Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Farkas v Ping; Wang v Farkas [2013] NSWCA 440 Hearing dates: 9/12/2013 and 12/12/2013 Decision date: 12 December 2013 Before: Leeming JA Decision: (1) Note the acceptance of the undertaking to the Court proffered by Mr Wang on behalf of him and wife in the terms of paragraph 3 of MFI 1: In the event that: (i) Mr Farkas has removed the writ over all applicants' properties, and (ii) Judgment continues to be reserved from the Court of Appeal at the end of February 2014, then the applicants will not oppose Mr Farkas' application to put in place a new form of security, either a bank guarantee or cash term deposit, commencing on 1 April 2014 with the time of lodgement and terms of the security to be determined as is appropriate by the Court at the time, and in the same amount as the existing guarantee. (2) Note that the original ANZ bank guarantee in the amount of $411,813 remains lodged with the Registrar of the Court of Appeal supporting the interlocutory regime originally made on 9 September 2013 and modified by me. (3) Confirm that the stay of execution of the writ reflected in order 3 made on 9 September 2013 remains in place. (4) To the extent necessary, stay the execution by Mr Farkas of the order challenged by the proceedings in this Court, namely the order made on 20 May 2011 by the District Court of NSW, until further order. (5) Direct that Mr Farkas take all necessary steps to remove the registration of the writ on all properties of Mr Wang and his wife within seven days. (6) Grant both parties liberty to apply on two days' notice. In the event that liberty to apply in the vacation is sought, then that liberty should be exercised in the third week of January when I am sitting. (7) Otherwise dismiss the respondent's amended notice of motion dated 11 December 2013 and the applicants' notice of motion filed 10 December 2013. (8) No order as to costs. [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] Catchwords: PRACTICE AND PROCEDURE - stay pending appeal - interpretation of effect of interlocutory orders Legislation Cited: Civil Procedure Act 2005 Evidence Act 1995 Category: Interlocutory applications Parties: Gu Y Ping (first applicant) James Wang (second applicant) George Farkas (respondent) Representation: Counsel: First applicant in person for self and wife Respondent in person File Number(s): 2013/22988 Decision under appeal Jurisdiction: 9101 Date of Decision: 2011-05-20 00:00:00 Before: North J File Number(s): 2006/16085; 2006/16064 Judgment 1LEEMING JA: It is 3.54pm on 12 December 2013. The Court for the entirety of today has heard argument on two motions, both of which are directed in essence to the meaning and operation of interlocutory orders made by this Court on 9 September 2013, designed to protect both parties' position pending the determination of an appeal which is set down to be heard next Monday. In two respects perhaps the motions before me extend beyond those orders. 2On Mr Farkas' part, by amendment proposed yesterday afternoon, he sought contingently, against the possibility that Mr Wang (I will refer collectively to Mr Wang and his wife as Mr Wang, Mr Wang has appeared for himself and his wife during this application) was seeking to withdraw the bank guarantee, a freezing order. Properly, once Mr Wang confirmed that he was not today seeking to withdraw the existing bank guarantee, Mr Farkas withdrew that application. 3The second relatively extraneous matter about which a deal of argument has been heard is Mr Wang's application for some particulars as to how the $411,813, in relation to which many weeks ago he provided a bank guarantee, had been made up. Repeatedly I asked Mr Wang why it was necessary for that particularisation, if indeed he was entitled to it, to be determined today as opposed to some time in January or February. No answer was given in any substantive way to my requests. 4Given the time of year and day, and without prejudice in any way to Mr Wang's right at some later stage to seek particulars of how that amount is calculated, I do not propose, in the exercise of my discretion, to grant orders in that respect today. I much prefer to deal with the substance of the matter. 5The substance of the matter arises because of the terms of the orders made on 9 September 2013. The position on that day was that Mr Farkas, who is the judgment creditor in relation to the orders the subject of the challenge by application under s 69 in this Court's supervisory jurisdiction to be heard next Monday, had, as was his right, obtained a writ which I have been told, and do not doubt for the purposes of today's applications, extended over all of the real properties owned by Mr Wang and his wife. At the hearing before the Court of Appeal on 9 September, Mr Wang, who then also appeared for himself and his wife, complained that the existence of the writ was causing difficulties in his attempts to sell the properties. 