BRADBURY -v- AUSTRALIAN GUARANTEE CORPORATION LIMITED SUPREME COURT OF NEW SOUTH WALES — COURT OF APPEAL REGISTRAR Jupp 3 October 1996 [1996] NSWCA 64 Registrar Jupp. On 6 September 1996 the appellant filed a Notice of Appeal from a decision of Dunford J of 9 August 1996. That decision made a declaration that the plaintiff (Australian Guarantee Corporation — the Ist respondent) was entitled as against Mrs Bradbury (the appellant in these proceedings), to vacant possession of certain company title units in the Astor Building. The proceedings had been brought as a result of a default in payments by Mrs Bradbury and upon a Deed of Mortgage dated 1 November 1985 which secured the moneys payable to AGC over Mrs Bradbury's parcel of shares in The Astor Pty Ltd, which entitled her to occupy a pair of units on the Sth floor of that building which had been combined into a 4 bedroom unit. Orders were made that Mrs Bradbury vacate the premises, and deliver the keys to AGC by 30 September 1996. Orders were also made giving judgment for the cross-defendants in two cross-claims brought by Mrs Bradbury. On 18 September 1996 the appellant filed a Notice of Motion seeking that 'the proceedings herein be stayed until further order or upon such terms and conditions as the Court may order'. During the course of hearing this motion it was confirmed byMr Blackburn, who was appearing for Mrs Bradbury, that what was in fact being sought was a stay of the Judgment of Dunford J. It was also confirmed that a stay of the costs orders was also being sought. The Notice of Motion was originally returnable before me on 23 September 1996. Time for service of the motion had been abridged at the request of the claimant. On that day Mr Blackburn sought an adjournment due to the late service of certain affidavits from AGC in respect of which he had not been able to obtain instructions. With some reluctance I granted the adjournment, on the condition that the claimant paid the opponents costs of that day. I heard the motion on 30 September 1996 and indicated that I would reserve judgment to allow me to consider the Judgment of Dunford J. A copy of that Judgment had not been provided by any of the parties until the hearing. I granted a stay of the orders until the delivery of these reasons. In support of the motion I read 3 affidavits, 2 by Mrs Bradbury (sworn 18 and 27 September respectively) and 1 by Mr Bradbury sworn 18 September 1996. These affidavits establish among other things that Mr Bradbury, who would otherwise reside with Mrs Bradbury, is currently hospitalised and is likely to remain in hospital till at least 21 October 1996. Mr Bradbury's health is one of the matters that I have considered in determining whether a stay should be granted, however in this case I have not been able to give this factor much weight. Mr Bradbury is not an owner of the units or the shares that entitle occupation of the units, although he may have some equitable right to occupy the units while Mrs Bradbury remains in possession. This was not a matter that was argued before me. Mr Bradbury is not a party to the appeal and is not currently 2 UNREPORTED JUDGMENTS living at the subject premises, although it is implicit from his and MrsBradbury's affidavits that he intends to return to the Astor units when he is discharged from hospital. It is arguable that it would be less stressful for Mr Bradbury to go to alternative lodgings when he is eventually discharged from hospital rather than to return to a home that is still the subject of ongoing litigation. I also note that the evidence shows that Mrs Bradbury has allowed large arrears in the levies payable in respect of the units to accumulate and that there is no indication of how these will be paid out whilst the Bradbury's remain in occupation Mr Blackburn principally addressed his arguments as to the likely success of the appeal and as to the fact that the appellant would be the party to suffer the greater prejudice if the stay was not granted. The grounds of appeal broadly fall into 2 categories, being arguments relating to unfair pressure, misrepresentation and the Contract Review Act, and a technical argument that the Court could not or should not have given AGC possession of units in a company block, as the company having title to the units was not a party to the proceedings. In respect of the first of these categories I consider the prospects of success on the appeal to be poor. Mr Blackburn did not assert that these grounds were the main grounds of appeal. Dunford J has assessed the credibility of the various witnesses in respect of these issues.. It is very unlikely that these findings will be overturned by the Court of Appeal. In respect of the technical argument the reasons of Dunford J deal with this issue only briefly. Dunford J appears to have taken the view that amendments made to the summons so that what was being sought was not so much possession and leave to issue a writ of possession, as a declaration that the plaintiff was entitled to possession, resolved this difficulty. He may be right, Mr Blackburn has argued that he is not. I believe that this point is arguable and if there is to be any success on the appeal it is likely to be on this point. In passing, I note that if the appeal