential in enabling Lavin to avoid committing an act of bankruptcy, an event which would potentially expose her to devastating loss.
Lavin, it transpires, has two properties mortgaged to Westpac Bank. Under the terms of those mortgages, committing an act of bankruptcy constitutes a default, paving the way for Westpac to potentially seize the properties.
Toppi filed a creditor's petition in the Federal Court on June 6, two weeks after Lavin's appeal was dismissed and a week after Lavin filed her High Court application on May 30.
The petition states that Toppi is seeking a sequestration order to recover almost $875,000.
SiN understands the petition has yet to be served on Lavin, who was reportedly in Los Angeles when the Manousaridis judgement was handed down.
Toppi's creditor's petition and Lavin's special leave application represent almost the final stage in the drawn out disintegration of the two women's friendship, a disintegration which in terms of these proceedings began when they borrowed millions of dollars from NAB in 2005.
The money was used to purchase a property at 279 - 281 Liverpool Street to house their Luxe Studios venture. More money was then borrowed to renovate the premises and provide an operating facility for the business.
Initially, security and guarantees for these loans was provided by Toppi, Cunningham, Lavin and her company Dolores Lavin Management Pty Ltd (DLM). Then in 2008 NAB consolidated the various loans into one loan to Luxe Studios, obtaining guarantees from Toppi, Cunningham, Lavin, DLM and Luxe Productions Pty Ltd.
Not long afterwards, signs the relationship had soured began emerging. There have been accusations of gambling debts. In May 2009 Toppi found herself locked out of the premises.
She retaliated by asking a court to appoint receivers to Luxe Productions and Luxe Studios, which it did on November 11, 2009. To secure its interest in the Liverpool Street property, NAB appointed its own receivers on January 8, 2010.
Two months later the bank demanded the guarantors of the loans repay $7.8 million plus interest. In June 2010, just weeks after the Luxe property was sold for $4.9 million, NAB commenced recovery proceedings against DLM, Lavin, Toppi and Cunningham to recover an additional $4.25 million.
By this point Toppi and Cunningham had had their house on the market for 12 months. But fate worked against them. An offer of $5.6 million in March 2010 had to be declined because the Luxe property had not at that point sold and they were afraid the entire proceeds of the sale of their home would be consumed by their obligation to NAB.
When they did sell their home approximately 12 months later SiN understands they received almost $1 million less. It was nevertheless enough for them to pay the $2.9 million they were obligated to pay under the terms of the loan as their share, given the proceeds of sale of the Liverpool Street property had by this time also been paid to the bank.
But by this point, Lavin had already paid $1.35 million to NAB and negotiated a deed of settlement and release that saw the bank dismiss its proceedings against her and DLM and covenant not to sue her in relation to the matter. Added to the $4.9 million the bank trousered on the Luxe premises sale, this and Toppi and Cunningham's $2.9 million saw NAB finally mollified.
However it seemed to Toppi that she and her husband had taken a hit on the sale of their home and then ended up paying almost $1.6 million more than Lavin to discharge obligations they believed were owed to the bank equally. As a co-guarantor they reasoned Lavin now owed them $800,000.
Lavin disagreed, arguing her deal with NAB has the effect of denying Toppi and Cunningham the usual right of equitable contribution. Nor is this her only grievance.
In 2012 she launched a claim against her former school friend for a reported $400,000 which she argued was "excess interest", receiver's fees, legal and other costs associated with Toppi's decision to place Luxe Studios into receivership.
However it is the personal insolvency proceedings that have brought the pair to a point where one is stuck in limbo with a stayed judgement and an extendable bankruptcy notice while the other treads increasingly skeptical avenues of appeal, spruiking an argument lower courts didn't buy.
In the course of explaining why he allowed Lavin another extension for compliance with the bankruptcy notice, Judge Manousaridis described her chances of obtaining special leave based on arguments that four judges had already rejected as "slight". Then he made some other interesting remarks.
"... there is an inherent unattractiveness of the position Ms Lavin maintained in the Supreme Court and in the Court of Appeal, and which she wishes to advance in the High Court," the judge said.
"That position is that the rights of contribution that co-guarantor A has against co-guarantor B can be destroyed unilaterally by co-guarantor B entering into an agreement with the creditor without the agreement or knowledge of co-guarantor A".