6The orders that have been the subject of argument for all of today are the Court's attempted resolution of that difficulty. The orders are these: "Direct that upon the applicants providing security in the form of a bank guarantee to be lodged with the Registrar of this Court in an amount to be determined by the Sheriff, taking into account the amount of the judgment debt, any fees incurred to date and interest up to 30 March 2014, the execution of the writ of levy registered on the properties of the applicants be stayed. Upon the lodgement of the bank guarantee within 21 days of today's date, the respondent, George Farkas, is directed forthwith to take all steps necessary to remove the registration of the writ on the applicants' properties." 7Anyone present in Court at that time and anyone reading the transcript would well understand that the price that the Court invited Mr Wang to pay in order to remove the blot on title, namely, the writ which had been registered on the applicants' properties, was that Mr Wang would provide an alternative, indeed, a better form of security for Mr Farkas, namely, a bank guarantee. 8One of the difficulties that I have raised throughout the course of the day is that a bank guarantee has indeed been provided to the Court. Admittedly, Mr Farkas has complaints about it to which I will turn, but for a number of weeks the very matter that was the subject of attention by the Court of Appeal, namely, Mr Wang being able to sell some properties removed from the writ that had been registered on them, has been prevented and Mr Farkas, in a real sense, has been doubly secured: first, there is the benefit of the bank guarantee in the hands of the Registrar of this Court and, secondly, notwithstanding his being directed forthwith to take all steps necessary to remove the registration of a writ, the writ to this day remains on title. 9I need to deal with some precision with what happened after the orders were made on 9 September 2013. There seems, save in one respect, to be no real dispute that on 26 September this year Mr Wang obtained a bank guarantee from the Australia and New Zealand Banking Group, and on the following day arrived at the Registry of this Court and provided it, in its original form, to a counter officer. There is no dispute that ultimately Mr Wang left the Court with the original guarantee, and only a copy had been left in the possession of the Court. Mr Wang says that that was inadvertent. Mr Farkas says that it was deliberate. I do not determine which of those submissions is preferred. 10It does not matter on the view that I take as to the construction of the orders and the outcome of the motions before me today, because no later than 16 October, as far as the evidence before me records, the original of that bank guarantee had been lodged with a Court. By 16 October, the 21 day period referred to in the order had expired. As I have said, notwithstanding the terms of the order, Mr Farkas has to date taken no steps to remove the registration of the writ on the applicant's properties. For his part, Mr Wang, until very recently, has not applied to the Court to enforce such entitlement as he has under the orders made on 9 September 2013. 11Mr Farkas and Mr Wang, understandably, ask me to determine what the situation is in terms of the application of the orders, given the events that occurred at the end of September and the middle of October. Mr Farkas propounds four reasons why he is under no obligation to remove the registration of the writ, and indeed, why he says there is not presently in place a stay of the execution of that writ. 12I should say immediately that the third and fourth grounds that he put forward were put forward expressly very much as subsidiary matters, and I indicated during the course of the hearing that my preliminary view was against him in relation to both of those matters. 13The first of those matters was that the bank guarantee was addressed: "To: NSW Court of Appeal (The Principal)". Mr Farkas' point was that the bank guarantee should have been addressed to the Registrar of the Court of Appeal in whose custody it continues to this day. There is, with great respect to Mr Farkas, nothing in that point. 14His second point was that he says the bank guarantee should have referred to the Court's orders. Instead, its opening sentence is in these terms: "Australia and New Zealand Banking Group Limited ('ANZ') asks the principal to accept this bank guarantee ('Undertaking') in connection with a contract or agreement between the principal and customer for security bond under case number 2013/00022988 in the NSW Court of Appeal". 15It is again, with respect to Mr Farkas, very plain that it is appropriate to refer to the contract or agreement between the principal and the customer pursuant to which the bank guarantee has been provided. As I said, they were avowedly subsidiary arguments put forward by Mr Farkas. 