is to be argued each of the current parties should consider whether it is necessary or appropriate to have Astor Pty Ltd joined as a respondent to the appeal. Both parties would agree that the 'Astor' Board will have to arrange the registration and approve the transfer of the shares owned by Mrs Bradbury. The point of AGC obtaining the declarations made by Dunford J is that it can put the units on the market and go to the Board and seek to have the relevant shares transferred. As I understand it they already hold a transfer of the shares which was executed at the same time as the deed the subject of the proceedings. Mr Blackburn has argued that if the 'Astor' Board is not going to consider any transfer of the shares till after the proceedings have been determined then there is no real utility in having Mrs Bradbury vacate the premises in the meantime. Mrs Bradbury's affidavit of 27 September 1996 annexes correspondence between Mrs Bradbury and the secretary of 'The Astor' Pty Ltd which suggests that some arrangement had been made that the transfer of shares would not be considered by the Board till after the proceedings had 'reached finality'. This correspondence was dated October 1995 and no evidence was lead as to what view if any the current Astor Board would take if they were asked to consider an application to transfer the shares by AGC. A Notice to Produce documents relating to any such request to register AGC was called upon at the hearing by the appellant. AGC had no documents to produce. The lack of any evidence as to the current attitude of the 'Astor' board has not been helpful. Mr Stevenson appeared for AGC, the principle opponent to the motion. He argued with some force that the prospects of the appeal succeeding were low. He also spent some time dealing with the prejudice that would flow to his client if URADBURY -v- AUSTRALIAN GUARANTEE CORPORATION LIMITED (Registrar JuppB the stay was granted. In this respect I read an affidavit of Garry Michael Buckley (over the objection of the claimant). This affidavit set out the debt of Mrs Bradbury to AGC which was over $8,000,000 as at 31 May 1995 with interest accumulating at over $100,000 per month. It also appears that the claim for 'possession' of the 'Astor' units is the last recourse AGC will have to recover this debt. Mr Blackburn pointed out, and this was not disputed by the opponents that the relevant deed (a copy of which was tendered) included a clause which specifically limited the amount secured by the deed to $600,000 with no interest. This would mean that if the units were sold and the proceeds exceeded $600,000 that AGC would have to account to Mrs Bradbury for the balance. Although Mr Stevenson argued that the potential loss to his client was the accumulating interest on the full outstanding debts it seems to me that the prejudice is really in respect of not having $600,000 now, or as soon as the units could have been sold if the appellant had vacated them on 30 September 1996 compared to having $600,000 when the units are sold later if a stay is granted. This prejudice could be at least partly overcome by requiring that as a condition of the stay the appellant enter into a supplementary deed which would extend the amount secured by the original deed to include interest at the current Supreme Court rates from the date the appellant was due to have vacated the premises (30 September 1996) till when the amount secured by the deed and accumulated interest is paid or the premises are vacated. An affidavit of Walter Patterson, the company secretary of 'The Astor Pty Ltd' was also filed by AGC, and read. This shows that there are outstanding maintenance levies in respect of the subject units exceeding $90,000. This also concerns me greatly. With due respect to Mrs Bradbury it appears to me that she and her husband may be living beyond their means, and that it might be in their own best interest if they were to move out of premises for which they cannot afford the maintenance levies. I sought information from Mr Blackburn as to what his client intended to do with the units if she was successful. Unfortunately he was not able to enlighten me. It was also unclear as to what the attitude of the 'Astor' Board will be if the arrears in the levies continues to accumulate and whether this would mean that any prior arrangement to defer the approval of a transfer could be placed in doubt. There is some doubt as to the current value of the units. A valuation annexed to Garry Buckley's affidavit which was done in May 1993 gives a value of $700,000, whilst a valuation annexed to Mrs Bradbury's later affidavit dated 26 September 1996 gives a value of between $1,100,000 and $1,150,000. I am more inclined to accept that the later valuation is now more accurate and that as result that there will be some greater amount than $600,000 recovered if, and when the units are eventually sold, even taking into account the substantial unpaid maintenance levies. If that is the case, the prejudice to AGC should not be great, particularly if there is some provision for interest to accumulate on the amount secured. I may be wrong, but it appears that ultimately the units will heave to be sold, either by AGC after they do obtain possession, or by Mrs