Judge blasts 'harsh' treatment in Sisters' forced sale of home

Justice Peter Vickery said the actions of MBF Investments Pty Ltd, a finance company controlled by the Abbotsford-based Sisters of the Good Shepherd, had been "harsh, unreasonable and unnecessary".

The judge found MBF did not act in good faith on August 18, 2001, when it auctioned the family home of businessman Damien Nolan, overlooking parkland at Studley Park.

In a decision with references to Working Dog's movie The Castle, Shakespeare's Merchant of Venice and the 1948 Universal Declaration of Human Rights, Justice Vickery said MBF had deprived Mr Nolan of his rights and its actions were "manifestly unreasonable".

"It amounted to an arbitrary interference of the most serious kind with Mr Nolan's right to continue in occupation of his home," the judge said.

Neither Mr Nolan nor lawyers representing MBF would comment on the case.

The Sisters of Good Shepherd's stated core values include compassion, respect, dignity and justice, but at trial in April and May, the court heard a bizarre tale about the Nolan family's nightmare in 2001 as MBF tried to recoup $1.5 million Mr Nolan owed against his sprawling property.

Mr Nolan had two mortgages that were secured by a home on one title, an adjoining corner block of land with gardens, plus a tennis court at the rear on a small third block.

He agreed to sell the vacant land and tennis court to discharge the MBF mortgage, but he begged MBF not to sell the family home if at all possible.

Months of negotiations between the Nolans and MBF, their lawyers, ANZ as the second mortgage provider, plus some of Melbourne's best-known real estate agents led to passionate entreaties on Mr Nolan's behalf.

The court heard MBF's board preferred the two vacant blocks be sold first and that the family's home should only be sold as a last resort. This was also the advice MBF obtained from senior counsel Alan Archibald, QC.

But the court heard that MBF's lawyer, John Date snr, of Cornwall Stodart, who has also been an MBF director since 1980, pursued a different course for reasons that were not clear.

Mr Date resolved to sell the vacant corner block, which was expected to fetch up to $950,000, and the house, valued about $800,000. He would only sell the tennis court if necessary.

The court heard that two months before the auction, one of Mr Nolan's friends urged the then head of the Sisters of the Good Shepherd to show compassion and, if needed, sell the surrounding land but not the Nolans' home. It was not the Christian thing to do, he implored.

The response from Sister Anne Dalton was that, as sorry as she might be, the matter was in the hands of the lawyers.

On the eve of the auction, Mr Nolan's lawyers faxed another lawyer acting for MBF, Peter Macnish, of Cornwall Stodart, saying MBF's decision to sell Mr Nolan's home "defies gravity", adding that it was neither fair nor common sense. He did not receive a response.

The next day, all the parties were astonished when the corner block sold at auction for a spectacular $1.3 million, more than 35 per cent above valuers' best estimates.

But instead of selling the rear tennis court and leaving the Nolans with their home and spare change, the court heard Mr Date ignored Mr Nolan's pleas and instructed the auctioneer to sell the family home. It also fetched a spectacular price.

Justice Vickery said Mr Date's decision to sell the family home had "no logic or principle" behind it except that MBF "was reluctant to change its position even in the face of overwhelming evidence that it should alter its stance given the unexpectedly high sale price" achieved for the corner block.

Mr Nolan then instructed the auctioneer to sell his tennis court, which also realised more than the real estate agents expected.

Justice Vickery said MBF was obliged under the Transfer of Land Act 1958 to consider Mr Nolan's interests in wanting to remain in the home.

"There was no evidence that Mr Nolan's interest was considered at all when MBF made its decision (to sell the home) following the sale of (the corner block)," the judge said. "On the contrary, his interest was completely ignored."

The judge found that the sales of the vacant land and tennis court would have been enough to pay Mr Nolan's debts to both financiers, and he could have retained equity in his home.

The judge said not only did Mr Nolan have a contractual right to redeem or pay out the mortgage if he had sufficient funds, but he also had a "fundamental human right" not to endure arbitrary or capricious interference with his family home. "The right to protection of a family's home from arbitrary interference is reflected in all of the major international human rights instruments to which I have referred and the Victorian Charter," Justice Vickery said. "It is unequivocally a fundamental human right."

The court is yet to hear submissions about how Mr Nolan might be compensated, but it may prove very expensive for MBF.

Justice Vickery suggested Mr Nolan should submit eight years of accounts detailing costs incurred in leaving his home and finding a new one, adding that the court might also consider "what has actually happened to the value of assets, and what transactions took place, in later years", including the loss of opportunity.

Mr Macnish said MBF would not comment. He said Mr Date remained a consultant at Cornwall Stodart, where he was managing partner for 20 years. In 2007, Mr Date was awarded the Order of Australia for services to the community in assisting Catholic religious orders.

MBF Investments is not associated with the Sydney-based health-care insurance group MBF Australia.