LACEY v BANK OF NEW ZEALAND SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL SHEPPARD AJA 19 August 1997 [1997] NSWCA 181 Sheppard AJA To be considered is a notice of motion taken out by Ms Lacey, who is the appellant in this matter, seeking an order that a stay of the proceedings be granted. The stay that she seeks is a stay of the judgment which is the subject of the appeal until her appeal is heard. It is expected by both parties that that appeal will come on for hearing within three or four months from today. Ms Lacey has no assets of any consequence and no means whereby she can meet the judgment which, with the running of interest, is, I understand, in excess of $50,000. This is not the first occasion upon which she has applied for a stay of proceedings. She made a similar application last year. It came before Waddell AJA, sitting as a single judge of the Court of Appeal, and went then on reference, or perhaps on an application for leave to appeal, I am not sure which, to a Full Court of the Court of Appeal, the court consisting of the then President, Mahoney P, and Meagher and Beazley MA. The application was dismissed. The matter that has caused Ms Lacey to renew the application is of the fact that she an act of bankruptcy because the Bankruptcy Notice will not be complied with. She seeks the exercise of the court's discretion to prevent that happening, at least until her appeal has been heard. I have taken very much into account what was said by the judges who dealt with this matter on the previous occasion. I have not had the benefit of Waddell AJA's reasons for judgment, but it is clear that he took a clear view that the appeal was hopeless. That view was also taken by the Court of Appeal, before whom the matter came. However, Mahoney P, in the course of his judgment, said (at p3 to p4): "Before parting with the matter I would say this, Ms Lacey claims that she has no money to pay the judgment and the contrary does not appear to have been suggested. The essential reason for her pressing of this application appears to be, I make no specific finding about it, that she fears that if there is no stay the bank will attempt to make her bankrupt and do this for the purpose not of recovering money from her, but preventing her pursuing the appeal. There has been no argument on this application as to whether that is a proper or commendable course to be followed by a judgment creditor. No doubt the matter has been considered in other cases in other contexts. The court inquired of Mr Walton, for the bank, whether it was the intention of the bank in opposing the stay to attempt to take such a course with a view to preventing the appeal proceeding. The Court was told that no decision had been made on that point. That is a matter upon which, of course, the Court was not entitled to force an answer from the bank, and it was made clear that the Court was not doing so. But whether that is an appropriate procedure to be adopted is a matter which may have to be considered by an appropriate Court if that be the course that is followed by the bank. 2 UNREPORTED JUDGMENTS I say those things merely to record what has happened and to place them upon record. I do not propose by what I have said that any judgment be made by this Court upon the propriety of proceedings of that kind or upon the use of bankruptcy proceedings simply for such a purpose. That is a matter which may have to be considered elsewhere in due course should the circumstances arise." As I have said, what Mahoney P said was agreed in by Meagher and Beazley MA. His Honour did not express any view about the matter he raised, nor did he indicate the court to which he referred. Mr Joseph, who has appeared for the bank this morning, suggests that his Honour meant the Federal Court which deals with bankruptcy proceedings. That may well be so, although do I not think that it necessarily is. Another matter that I think I must bear in mind this morning is the fact that Ms Lacey has apparently brought proceedings against her former solicitor seeking damages for negligence on his part. I know nothing about those proceedings; the papers are not before me, and I do not know what the rights and wrongs of the case are. Apparently, however, the case has been heard by a judge of the District Court who has reserved his decision. The parties were asked to lodge written submissions in support of their cases. Those have been lodged. Ms Lacey says that the parties are hopeful that a judgment will be given quite soon. She naturally is optimistic about the outcome and is hopeful of recovering a verdict of some substance against her former solicitor. Whether her hopes in this regard have justification I do not know. What I can say is that that was not a matter which was before either Waddell AJA or the Full Court of Appeal when the matter was considered last year by them. Ms Lacey also seeks to lead fresh evidence when the appeal comes on, and has given some account of that in an affidavit she has filed in support of the application and in her oral evidence this morning. I think it must be said that her chances of leading such evidence are slim, simply because the ordinary rule is that fresh evidence will not be entertained on appeal unless it was not available to the party seeking to rely on it at the time of the trial and could not, by reasonable diligence, have been discovered at the time of the trial. It seems to me, from what Ms Lacey has told me about the matter this morning, that she may have difficulty in overcoming that hurdle. Mr Joseph has pressed on me a submission that the appeal is hopeless and he has, in a sense, the support of both Waddell AJA and the Court of Appeal for that matter. Of course I am not the judge who is hearing the appeal. The appeal, if it is heard, will be heard by three judges, and Ms Lacey is entitled to the benefit of three judicial minds on her problem, however difficult her case may be. In the normal course that is what would happen. It is impossible to say that the bank is deliberately taking bankruptcy proceedings to stultify her chances of prosecuting her appeal. There is a suggestion in the evidence that if the appeal has merit, the trustee in bankruptcy will prosecute, but experience shows that this will not be so unless a creditor or other person is prepared to ensure that the trustee in bankruptcy is indemnified for the costs of this appeal. There seems little chance that this will happen. The reality is that if she should be made bankrupt before the appeal comes on, it is unlikely to be prosecuted. That is something that I think I must bear in mind. URJ LACEY v BANK OF NEW ZEALAND (Sheppard AJA) 3 Another matter I bear in mind is the fact that the bank, on the face of the evidence, is not prejudiced by a further three or four months delay. She has no assets. The likelihood is that the bank will recover nothing in consequence of a bankruptcy and will, indeed, be worse off because it will have to outlay the costs of bankruptcy proceedings. The one matter which has been put to me by Mr Joseph which has caused me to pause in determining the course that I think should be taken, is that I should leave matters to the Federal Court. He also relies on the fact that no petition has as yet been presented. The act of bankruptcy has not yet been committed. If I refuse a stay almost certainly the consequence will be an act of bankruptcy which will be available to the bank upon which to present a petition. It seems to me, in the absence of any clear statement by the bank as to its intentions, and I do not ask for it any more than Mahoney P did, that the bank is likely to proceed with the bankruptcy. Whether or not the intended result is the stultification of the appeal that would be the effect. In all the circumstances, having taken into account the various matters to which I have referred, I have come to the conclusion that I should accede to this application, and I do so. There will be a stay of proceedings in this matter up to and including the first day of the hearing of the appeal. There will be liberty to either party to apply on seven days notice. The costs of this application will be costs in the appeal.