Bradbury, after these proceedings have been determined and she realises that she can no longer afford to live in them. However I have determined that it may be fairer to allow the Bradbury's to remain in occupation until the appeal has been determined, if only so that they may have the opportunity of obtaining the best prices for the units if they are sold by the appellant rather than by a finance company. A stay of the orders in this case 4 UNREPORTED JUDGMENTS is however only appropriate on terms. The first of those terms is that the appellant and the first respondent enter into an supplementary deed extending the effect of the current deed so that it includes interest on the sum secured by that deed, at the prescribed Supreme Court rates, from 30 September 1996 till when the amount so secured is paid or vacant possession of the units is given. The terms of that agreement will need to be agreed upon by the appellant and first respondent, but if the parties cannot agree then they may apply to me. The appellant will have to bear the expense of any stamp duty that may be payable in respect of any such supplementary deed. To the extent that the appeal will determine the enforceability of the original deed, any such determination should also apply to the supplementary deed, and this may have to be spelt out as part of the terms of that deed. The appellant will also have to ensure that the appeal is prosecuted with all due diligence. To this end the timetable for the preparation of the appeal books may be shortened. Once the appeal books have been printed the appellant will be required to file an application for the expedition of the appeal. The first respondent will have leave to apply to vacate the order for a stay if this is not done. The appellant should be given an opportunity to consider whether she is prepared to accept the proposed terms of the stay. As such I am prepared to extend the current stay of the order for possession without terms to Friday 25 October 1996, however ifthe appellant has not accepted the terms of the proposed stay by that time she will have to vacate the units and surrender the keys to AGC as required by Dunford J's orders. The orders sought to be stayed include the orders for costs. This is the only order that really concerns the second and third respondents at this stage. I was advised that the costs have not yet been assessed. I am reluctant to interfere with the right of a successful party to have their costs assessed. In the ordinary course it takes some time to have costs assessed and then more time to actually enforce those costs. Very little of the evidence or the argument of the appellant goes to why I should stay the order for costs at this stage, or at all. I am not prepared to stay the order for costs at this stage and I dismiss the motion so far as it seeks such an order. This is without prejudice to the appellant filing a fresh motion seeking to stay the costs orders if the costs of the successful parties have been assessed and they are seeking to recover those costs. It is up to the successful parties to determine whether they incur the expense of having their costs assessed in the meantime. In the event the appeal is successful and the costs orders are set aside the expense of having the costs assessed may be wasted. In my opinion the costs of the motion so far as they concern the Ist respondent should be costs in the appeal. The costs so far as they relate solely to orders re costs as against the 2nd and 3rd respondents should be paid by the appellant. The formal orders that I make are: 1. That there be a stay of the orders made by Dunford J on 9 August 1996 to the extent that they required the appellant to vacate units 3 and 4 in the Astor Building inMacquarie Street, Sydney and deliver to AGC the keys of those units, till the determination of the appeal, or till further or other order of the Court on the following terms; (a) that the appellant and the Ist respondent enter into a deed supplementary to the Deed of Mortgage dated 1 November 1996, which will extend the amount secured by the original deed to include interest on the sum originally secured ($600,000), at the applicable Supreme Court interest rate from time to time, from 30 URADBURY -v- AUSTRALIAN GUARANTEE CORPORATION LIMITED (Registrar Juppp September 1996 till the original amount secured and any interest is paid, or till the appellant gives vacant possession of the units in the 'Astor' building to the Ist respondent. (b) that the appellant prosecute the appeal with all due diligence and 5 that within 2 weeks of the appeal books being filed and served file an application for the expedition of the appeal; 2. That there be an unconditional stay of the orders requiring the appellant to vacate the 'Astor' units till 25 October 1996. 3. That there be liberty for the appellant and the Ist respondent to apply in 10 respect of the terms of the supplementary deed, and for the Ist respondent to apply to vacate the order for a stay if there is non compliance with the term of the stay set out in order 2 (b). 4. That the costs of the motion as between the appellant and the Ist respondent be costs in the appeal. 15 5. That the appellant pay the 2nd and 3rd respondents costs of the motion. Orders accordingly.