16The first argument that Mr Farkas put forward depended upon the proposition that the guarantee, in its original form, had not been lodged within 21 days. The view that he took was that that was a condition precedent to the operation of all other aspects of the order. That is not the ordinary meaning of order 3 made on 9 September 2013, nor would it accord with the sense of the order as reflected in the debate which took place on 9 September 2013. Order 3 is on its face, in its first sentence, unconfined in relation to time. The reason why it is not necessary to determine whether the mistake that occurred in lodging a copy, as opposed to the original, was innocent or deliberate is that either way the proper construction of order 3 made on 9 September was that once a bank guarantee had been lodged with the Registrar of this Court, then the execution of the writ was stayed. There is, as I read the order, no basis except for that propounded by Mr Farkas for contending to the contrary. 17Mr Farkas pointed to the second sentence in the order which did refer to the lodgement of a bank guarantee within 21 days of today's date. However, that sentence is separate from the first, and it is the first sentence within the order that contains the operative provision of the stay. The second sentence, the only sentence which contains the time limitation, is the sentence which imposes an obligation upon Mr Farkas forthwith to remove the registration of the writ. If the literal operation of the order produced a result that I regarded as uncommercial or capricious, then perhaps it would be open to construe the orders in the way Mr Farkas contends. But taking the ordinary literal meaning of order 3, there is no reason to conclude that the stay to which it refers depended upon the lodgement of a bank guarantee was not effective when in the middle of October the original of that guarantee was lodged. 18I turn to the last argument of Mr Farkas, that is the fact that the form of the guarantee in the possession of the Registrar of this Court is limited in time. The bank guarantee is expressed to remain in force until the first to occur of various events, one of which is "4pm on Monday 31 March 2014". It is common ground that on 1 April 2014 it will not be possible by presenting the original guarantee, to call upon it; the document expires. There is nothing expressly on the face of the order stating the duration of the bank guarantee. That is not an end to it. It is plain, for example, that had a bank guarantee which was open to be exercised only for, say, a seven day period being proffered, then at least after that seven day period had expired, the stay, which is contingent upon this alternative form of security being provided to Mr Farkas, would not continue to be in place. 19Order 3 does refer to 30 March 2014. That reflects the date in the Court of Appeal on 9 September as to what amount of time was necessary adequately to secure or to protect Mr Farkas' interests. It is plain on the face of the reasons that a generous approach was being adopted by the Court of Appeal. The possibilities that will occur next Monday essentially are either Mr Farkas will win there in which case there will be no need at all for the interlocutory regime, which will thereupon expire. Alternatively Mr Farkas will lose on Monday, in which case the same result obtains. Or, thirdly, the position will not be known. Most cases heard in the Court of Appeal are determined in less than, often considerably less than, three months. 20A fair reading of the transcript makes it plain that 30 March 2014 was a date set by which it was reasonably contemplated that the application under s 69 would be heard and determined. As I read Mr Farkas' submissions and heard them throughout the day, his concern is confined to what may be the prejudice he suffers if he removes the registration of the writ on Mr Wang's properties and there is no certainty in the outcome of the litigation by 31 March 2014 and the guarantee expires. He points out that if that combination of events comes true, then he will lose the benefit which he presently enjoys in a sense of being a secured creditor. 21Various scenarios were contemplated. One involved a determination by the Court of Appeal but an application for special leave and subsequent determination by the High Court of Australia. Another involved further hearing in the District Court. Those two scenarios in my view can be put to one side immediately. The only question that this Court is concerned with for the purposes of the interlocutory regime to preserve the parties' position pending the determination of the proceedings in it. In the event that either party chooses to apply to the High Court of Australia, a separate regime may need to be put in place. Likewise in the event that there are further proceedings remitted to another Court, again a separate regime may be put in place. 