BETWEEN : COMMONWEALTH BANK OF AUSTRALIA (ACN 123 123 124)

Courts - Procedure - Application for stay of execution - Mortgage action

Scott v Australian & New Zealand Banking Group Ltd [1989] WAR 256

1 PULLIN J: This is an application for a stay of execution. It follows upon, and is sought in relation to, a judgment which was given by Master Sanderson on 6 August 2003, when he ordered:

(1) judgment be entered in favour of the plaintiff against the defendant in the sum of $165,058.52 and interest thereon at the rate of $60.34 per day from and including 24 May 2003 until payment;

(2) the defendant do within 28 days deliver up to the plaintiff vacant possession of the relevant property; and that

(3) the defendant pay the plaintiff's costs of this action and this application including any reserved costs calculated on a solicitor and client basis, to be taxed.

2 The defendant has appealed against that judgment. The grounds of appeal are as follows:

"1. The Learned Master erred in law and in fact in concluding that the evidence contained in the affidavits did not show an arguable defence to the allegations contained in the Statement of Claim.

PARTICULARS

(a) - the Learned Master failed to take account of the evidence that each of the First Loan, the Second Loan and the Third Loan had been repaid to the Plaintiff, either directly by the Company (Moka Nominees Pty Ltd) or from the distributions to the Plaintiff of the proceeds from the winding up of the Company;

(b) - the Learned Master Failed to take account of the fact that the Defendant declined to consent to the extension of the Guarantee or the Mortgage to secure the repayment of the Fourth Loan.

2. The Learned Master erred in law and in fact in failing to take into account the deficiencies in the Statement of Claim and in the Plaintiff's affidavit evidence including:-

(a) - the error in paragraph 5 of the Statement of Claim and the Plaintiff's verifying affidavit in relation to an equitable mortgage;

(b) - the failure to provide an executed or stamped copy of the agreement for the First Loan to verify the allegations pleaded in paragraphs 7 and 8 of the Statement of Claim;

(c) - the fact that the copy of the Terms Schedule for the variation of the Third Loan dated 12 February 2002 annexed at pages 102 to 103 of the affidavit of Felicity Peter sworn 23 May 2003 did not include a security schedule; and the fact that the security schedule attached to the copy of the Terms Schedule annexed at pages 16 to 21 of the further affidavit of Felicity Peter sworn 11 July 2003 is, prima facie, a copy of the security schedule for the variation of the First Loan made on 28 July 2002.

3. The Learned Master erred in law in granting costs on a solicitor and client basis, when legal costs were included in the amount for which judgment was entered."

3 The application for the stay of execution relates to par 2 of the judgment, which is the order that the defendant deliver up vacant possession, and what has happened is that the sheriff is now threatening to take possession of the property as a result of steps taken by the bank in relation to that judgment.

4 The application for a stay is brought pursuant to O 47 r 13 insofar as it is an application to stay execution, and under O 63 r 15 insofar as it is seeking a stay pending the appeal. In my view, there is no difference in the principles to be adopted under either of those orders. I must be satisfied that there are special circumstances and must decide where the balance of convenience lies, and I must take into account the special principles that apply in relation to a mortgage action. It is also necessary that the applicant satisfy the Court that there is an arguable case for appeal in order to ensure that the appeal has not been lodged simply to delay execution. See Croney v Nand [1998] QCA 367; [1999] 2 Qd R 342.

5 Before I proceed any further then, I will look at the grounds of appeal. In relation to ground 1, which is an allegation, in effect, that the first, second and third loans which had been made to the company in question and which had been guaranteed by the defendant, had been repaid. As to that, there seems to be no dispute that there was a Dobbs certificate. There being a Dobbs certificate, the Master was entitled to act on that as evidence of the amount that was owing: Dobbs v National Bank of Australasia Ltd [1935] HCA 49; (1935) 53 CLR 643.

6 Secondly, the statements of the bank accounts regarding the four loans which had been made to the company in question show no support for the contention in this ground of appeal. The defendant himself tendered these bank statements showing that moneys were outstanding even after certain payments had been made which were said to have discharged the loans. So, in my opinion, ground 1 shows no prospect of the appeal succeeding on the information which is before me.

7 The second ground is an allegation about deficiencies in the statement of claim and the affidavit evidence. The position is that not all deficiencies in the statement of claim on an application under O 14 will cause the application to fail. Only if the statement of claim contains substantial defects must the application for summary judgment be dismissed. See Westpac Banking Corporation v Thorpe, unreported; SCt of WA (M Sanderson); Library No 970465; 18 September 1997.

