Appleby v Nellis [2009] NSWSC 299 | Case summary

After this conversation she left the property without signing the contract for sale. In that affidavit the defendant deposed to a conversation with another real estate agent, a Mr Darren Wildash, in which she said she was told by that agent he had a buyer who would buy her property at 40 Bower Street for $6.5 million. She said that the agent told her that if she were to sell, his buyer would purchase. She deposed that on or about 12 June 2008 she signed the contract to purchase 78 Bower Street expecting her house at 40 Bower Street to sell at around $6.5 million. However, it did not. She said that the top bid at auction was $4.7 million. 3 On 3 October 2008 the parties entered into a document called a Deed of Settlement and Guarantee and Indemnity. Clause 2.1 provides that the parties had without admission to liability agreed to settle the proceedings. Clause 3 provided that the defendant should pay a deposit of $700,000 by 10 October 2008, time being of the essence, and if she failed to pay the deposit she would consent to a judgment being entered in favour of the plaintiff in that sum, and to pay costs of the proceedings which would be agreed or assessed. By clause 3.2(b) the plaintiff agreed that if he became entitled to enter judgment against the defendant, it would be the only relief to which he would be entitled against either her or her husband in relation to the contract or the property or the deed. 4 In support of her application for a stay of execution of the judgment, the defendant has sworn a further affidavit in which she deposes that in the course of her and her husband's inspecting the premises at 78 Bower Street, Manly, her husband asked the agent, Mr Walls, what he thought the defendant and he would be able to get for the property at 40 Bower Street. She deposes that Mr Walls replied with words to the effect that he knew the house and that he could get $6.5 million dollars for it, and that was what it was worth. The defendant says that this representation induced her to enter into the contract to buy the property at 78 Bower Street. 5 She also deposes that three or four days before signing the contract of 12 June 2008, she was told by her husband that the agent, Mr Walls, had suggested that she hand over a cheque for the deposit for $700,000, sign a contract, and provide those documents to him so that they could be shown to the vendor to assist in the negotiations for the purchase of the property. She says she did not have the funds to meet the cheque for $700,000. Her husband deposes that Mr Walls told him that he would not hand over the signed contract or the cheque to the vendor, but would use the documents to indicate to the vendor that the defendant and her husband were seriously interested in buying the property. 6 None of these matters were raised either by the defence or cross-claim in these proceedings. 7 The defendant has instituted separate proceedings in which she is the plaintiff and the plaintiff is the defendant, being proceedings 1999/09 in this Division. In those proceedings she seeks damages for alleged misrepresentations made by the agent, Mr Walls, for which she contends the defendant is vicariously liable. The two alleged representations are that the agent would use the contract and cheque only to seek to negotiate a price and terms acceptable to both the plaintiff and defendant for the property, and that the plaintiff's home at 40 Bower Street, Manly could be sold for over $6 million. The defendant submits that judgment against her should be stayed so that she can pursue her claim for damages for misrepresentation, which claim is connected with the contract on which the plaintiff has obtained judgment. She submits that her claim appears to be seriously arguable and potentially substantial. (See Integral Home Loans Pty Ltd v Interstar Wholesale Finance Pty Ltd (No. 2) [2007] NSWSC 592 at [43] and [46]). In this respect the defendant points to the fact that no answering affidavits to her most recent affidavit and that of her husband have been sworn by the plaintiff or the agent. 8 There is evidence that the plaintiff has instituted bankruptcy proceedings against the defendant arising, I assume, from the non-payment of the judgment debt. Those proceedings were before the Federal Magistrates Court on 7 April 2009 and have been adjourned until 29 April 2009 to enable this notice of motion to be determined. The defendant submits that if a stay is not granted, she will suffer hardship because her causes of action against the plaintiff will pass to her trustee in bankruptcy and she will not, at least immediately, receive the benefit of them. There is no explanation in the evidence as to why the present claims were not advanced by way of defence or cross-claim in the proceedings. 9 Mr Sirtes SC, counsel for the plaintiff, submitted that the present claim of the defendant suffers substantial problems in the nature of an Anshun estoppel (Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589). I express no view as to whether that is so. The contrary is certainly arguable (Tanning Research Laboratories Incorporated v O'Brien [1990] HCA 8; (1990) 169 CLR 332 at 346). Because the consent orders were made pursuant to a settlement agreement which was made without admissions, it is also arguable that the consent orders do not preclude the defendant now bringing a claim which is inconsistent with the basis upon which judgment has been entered against her (Isaacs v Ocean Accident & Guarantee Corp Ltd & Winslett (195) SR (NSW) 69 at 76). However, for the defendant to obtain a stay of execution of the judgment it is not enough for her to point to reasons why her new claim might not be defeated in limine. 