Court of Appeal Supreme Court New South Wales Medium Neutral Citation: MacDonald v Yakiti Pty Ltd [2018] NSWCA 108 Hearing dates: 18 May 2018 Date of orders: 18 May 2018 Decision date: 18 May 2018 Before: Macfarlan JA Decision: (1) Stay the operation of the orders made by Fagan J on 9 March 2018 until determination of Ms MacDonald's application for leave to appeal and any appeal that follows in the event that leave is granted. (2) Direct that Yakiti Pty Ltd not proceed with the writs of possession that have been issued. (3) Order that Ms MacDonald's application for leave to appeal and any appeal following from it be heard concurrently. (4) Grant expedition of the application for leave to appeal and appeal. (5) Direct the parties to approach the Registrar with a view to obtaining an expedited hearing date. (6) Order that the costs of the present motion be costs in the application for leave to appeal. Catchwords: APPEAL – stay pending appeal – no issue of principle Cases Cited: Capital Securities XV Pty Ltd (formerly known as Prime Capital Securities Pty Ltd) v Callejaa [2017] NSWCA 342 O'Brien v Bank of Western Australia Ltd [2013] NSWCA 71 Category: Procedural and other rulings Parties: Kate Marie MacDonald (Applicant) Yakiti Pty Ltd (Respondent) Representation: Counsel: L W Chan (Applicant) V Bedrossian (Respondent) Solicitors: Self-represented Applicant Moisson Lawyers (Respondent) File Number(s): CA 2018/103460 Decision under appeal Court or tribunal: Supreme Court Jurisdiction: Common Law Date of Decision: 09 March 2018 Before: Fagan J File Number(s): SC 2017/163651 [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.] Judgment 1. HIS HONOUR: This is an application for a stay of orders made by Fagan J sitting in the Common Law Division. The stay is sought until determination of an application for leave to appeal and any appeal that follows from it. 2. By judgment of 9 March 2018 his Honour rejected the argument of the present applicant, Ms Kate MacDonald, that she was entitled to an equitable set-off against the claim of the present respondent, Yakiti Pty Ltd. Yakiti claims repayment with interest of loans it made to Ms MacDonald totalling $456,000. Repayment of the loans was secured by mortgages over Ms MacDonald's properties at Woolloomooloo. Ms MacDonald admits the loans, their non-repayment and the security given for them but claims that by a subsequent agreement between herself, Yakiti and other parties, Yakiti agreed to release Ms MacDonald's debt in return for alternative consideration. 3. In his judgment of 9 March 2018, the primary judge proceeded on the basis that Ms MacDonald's claim was not unarguable but concluded that, bearing in mind the manner in which it was expressed in her cross-claim, it would not, if successful, give rise to an equitable set-off. As a result, his Honour struck out Ms MacDonald's defence to Yakiti's claim and gave judgment for Yakiti for possession of the Woolloomooloo properties. His Honour also granted leave to Yakiti to issue writs for possession. 4. Subsequently, Ms MacDonald reframed her cross-claim, sought leave to file it in its amended form and contended before his Honour that, even on the views expressed by his Honour in his judgment of 9 March 2018, her entitlement to a set-off was established. 5. In his judgment of 29 March 2018, his Honour took the view that Ms MacDonald's proposed Further Amended Cross-Claim in some respects sought to subvert his Honour's earlier decision. His Honour therefore granted only limited leave to amend the Amended Cross-Claim. The orders his Honour made on 9 March 2018 remain operative. 6. In my view it is arguable that, if Ms MacDonald proves the subsequent agreement she alleges, she is entitled to an equitable set-off against Yakiti's claim, or at least is entitled to a stay of enforcement of Yakiti's claims pending determination of her cross-claim. The competing claims are clearly closely connected and, if Ms MacDonald's claim is upheld, it will effectively negate Yakiti's claim. The decision in O'Brien v Bank of Western Australia Ltd [2013] NSWCA 71 provides some arguable support for Ms MacDonald's application for a stay. It is important to note in this context that Yakiti did not contend before Fagan J that Ms MacDonald's claim, expressed in different ways in iterations of her cross-claim, was hopeless and ought to be struck out. 7. On this application Mr Bedrossian, counsel for Yakiti, put some substantial arguments in support of the primary judge's approach to set off but in my view these should await the hearing of the application for leave to appeal for resolution. Likewise, he made submissions as to why Ms MacDonald's cross-claim was likely to fail but I am unable to assess them properly on an application such as this, nor do I consider that I should attempt to do so when Yakiti did not file any application at first instance to strike out the cross-claim and the primary judge proceeded on the basis that it was not unarguable. 8. As to the balance of convenience, it is clear from evidence led before me that Ms MacDonald may well suffer considerable prejudice if Yakiti is able to enforce its claims before her claim is determined. Arguably her proposed appeal will be rendered nugatory. On the other hand, Yakiti has the security of mortgages over real property and has not led evidence of any particular prejudice to it. 9. In the course of the hearing before me, Mr Bedrossian indicated that his client would consent to an order that if the properties were sold the proceeds of sale would be set aside pending the determination of the proceedings. This does not seem to me to fully counter Ms MacDonald's alleged prejudice, in particular, because the apartment in question is her home, although she is temporarily unable to reside in it. 10. In these circumstances, and applying the principles recently summarised by Basten JA in Capital Securities XV Pty Ltd (formerly known as Prime Capital Securities Pty Ltd) v Callejaa [2017] NSWCA 342 at [6], I consider that an appropriate stay should be granted. 11. Accordingly, I make the following orders: 1. Stay the operation of the orders made by Fagan J on 9 March 2018 until determination of Ms MacDonald's application for leave to appeal and any appeal that follows in the event that leave is granted. 2. Direct that Yakiti Pty Ltd not proceed with the writs of possession that have been issued. 3. Order that Ms MacDonald's application for leave to appeal and any appeal following from it be heard concurrently. 4. Grant expedition of the application for leave to appeal and appeal. 5. Direct the parties to approach the Registrar with a view to obtaining an expedited hearing date. 6. Order that the costs of the present motion be costs in the application for leave to appeal. ********** Amendments 18 May 2018 - Coversheet 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: 18 May 2018