8 There is a point in ground 2 about whether or not the first loan was stamped, and the ground is couched in terms that there was a failure to provide an executed or stamped copy of the first loan. In my view, there is no obligation to "provide" an executed or stamped copy to somebody. The prohibition is on pleading or tendering documents which have not been stamped, and there is nothing before me which indicates that the document was not stamped, and it is not made out by referring to the fact that the schedule in relation to one of the two loans covered in the document which the defendant points to was stamped. That does not prove to me in any way, or suggest, it was an arguable case and that the loan in relation to the $305,000 was not stamped.

9 In relation to ground 3, it is suggested that the Master erred in law in granting costs on a solicitor and client basis when legal costs were included in the amount for which judgment was entered. I do not see any basis for that contention succeeding when the mortgage documents themselves provide for costs on a solicitor and client basis. So, in my view, the defendant has not shown that it has prospects of success in this appeal, which is not to say that the defendant cannot pursue the appeal through to a hearing, but at the moment, on the material before me, I am not satisfied that it reveals an arguable appeal with prospects of success.

10 Even if I am wrong in relation to the point about prospects of success, the defendant has to overcome some other hurdles. First, the defendant points to the principles that apply generally in relation to a stay as appears from Federal Commissioner of Taxation v Myer Emporium Ltd [No 1] [1986] HCA 13; (1986) 160 CLR 220, where Dawson J said that the discretion to order a stay of proceedings is only to be exercised:

"... where special circumstances exist which justify departure from the ordinary rule that a successful litigant is entitled to the fruits of his litigation pending the determination of any appeal ... Special circumstances justifying a stay will exist where it is necessary to prevent the appeal, if successful, from being nugatory ... Generally that will occur when, because of the respondent's financial state, there is no reasonable prospect of recovering moneys paid pursuant to the judgment at first instance."

11 I pause there to mention that there is no suggestion that the Commonwealth Bank of Australia will be in a position, because of its financial state, that it will not be able to repay the moneys if the appeal succeeds. I note that Dawson J said that special circumstances are not limited to that situation and will exist, for whatever reason, where there is a real risk it will not be possible for a successful appellant to be restored substantially to his former position if the judgment against him is executed.

12 In my view, that must take account of the situation of a defendant who is in a position to pay moneys. If the defendant is in a position to pay the moneys the subject of the judgment, then, if the moneys are paid, there will not be execution and then there will not be a real risk that the defendant will end up in a position where, if execution proceeds, he would lose his property.

13 It may be more important in cases where the defendant is unable to come up with the money, perhaps for a reason which might be tied up in the proceedings, but in this case I have been told that the defendant is in a position to pay the amount due into Court, and I simply do not understand why, in those circumstances, the money could not be paid to the bank, in which case there would be no execution and therefore the defendant could never be in a position where he would lose the property, and so therefore there is no prospect that the appeal could be rendered nugatory.

14 I also refer to the situation in relation to mortgage actions. In Inglis v Commonwealth Trading Bank of Australia [1972] HCA 74; (1972) 126 CLR 161 at 164, Walsh J said:

"A general rule has long been established, in relation to applications to restrain the exercise by a mortgagee of powers given by a mortgage and in particular the exercise of a power of sale, that such an injunction will not be granted unless the amount of the mortgage debt, if this be not in dispute, be paid or unless, if the amount be disputed, the amount claimed by the mortgagee be paid into court."

15 That is a general rule only, and it cannot be applied rigidly. That cuts both ways. Sometimes the general rule will not apply at all and sometimes, and I consider this is one of those cases, the amount to be paid should be paid to the bank rather than paid into Court. I should mention that the Full Court of this Court in the Commonwealth Development Bank of Australia Ltd v Nertec Pty Ltd [1999] WASCA 311 said that Inglis would apply in circumstances where a defendant seeks a stay of execution of a plaintiff's judgment for possession.

16 The position seems to be this: that the amount which has to be paid by the defendant, according to the successful bank in this litigation, is the sum of $186,491.17, and I am told that the defendant would be in a position to pay that sum into Court tomorrow. As I have already indicated, if it is able to pay the money into Court, I see no reason for that. That would simply disadvantage both parties. It would tie the money up in Court in a low-interest environment when, in fact, if it is paid to the bank, it stops interest running at the rate which is claimed by the bank; so I see no reason why the money should be paid into Court rather than simply paid to the bank. If the defendant, contrary to my opinion, succeeds in the appeal, the bank will be obliged to repay that money to the defendant.

17 There has been some delay in relation to getting to this position. The defendant has previously tendered a sum of money which would have paid out the amount claimed by the plaintiff previously, but on those occasions tendered on the basis that the plaintiff exchanged a discharge of mortgage in relation to the second mortgage which it holds. In my opinion, the bank is not obliged to provide the discharge, and in any event I cannot deal with that aspect here. All I am being asked to do is to stay execution, and the reasons I have given draw me to the conclusion that I should dismiss the application which has been brought by the defendant.