ARNOYA HOLDINGS PTY LIMITED v METWAY LEASING LIMITED SUPREME COURT OF NEW SOUTH WALES — COURT OF APPEAL SHELLER JA 17 July 1995 [1995] NSWCA 21 Sheller JA. On 16 June 1995 Barr AJ gave judgment in two matters, Nos 16194/91 and 12042/94. In the first he ordered two of the defendants, Keith Malcolm Campbell and Lois Audrey Campbell (Mr and Mrs Campbell), to give the plaintiff, Metway Leasing Limited, possession of land owned by them and known as 17 Jindabyne Avenue, Baulkham Hills. In the second he ordered the defendants, which included Arnoya Holdings Pty Limited and Mr and Mrs Campbell, to pay Metway Leasing the sum of $104,569.16. His Honour ordered a stay of execution of the judgments for a period of 28 days from 16 June 1995 upon condition that the defendants, Arnoya Holdings and Mr and Mrs Campbell, file a notice of appeal and file and serve an affidavit of means to include all assets, liabilities, income and expenditure, no later than 4 pm on 23 June 1995. On 23 June 1995 those defendants filed a notice of appeal and Mr and Mrs Campbell swore affidavits of their means and the means of Arnoya Holdings. On 4 July 1995 Arnoya Holdings and Mr and Mrs Campbell filed a notice of motion for an order that the stay granted by Barr AJ be continued until further order. They supported the application, which came on for hearing before me on 10 July 1995, with the two affidavits of means. Metway Leasing opposed the application and relied on two affidavits by Anthony John Gavan, the solicitor for the opponent, of 15 June 1995 and 10 July 1995. The affidavits of Mr and Mrs Campbell and the first affidavit of Mr Gavan were filed in the Common Law registry, the second affidavit of Mr Gavan in the Court of Appeal registry. At the invitation of the parties I have read all these affidavits and Barr AJ's reasons for judgment in the two proceedings of 26 April 1995. For completeness I should add that Metway Leasing on 7 July 1995 filed a notice of motion asking for security for its costs of the appeal. The claimants on the application for a stay rely upon the meagre state of their assets. They live in the house at Baulkham Hills, the value of which they estimate to be $200,000. The property is subject to a mortgage in favour of National Australia Bank to secure an amount of $165,000. Their other assets are of insignificant value and include two motor vehicles, household furniture and appliances, jewellery and small bank balances. They each own twenty shares in Arnoya Holdings estimated to be worth between $3,000 and $5,000. They have shares in two other companies which appear to be worthless. Their debts on credit cards exceed $65,000. They owe AGC (Advances) Limited $1,670,000. Mr Campbell says that he has liabilities to other creditors in an amount of approximately $185,000. Advance Bank has commenced proceedings against Mr and Mrs Campbell to recover approximately $500,000. Mr Campbell's income is in the order of $35-40,000 gross per annum. MrsCampell is not employed and suffers from illness sufficiently serious to prevent her from working. 2 UNREPORTED JUDGMENTS The claimants relied upon the principles governing stays stated by the Court in Alexander v Cambridge Credit Corporation Limited (1985) 2 NSWLR 685 at 693 and following. At 694 the court emphasised that the onus is upon the applicant to demonstrate a proper basis for a stay that will be fair to all parties. The Court has a discretion in the exercise of which it will weigh considerations such as the balance of convenience and the competing rights of the parties before it; 694F. In that case it was urged that premature enforcement of the judgment, to the full extent of the assets of the judgment debtors, would do irreparable harm to them. It could render them liable to proceedings in bankruptcy, deprive them of the control over the litigation and effectively deprive them of their right to appeal. It is to be observed that in that case it was conceded that the appeal was an arguable one; 696F. Bankruptcy would threaten the livelihood of the judgment debtors. It would inflict upon them such a serious injury, both in their professional and domestic lives that could not effectively be undone if the appeal were to succeed. The sum in issue in the present proceedings was originally $58,000 payable on 18 June 1991 pursuant to a deed of settlement of 18 December 1990 following the claimants" default under the terms of another substantial loan agreement with the opponent made on 2 February 1989 and varied on 25 May 1990. The amount was not paid on 18 June 1991 and between that date