HOWELL v FINE REAL ESTATE NETWORK PTY LIMITED SUPREME COURT OF NEW SOUTH WALES — COURT OF APPEAL SHELLER JA 10 March 1997 [1997] NSWCA 155 Sheller JA. On 4 November 1996 the Court, comprising Mahoney JA and Simos AJA, dismissed an application for a stay of proceedings upon judgment brought by the present claimant, Paul Roch Howell. The application was in respect of orders made by the Chief Judge in Equity on 30 August 1996. On that day his Honour ordered, inter alia, that Mr Howell pay to the plaintiff the sum of $ 445,395. The application was for a stay pending the hearing of an appeal by Mr Howell from the Chief Judge's decision. The matter was before the Court following upon a dismissal of an application for a stay by Registrar Jupp on 28 October 1996. On 7 February 1997 the claimant, Mr Howell, again filed an application that the judgment of the Chief Judge of 30 August 1996 in the sum of $445,395, plus costs, be stayed and an alternative order was sought that the respondents provide security. This application has come in the ordinary way before a single Judge of the Court. The claimant bases this application upon what is said to be a change of circumstances since November 1996. The claimant says that a reason why the previous application was refused was that the proceeds of the judgment, if paid to the respondents/opponents to this application, would have gone to meet indebtedness to Westpac Banking Corporation, to which the claimant and the opponents were jointly indebted under a guarantee. Thus, if because the respondents were unable to pay the indebtedness to the bank by not receiving the fruits of the present judgment, the appellant/claimant would have been obliged to pay the amount of the indebtedness. It appears that the indebtedness to Westpac has now been discharged except perhaps of an amount of some $ 40,000 which is in dispute. In the result, by taking from the amount of the judgment the amount that has been paid by the claimant to Westpac, there remains outstanding an amount of approximately $15,000 together with interest and costs. It is argued that there is no assurance that if the balance of the judgment is paid to the respondents and the appeal is ultimately successful, this payment will be recoverable from the respondents. One irony of the current situation is that $480,000 of the moneys paid to Westpac to discharge the debt owing to the bank has come from the sale by the respondents of their home. There does exist a substantial claim for contribution by either Mr or Mrs Fine or both of them, against the claimant. In short, in part at least the claimant's obligation to the bank under the guarantee has become an obligation to the respondents. I note that there is outstanding a dispute about the validity or enforceability of the claimant's guarantee to the bank, and no doubt this dispute carries down to any claim for contribution against Mr Howell. 2 UNREPORTED JUDGMENTS In the course of his judgment of 4 November 1996, Mahoney JA, with whom Simos AJA concurred, referred to the mass of evidence before the Court in relation to the various liabilities of the parties, one to the other. His Honour observed that the precise and ultimate financial position did not appear on a piece of paper placed before the Court. He referred to the indebtedness to Westpac and the guarantees and security given by the various parties. Reference had been made to a sale that was proposed to be effected in the immediate future of property owned by Mr Howell, and proceedings which had been taken by the bank against Mr and Mrs Fine upon their guarantees. His Honour continued: The thrust of the matter, or portion of the thrust of the matter, as put by Mr Drummond is this: that if the money payable by My Howell upon the present judgment is paid to the company and the company is subsequently held not entitled to that money, the company has financial rights against Mr Howell to such an extent that in any event, even if it were obliged to repay the amount in question to Mr Howell, Mr Howell would still be indebted to the company and accordingly there would be nothing to repay. As I have said the financial relationship between the parties is a complicated one. It is sufficient for me to say that, having heard what has been put and having read the material which has been placed before the Court, I am of the opinion that in the Court's discretion, this is not a case in which a stay should be granted. I think the financial relationships between the parties are such that notwithstanding the principles to which Ihave referred and what otherwise would be the application of them in the present case, in the end I do not think that it is appropriate that the proceedings upon the judgment be stayed. His Honour went on to say that he did not consider it appropriate in the circumstances of the case to pass upon the prospect of success upon the appeal. Subsequent to the decision of this Court in November 1996, orders were made by Windeyer J on 18 December 1996 restraining Mr Howell, at the suit of Fine Real Estate Network Pty Limited, from selling or otherwise dealing with shares in a number of companies. At some stage Fine Real Estate Network beganbankruptcy proceedings against the claimant. On 19 February 1997 the bankruptcy petition came before Emmett J in the Federal Court. A document has been tendered which is headed 'Order' and which sets out a number of matters following under notes made by the Court and orders made by the Court. It seems to me clear that on 19 February 1997 the Federal Court would have made a sequestration order but for the submission of the debtor to the orders that are set out and to the terms of the agreement which is recorded. I do not propose to spend time doing more than note the terms of what was then said by the Federal Court and to observe that clearly enough at that date an agreement was arrived at by the parties in respect of the indebtedness of the debtor to the petitioning creditor. I also observe that the order was made two days after the claimant filed this application for stay in this Court. Quite frankly the claimant says that the present application is brought to enable the debtor, the claimant, to apply to the Federal Court to seek effectively to avoid the consequences of the agreement that was made in the Federal Court on 19 February. I do not think that this Court should be party to such an endeavour. I am not persuaded that any change in circumstance has been demonstrated which would lead me to revisit the question of a stay of the judgment of the Chief Judge. For present purposes I am prepared to accept that if a change ofcircumstance had been shown it would be appropriate for a Judge of the Court sitting alone to grant a stay after the Federal Court had refused it. URJ HOWELL v FINE REAL ESTATE NETWORK PTY LIMITED (Sheller JA) 3 However, in the present case to the extent to which there has been a change of circumstance, it is the agreement the parties arrived at to deal with the situation as it emerged before the Federal Court on 19 February. It seems to me that no reason has been shown for interfering in a way which might affect the enforceability or the achievement of the objects of that agreement. The second part of the application made in this notice of motion is that the respondent provide security over certain real estate sufficient to ensure that they could repay to the claimant moneys paid pursuant to the judgment in the event that the appeal is successful. Ultimately this application was limited to the amount of costs that may be recoverable if costs are assessed before the appeal is heard. This seems to me a somewhat unusual application for an appellant to seek to have a respondent give security. However, I should say that nothing in the material before me persuades me that the respondents would not be able to repay to the claimant any money that the claimant may pay to them in the course of abiding by the orders made by the Chief Judge in Equity if the appeal is successful. Some attempt was made to suggest otherwise based on evidence which I regard as entirely unsatisfactory. There are well-established ways of demonstrating impecuniosity, if the party wishes to prove that. Those ways have not been followed in the present case and I am quitedissatisfied that that plays any part. In any event I do not think that the circumstances of this case call for the giving of security in the manner sought. For those reasons the application is dismissed with costs. Orders accordingly.