1 On 8 April 2009 I delivered judgment in this matter. The Plaintiffs, whom I have called the Brown parties, failed in the proceedings which they instituted, namely, proceedings 2008/2008, and the Defendants in those proceedings, whom I have called the Hodgkinson parties, succeeded in their claim against the Brown parties in proceedings 4043/2008. The amount in respect of which judgment is to be entered for the Hodgkinson parties in proceedings 4043/08, together with interest and costs, is in excess of $1.5 million.
2 The Brown parties have informed me that they intend to appeal and they seek a stay of execution of the judgment. The Hodgkinson parties have opposed any stay. When the application for stay was first made, Mr Donohoe of Counsel, who appears for the Brown parties, was not yet in a position to say that Senior Counsel had advised that there were sufficient prospects of an appeal to warrant the commencement of the appeal. He informed me that Senior Counsel was being consulted. Accordingly, at that stage I was not informed as to what grounds of appeal the Brown parties may rely on, so it was impossible for me to form any view as to the prospects of success of an appeal.
3 The prospects of success of an appeal, which is essentially a matter of identifying whether there are reasonably arguable grounds of appeal, is a highly relevant factor in the exercise of discretion as to whether a stay of the execution of the judgment ought to be given pending an appeal.
4 On the other side of the record, however, there was a difficulty with the Hodgkinson parties. Evidence adduced by the Brown parties showed that bankruptcy proceedings had been commenced against both Mr Hodgkinson and Mr Hausman. I think one of the Defendant companies was in liquidation. It appeared that there was a real risk that if the judgment was executed and the proceeds of execution came to the Hodgkinson parties pending an appeal, the Hodgkinson parties may well not be able to repay the whole or some substantial part of the judgment if the appeal was successful.
5 On the one hand, therefore, one is faced with the situation where the prospective appellants could not enunciate grounds of appeal sufficient to form a view as to whether there were any arguable grounds. But on the other hand, the parties seeking to execute the judgment appeared to be in a position where they may well not be able to repay the proceeds of that judgment.
6 The matter was stood over for some time to enable a solution to be worked out. In the event, propositions emerged from the parties as follows: the Brown parties offered, as a term or condition of a stay, to provide security over property to cover the amount of the judgment debt and the costs. That proposal removed the necessity for the Brown parties to sell or otherwise realise the properties which they were holding.
7 Both sides of the record are real estate developers. One has to take judicial notice of the fact that the real estate market is undergoing a period of depression and turbulence, to say the least, in the current economic conditions. The proposal put forward by the Brown parties therefore has the merit that, while they do not have to realise properties on a forced sale basis, they are able to provide a sufficient fund by way of security to cover the judgment debt if the appeal is unsuccessful.
8 The Hodgkinson parties proffered the following solution in order to overcome the difficulty that the evidence shows that they were at risk of not being able to repay the fruits of judgment. They proposed that the proceeds of sale of properties against which execution would be levied should be paid into Court to abide the result of the appeal. There would then be no risk that the proceeds would not be repaid to the Brown parties if the appeal was successful.
9 Both the proposal of the Brown parties for security and the proposal for the Hodgkinson parties for payment into Court meant that the Hodgkinson parties would not actually receive any cash in hand pending determination of the appeal.
10 It seems to me that it is less prejudicial to the Brown parties to provide security for the judgment debt in the form of the mortgages, which they offer to do, rather than to force them to sell properties in the current market and pay that money into Court. I would therefore prefer the proposal put forward by the Brown parties, that is, that security for the judgment debt, interest and costs, be provided.
11 The Hodgkinson parties say that the security offered, however, is unsatisfactory and that better security ought to be ordered. The security consists of second mortgages over specified properties. There are in evidence valuations from a qualified valuer as to the current market value of those properties. There is also evidence as to what are the outstanding debts secured over those properties by first mortgage. The equity, according to the valuations, is some $1.6 million which is approximately equal to the amount of the judgment debt and interest and costs to date.
12 Complaint is made that the valuations are only recently provided and that the Hodgkinson parties have not had sufficient time to make their own assessment of the valuations. I do not think this exercise should deteriorate into a valuation case. There is evidence that a qualified valuer has valued the properties, and I think it is proper at this stage of the proceedings to accept that evidence and to proceed on the basis that the nett equity remaining in the properties to be offered by way of second mortgage is about equal to the judgment debt, interest and costs.
13 I come then to the other limb of the discretionary consideration, and that is whether reasonable arguable grounds of appeal have been made out. Mr Donohoe has now provided me with brief outline of submissions and that in essence is an outline of the appeal. I should say that the points of appeal amount really to little more than that I failed to accept the Brown parties' submissions at trial and that those submissions were right.
14 I do not think that a very high threshold has to be crossed in order to demonstrate that there are arguable points of appeal, particularly when the decision of the trial Judge turns, as it does in this case, largely upon the legal character to be given to a certain set of facts. There are, to be sure, some material findings of credit in my judgment, but a substantial part of the judgment is concerned with giving a legal character to the events which occurred. Minds often differ in that area. I do not think that I could reasonably say that there is no arguable ground of appeal. The Court of Appeal may form a different impression of the facts.
15 In those circumstances, I am satisfied that there is an arguable case for an appeal. The security offered by the Brown parties is a sufficient and proper security to avoid any prejudice which the Hodgkinson parties might suffer by reason of an inability to realise their judgment between now and the determination of the appeal.
16 The proper order in these circumstances is to order that the execution of the judgment be stayed pending the appeal, upon condition that the Brown parties provide the security over the properties as outlined in the affidavit of Mr Brown of 18 May 2009. That security should be by way of second mortgage in a form acceptable to the Hodgkinson parties' solicitors.
17 The conditions upon which the stay is granted are as follows: first, that the Brown parties file their Notice of Appeal within seven days, and second that the Brown parties provide mortgages in a form acceptable to the Hodgkinson's parties' solicitors within fourteen days. The costs of the application for a stay will abide the result in the Court of Appeal. Liberty to apply is implicit.
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