10 In Integral Home Loans Pty Ltd v Interstar Wholesale Finance Pty Ltd (No. 2), Brereton J, by reference to authority, noted at [43] and [46] that where judgment is entered on a plaintiff's claim, a stay may be granted where the defendant has an unresolved cross-claim for damages for breach of contract on which the plaintiff successfully sued or for misrepresentation in connection with that contract. His Honour observed that: " the flavour of the judgments, both in the Divisional Court and in the Court of Appeal, [ in Mersey Steamship Co v Shuttleworth (1883) 10 QBD 468; affirmed (1883) 11 QBD 531 ] is that absent 'special reason' a judgment on a claim for a liquidated sum under a contract will not be enforced pending determination of a triable cross-claim for damages for breach of the same contract ". 11 In refusing the stay in that case, his Honour weighed, amongst other things, the apparent substantial strength of the cross-claim, but also the defendant's delay in formulating that cross-claim and the parties' agreement which expressed an intention as to how an asserted set-off should be dealt with. 12 I do not consider, on the materials on this application, that the defendant's new claim should be characterised as "seriously arguable and potentially substantial". The disconformity between the defendant's affidavit in support of that claim and her affidavit sworn in September last year in defence to the plaintiff's claim is striking. As I have said, there is no explanation as to why this claim was not advanced by way of defence or cross-claim, as would be expected if it were of substance. Moreover, it is highly relevant that the claim was not brought by way of cross-claim. Rather the parties agreed to a settlement under which the plaintiff relinquished all claims except the claim to enter judgment for $700,000 and costs. The natural expectation of the parties entering into such an agreement would be that if judgment were entered it could be enforced. For the defendant to resist enforcement on the ground of a claim which could have been brought by cross-claim, and thus brought to the notice of the plaintiff but which was not, is not consistent with fair dealing. Had such a claim been raised at the time the settlement was entered into, it might well have affected the terms on which the plaintiff was prepared to settle. 13 The defendant also submitted that she should be entitled to a stay of the judgment if, as she contends, the plaintiff/judgment creditor is insolvent. There was no evidence of the plaintiff's financial position but the matter proceeded on the basis that if the plaintiff's solvency or insolvency was relevant to a decision whether or not to stay execution of the judgment, the hearing would be adjourned part-heard to enable evidence on that topic to be adduced. The plaintiff contended that it was irrelevant whether he was solvent or not. In my view, the solvency of the plaintiff is irrelevant to the question whether the judgment should be stayed. Assuming that he is insolvent, there is no reason, it seems to me, that his creditors should be kept out of the fruits of the judgment to which the defendant consented. The defendant submitted that she would be unable to "recover" any payment made pursuant to the judgment if the plaintiff is insolvent. However, the claim which the plaintiff seeks to make is not a claim "to recover" any sum payable under the judgment. It is an independent claim for damages for misrepresentation allegedly made by the alleged agent of the plaintiff. 14 I was referred to the decision of Einstein J in Grosvenor Constructions (NSW) Pty Ltd (in admin) v Musico & Ors [2004] NSWSC 344 at [27], particularly at [21] and [24]. His Honour there was considering the question whether a judgment obtained pursuant to an adjudication under the Building and Construction Industry Security of Payment Act 1999 (NSW) should be stayed if the judgment creditor was insolvent. By reference to English authority as well as reasoning on first principles, his Honour said that such insolvency would be material to a decision whether or not to grant a stay. However, that case and the cases to which his Honour referred have to be understood in the context of the Act with which his Honour was concerned. That Act provides for a provisional, and not a final, determination of a claimant's entitlement to be paid moneys under a building contract. That type of case is remote from the present and I do not consider that the decision is of any assistance to the defendant in the present case. 15 For these reasons I do not consider that the execution of the judgment should be stayed. I order that the defendant's notice of motion filed on 20 March 2009 be dismissed with costs. For the sake of clarity I order that those costs may be assessed forthwith and are payable forthwith after agreement or assessment. The exhibit may be returned.

Appleby v Nellis

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Cases Cited (5)