and 15 November 1991 when the proceedings were begun the claimants" liability to repay the debt was acknowledged more than once. The proceedings having been begun, the hearing was delayed to enable the claimants to file defences or defences which complied with the rules. On at least four occasions between 29 May 1992 and 21 May 1994 cost orders were made against the claimants. Some of theseremain unpaid. On 28 September 1992 an order for expedition of the hearing of the proceedings was made but the claimants said they wished to raise a defence based upon fraud. This ultimately led to the hearing date being vacated. The defence of fraud which was raised was abandoned five days after the hearing began. The hearing ran for approximately five weeks. The claimants" defences related largely to issues which had arisen under the 1989 agreement. In his judgment Barr AJ described them as long, convoluted, substantially amended and amended again, difficult at times to understand and not always best calculated to state the defence it was counsel's intention to put forward. Later his Honour observed that Mr Campbell did not know from time to time what his and his company's defences would necessarily be. The defences were frequently amended as opportunities or difficulties arose. Amongst the defences raised at some point or another were economic duress, unjust enrichment, breach of covenant, negligence, injury to registration, contravention of the Trade Practices Act and the Fair Trading Act and relief under the Contracts Review Act. At the heart of some of the defences, if not all of them, was an argument that the agreement that up to a capped amount interest should not be paid by the claimants but added to the principal resulted in the claimants" being charged with interest upon interest. Barr AJ rejected significant parts of the evidence of Mr and Mrs Campbell. The rejection of that evidence led to the failure of many of the defences. In addition his Honour held that the claimants were estopped from raising in the proceedings disputes settled by the deed on 18 December 1990. It is of course not possible, nor should I attempt, to form any final view as to the outcome of the appeal. The claimants" defences failed completely and in large measure upon his Honour's rejection of their evidence. Furthermore URJ ARNOYA HOLDINGS PTY LIMITED v METWAY LEASING LIMITED (Sheller JA) 3 whatappears to be a well founded estoppel denied the claimants the right of going back and reopening disputes compromised on 18 December 1990. Mr Gregg, who appeared for the opponent, referred me to other matters. The claimants apparently successfully resisted the opponent's attempts to obtain evidence from the claimants" solicitors on the basis of legal professional privilege. In contrast, at the hearing, the claimants asserted that these solicitors were not at the relevant time retained by them. An affidavit made by Mr Campbell on 15 November 1994, pursuant to an order of the Court of 8 November 1994 requiring him to set forth a full description of all indebtedness and security on any property concerned in the overall transaction, in the course of which he said there was no mortgage over the assets of Arnoya Holdings, other than one in favour of National Australia Bank over four units at Chippendale, was inconsistent with his affidavit of 23 June 1995, made pursuant to his Honour's order of 16 June 1995, in which he disclosed a second mortgage over the units of $80,000. I am not satisfied that the claimants have made a case for an extension of the stay. Mr and Mrs Campbell's evidence demonstrates that, leaving aside the amount of this judgment and other contested claims made upon them, their liabilities exceed the sworn value of their assets. Their financial situation is such that the enforcement of the orders would not add in any significant manner to their difficulties in prosecuting the appeal. In answer to a claim for a relatively small debt, which initially they acknowledged, they have taken active steps to delay matters by raising defences which either had no merit or which were not prosecuted. I do not regard their appeal as having any real chance of success. I see no reason why the opponent should further be delayed from enjoying the fruits of its victory, such as they are. The application is dismissed with costs. On the material at present before me I would not be prepared to order security for costs. If the opponent wishes further to prosecute this application is may do so. Otherwise that application will be dismissed with costs. Orders accordingly.