22The purpose of the order made on 9 September was merely to put in place a holding pattern pending the determination of the application brought by Mr Wang which is to be heard by a Full Court next Monday. 23Accordingly the only risk that is relevant that Mr Farkas can point to for the purposes of today is the risk that the Court of Appeal decision is not determined by 31 March 2014. That is the context against which the terms of the order are to be assessed. It is perhaps unfortunate given the amount of time that has been devoted to the issue (probably a greater amount of time that will be devoted to the substantive hearing of the mater next Monday), that the bank guarantee is expressed to be limited in terms to 31 March 2014. However that does protect completely Mr Farkas for that period of time and in the event which I think is likely that there is a determination of Mr Wang's hearing within that three and a half month period. 24The present position therefore between the parties, given the events that have happened, in my view is that the stay in order 3 made on 9 September 2013 is in place and continues to be in place at least until 31 March 2014. I do not need to, for reasons I will address shortly, deal with the position after that time. 25Secondly, I think the better view, which accords with the commerciality of what was intended to be achieved by granting a bank guarantee to secure the Wangs' obligations under the challenged orders of the District Court, is that Mr Farkas is, notwithstanding the non-lodgement of an original of the bank guarantee within the time specified by the final sentence of the orders, under an obligation to remove the registration of the writ on the applicant's properties. I am driven to that conclusion because I strain against the proposition that the delay by some days in the lodging of the original of a bank guarantee would leave Mr Farkas in the position, as a fair holding pattern pending the determination of the hearing to be heard next Monday, of being doubly secured in the sense that he has until 31 March 2014 (a) the benefit of the bank guarantee which Mr Wang has obtained and I would infer at some expense or at least inconvenience to himself, and (b) Mr Wang is nevertheless unable to sell the properties without the blot of the writ which has been registered against them. 26It is that conclusion as to the effect of the orders that leads me to then determine what should be the outcome of the substantive aspects relating to interlocutory relief of the two motions that are before me. In the course of inviting the exercise of my discretion, I have been taken to a great deal of material. I have been taken by Mr Farkas to many statements by a magistrate and a judge of the District Court which are intended to be pejorative of Mr Wang and his wife and their conduct of litigation. Mr Farkas had no answer to the proposition that his was a use of reasons for judgment plainly contrary to s 91 of the Evidence Act 1995. Even if it were, it is not necessary and therefore not appropriate for me to express a view on the bona fides, to use a neutral word, of Mr Wang and his wife in conducting litigation in this Court for the purpose merely of determining the holding pattern which is to remain in place pending the determination of that litigation. 27It was not until this afternoon that Mr Wang proffered an attempt to answer what I regard to be the only substantive matter put forward by Mr Farkas altering what I regard to be the position today as to the effect of the orders in their application as to the facts which occurred at the end of September and the middle of October last year, which as I have said I regard as quite unlikely, that the Court of Appeal has not determined the application by 31 March 2014. He proffers formally, on behalf of himself and his wife an undertaking to the Court in the form of paragraph 3 in the document which is MFI 1: "In the event that: (1) Mr Farkas has removed the writ over all applicants' properties, and (2) Judgment continues to be reserved from the Court of Appeal at the end of February 2014, then the applicants will not oppose Mr Farkas' application to put in place a new form of security, either a bank guarantee or cash term deposit, commencing on 1 April 2014 with the time of lodgement and terms of the security to be determined as is appropriate by the Court at the time, and in the same amount as the existing guarantee." 28It will be seen that that undertaking is conditional upon Mr Farkas having removed the writ over all of the applicants' properties and also that judgment continues to be reserved from the Court of Appeal by the end of February 2014. 