Of course, the High Court may well find nothing unattractive about Lavin's argument and much to admire in her proposition that the deed of settlement and release with NAB must eliminate Toppi and Cunningham's right to pursue her for the $800,000. But that presupposes Lavin is granted special leave.
Her solicitor, Stephen Webster, did not return calls and SiN has been unable to seek comment from Lavin herself about Manousaridis' remarks or confirm if she is in the country.
Judge Manousaridis has ordered that the bankruptcy notice remain in effect until 28 days from the date of the determination of her application for special leave. But that lifeline could be cut if Toppi's mooted appeal overturns his decision to extend for the fourth time the bankruptcy notice's compliance period.
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She retaliated by asking a court to appoint receivers to Luxe Productions and Luxe Studios, which it did on November 11, 2009. To secure its interest in the Liverpool Street property, NAB appointed its own receivers on January 8, 2010.
Two months later the bank demanded the guarantors of the loans repay $7.8 million plus interest. In June 2010, just weeks after the Luxe property was sold for $4.9 million, NAB commenced recovery proceedings against DLM, Lavin, Toppi and Cunningham to recover an additional $4.25 million.
By this point Toppi and Cunningham had had their house on the market for 12 months. But fate worked against them. An offer of $5.6 million in March 2010 had to be declined because the Luxe property had not at that point sold and they were afraid the entire proceeds of the sale of their home would be consumed by their obligation to NAB.
When they did sell their home approximately 12 months later SiN understands they received almost $1 million less. It was nevertheless enough for them to pay the $2.9 million they were obligated to pay under the terms of the loan as their share, given the proceeds of sale of the Liverpool Street property had by this time also been paid to the bank.
But by this point, Lavin had already paid $1.35 million to NAB and negotiated a deed of settlement and release that saw the bank dismiss its proceedings against her and DLM and covenant not to sue her in relation to the matter. Added to the $4.9 million the bank trousered on the Luxe premises sale, this and Toppi and Cunningham's $2.9 million saw NAB finally mollified.
However it seemed to Toppi that she and her husband had taken a hit on the sale of their home and then ended up paying almost $1.6 million more than Lavin to discharge obligations they believed were owed to the bank equally. As a co-guarantor they reasoned Lavin now owed them $800,000.
Lavin disagreed, arguing her deal with NAB has the effect of denying Toppi and Cunningham the usual right of equitable contribution. Nor is this her only grievance.
In 2012 she launched a claim against her former school friend for a reported $400,000 which she argued was "excess interest", receiver's fees, legal and other costs associated with Toppi's decision to place Luxe Studios into receivership.
However it is the personal insolvency proceedings that have brought the pair to a point where one is stuck in limbo with a stayed judgement and an extendable bankruptcy notice while the other treads increasingly skeptical avenues of appeal, spruiking an argument lower courts didn't buy.
In the course of explaining why he allowed Lavin another extension for compliance with the bankruptcy notice, Judge Manousaridis described her chances of obtaining special leave based on arguments that four judges had already rejected as "slight". Then he made some other interesting remarks.
"... there is an inherent unattractiveness of the position Ms Lavin maintained in the Supreme Court and in the Court of Appeal, and which she wishes to advance in the High Court," the judge said.
"That position is that the rights of contribution that co-guarantor A has against co-guarantor B can be destroyed unilaterally by co-guarantor B entering into an agreement with the creditor without the agreement or knowledge of co-guarantor A".
Of course, the High Court may well find nothing unattractive about Lavin's argument and much to admire in her proposition that the deed of settlement and release with NAB must eliminate Toppi and Cunningham's right to pursue her for the $800,000. But that presupposes Lavin is granted special leave.
Her solicitor, Stephen Webster, did not return calls and SiN has been unable to seek comment from Lavin herself about Manousaridis' remarks or confirm if she is in the country.
Judge Manousaridis has ordered that the bankruptcy notice remain in effect until 28 days from the date of the determination of her application for special leave. But that lifeline could be cut if Toppi's mooted appeal overturns his decision to extend for the fourth time the bankruptcy notice's compliance period.
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This sounds like a nasty clash between old friends. With millions of dollars in the mix, this may go longer than the two years it has dragged on.
ReplyDeleteThank you for sharing your knowledge. You have a wonderful blog! Keep it up!
ReplyDeleteI bet the loans are lite or lo doc......coming to bear fruit
ReplyDeleteNot lite or low doc. Secured by real property valued in the multiples of millions of dollars on standard commercial terms.
Delete