Bendigo and Adelaide Bank Ltd v Karamihos

Judgment 1BASTEN JA: This matter involved an application by the Bendigo and Adelaide Bank Limited for possession of land, the subject of a mortgage, given by Mr and Mrs Karamihos. The response to the possession application was the filing of separate proceedings in the Equity Division seeking relief under the Contracts Review Act 1980 (NSW) and the National Consumer Credit Protection Act 2009 (Cth). 2On 8 March 2013 the trial Judge, Pembroke J, gave judgment in favour of the applicants before him, being Mr and Mrs Karamihos. In due course orders were formulated (which are far from a model of clarity) which appear to have the effect of reducing the capital repayable by Mr and Mrs Karamihos by about $240,000. So reduced, the payments, which had been made under the loan granted in 2007, exceeded those which were properly payable by an amount of some $36,000. In the result Mr and Mrs Karamihos were successful in their proceedings in the Equity Division, there was no default under the loan and therefore the possession proceedings were dismissed. Mr and Mrs Karamihos' costs were ordered to be paid by the Bank. 3The Bank has sought to appeal against that judgment and those orders. The matter has presently reached the stage where the red book has been filed and no doubt the other relevant appeal books, other than the orange book, can be filed in due course. The Bank is concerned, however, to reserve what it sees to be the status quo or at least the interest which it had in the mortgaged property prior to the orders made below. It now seeks to stay those orders in a manner which will prevent the respondents to the appeal selling, mortgaging, or otherwise dealing with, or disposing of, their property in terms which would see the Bank lose the security for any further amount which it might obtain if the appeal were successful. It also seeks a stay of the orders made as to costs. 4In an affidavit filed on 12 June 2013, Ms Jayne Gurney noted that a letter was sent by the solicitors for the Bank to the solicitors for the respondents to the appeal seeking undertakings from them not to either enforce the costs orders which had been made in the Court below or to refinance or discharge any of their obligations under the varied loan agreement. In the absence of such an undertaking a motion of the kind now on foot was foreshadowed. The undertakings were not given. The Bank says that in the absence of any undertaking either by the respondents, or their solicitors, execution of the judgment in respect of costs should also be stayed. The Bank referred to TCN Channel 9 Pty Limited v Antoniadis [No 2] [1999] NSWCA 104; 48 NSWLR 381, at [15] and [18], where the established procedure for seeking an undertaking from solicitors to repay costs paid to them if this Court should reverse the judgment as to costs below is discussed. No such undertaking has been proffered in the present case. 5So far as the balance of convenience is concerned, it is clear that the Bank has an interest in preserving the property in its present ownership in order to be able to enforce the mortgage against the property in the event that it is successful in the appeal in an amount which is significantly in excess of the sum which is presently secured. The respondents say that there is no threat or immediate intention to dispose of the property and there has been no application to discharge the mortgage. They also say that there is no indication that the equity available in the property is not sufficient to cover any increase in the debt owing if the Bank were successful on the appeal. They point out that the evidence in respect of the available equity is limited, as is the amount which would be owing in the event of an appeal being successful. 6These matters are all correct, but in those circumstances the only disadvantage to the respondents in the grant of the stay in respect of the substantive orders made below is that they would not be in a position to sell if, due to a deterioration in the health of either of them, they were required to move out of the property and possibly into supported accommodation. Given that that is at present only a theoretical disadvantage, there is little doubt that the balance of convenience favours granting the application by the Bank to stay the operation of the orders made below, in the limited sense in which the order is now sought by the amended notice of motion, dated today. 7So far as the costs of the proceedings below are concerned there are two issues. The first is that, in the absence of any undertaking to repay costs if the orders were to be set aside on appeal, there is a real risk that the costs will be unrecoverable in the event that the appeal is successful. There is, however, a separate issue as to whether the respondents should be able to proceed with the assessment of costs in the event that they are so minded, even if they are not in a position to immediately enforce the order, the quantum of which would be established by an assessment. 8In my view the appropriate course is to order that the execution of the costs order be stayed, but subject to the condition that if the respondents seek to assess the costs at this stage they be entitled to continue with that process which I understand is on foot. 9The Bank also seeks expedition of the hearing of the appeal, although it concedes that if the stay is granted in the form sought there is less need for the appeal to be expedited. The respondents say that if the appeal were to be granted full expedition, in which case it might be heard within a period of some six weeks, they would be limited in their opportunity to obtain legal aid and would almost certainly lose the assistance of counsel who has appeared for them so far and senior counsel who has tentatively been approached to appear on the hearing of the appeal. In those circumstances the matter should be subject to a limited grant of expedition, but if possible a date should be found later this year at a time which does not prevent the appearance of counsel sought to be briefed by each party. 10In these circumstances it is appropriate to make the following orders, (1) Pending the determination of this appeal or until further order: (a) stay orders 1, 2, 3 and 4 made 16 May 2013 in the Equity Division only to the extent that the said orders enable the respondents to demand a discharge of mortgage AD190821 or to sell, mortgage or otherwise deal with, or dispose of the respondent's property at xxx, Maroubra, being the land comprised in Lot 4966/DP 752015, and (b) stay orders 6(b) and 7 made 16 May 2013 in respect of costs in the Courts below without prejudice to the rights of the respondents to proceed with the costs assessment presently on foot if so advised. (2) Direct that the appeal be granted procedural expedition with the expectation that it will be heard within the next four months but at a date which is convenient to counsel for both parties. (3) Costs of the motion are to be costs in the appeal.