29Mr Farkas has pointed to some potential difficulties in relation to the operation of what is proposed. He asks rhetorically how can a cash term deposit be an appropriate form of security. It is not necessary, and therefore not desirable here and now, to completely resolve how the fine detail of the undertaking which Mr Wang proffers on behalf of himself and his wife will play out in the event (which I regard as unlikely) that it is necessary for that obligation to be enlivened. The fact of the matter at a substantial level is that if it is necessary there will be a further hearing. Mr Farkas suggested at one stage that such hearing should be before me, and perhaps that is appropriate having regard to the time that I have spent understanding this aspect of the matter, to determine how a further extended holding pattern will be put in place from 1 April. It seems to me to be an extraordinarily inefficient use of the parties' time and the Court's time to argue about the minutiae that are most likely never to become real because either Mr Farkas loses or the Court of Appeal determines the application in the next three and a half months, as it does for most of the applications that come before it. 30I am satisfied that the undertaking that is being proffered to the Court by Mr Wang sufficiently protects the hypothetical situation which has been at the forefront of Mr Farkas' submissions before me today. 31For those reasons I take the view that the substantive way of dealing with the paragraphs in both parties' notices of motion that relate to the operation of the orders made on 9 September 2013, in light of the events of September and early October 2013 is: (1) to make it quite plain what the position is, and (2) to the extent necessary to put in place a more perfect regime. I should add this: it would have been open to either party to approach the Court more promptly than they have, given the regrettable circumstances that an original bank guarantee was not lodged with the Registrar within time, and the document that was lodged turns out to have an expiry date of 31 March 2014. 32The orders that I propose to make for the reasons that I have just given are: (1)Note the acceptance of the undertaking to the Court proffered by Mr Wang on behalf of him and wife in the terms of paragraph 3 of MFI 1: In the event that: (i) Mr Farkas has removed the writ over all applicants' properties, and (ii) Judgment continues to be reserved from the Court of Appeal at the end of February 2014, then the applicants will not oppose Mr Farkas' application to put in place a new form of security, either a bank guarantee or cash term deposit, commencing on 1 April 2014 with the time of lodgement and terms of the security to be determined as is appropriate by the Court at the time, and in the same amount as the existing guarantee. (2)Note that the original ANZ Bank Guarantee in the amount of $411,813 remains lodged with the Registrar of the Court of Appeal supporting the interlocutory regime originally made on 9 September 2013 and modified by me. (3)Confirm that the stay of execution of the writ reflected in order 3 made on 9 September 2013 remains in place. (4)To the extent necessary, stay the execution by Mr Farkas of the order challenged by the proceedings in this court, namely the order made on 20 May 2011 by the District Court of NSW, until further order. (5)Direct that Mr Farkas take all necessary steps to remove the registration of the writ on all properties of Mr Wang and his wife within seven days. (6)Grant both parties liberty to apply on two days' notice. In the event that liberty to apply in the vacation is sought, then that liberty should be exercised in the third week of January when I am sitting. (7)Otherwise dismiss Mr Farkas' amended notice of motion dated 12 December 2013 and notice of motion of Mr Wang and his wife filed 10 December 2013. Costs 33Mr Farkas submitted that there should be no order as to costs. Mr Wang sought an order for his costs. Neither party before me has legal representation. The costs that Mr Wang seeks are therefore confined to disbursements. He says from the Bar table there is a filing fee of some $300 and some photocopying. 34There is real merit in what lies behind Mr Farkas' submission that an appropriate outcome to today is that there be no order as to costs. A lot of costs and a lot of time has been spent in a way that is very difficult to reconcile with the parties' obligations under s 56 of the Civil Procedure Act 2005 and the Court's obligations to all of the other litigants who call for its time. At one stage there was debate about whether there should be a direction that Mr Farkas do something by 4 o'clock as opposed to 5 o'clock on the day. I think it is true to say that every judge that has looked at this litigation has described it as horrendous. For present purposes I am not allocating that adjective to either of the parties, but a lot of time has been spent unnecessarily today and there is no reason, although Mr Wang has obtained some limited success, for there to be any exercise of a cost discretion in his favour. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 13 December 2013