Dimitrovski v Australian Executor Trustees Limited

The Common Law Proceedings 42The Lender commenced the Common Law Proceedings on 13 January 2011 by statement of claim. The defendants named in the Common Law Proceedings were the Borrower, Kosta, George, Trena and Shano. Clearly, the Common Law Proceedings were not properly constituted. It is clear that Kosta and George were intended to be defendants in their own capacity and not in their capacity as executors of the Will. Further, Trena, having died some 20 months prior to the commencement of the Common Law Proceedings, should not have been joined as a defendant. Kosta and George should have been joined as her legal personal representatives. 43By the statement of claim filed on behalf of the Lender in the Common Law Proceedings, the Lender claimed, relevantly for present purposes, the following relief: possession of the motel; possession of the fish and chip shop; judgment against the Borrower in the sum of $3,215,123.17; judgment against Kosta and George in the sum of $3,215,123.17; judgment against Trena in the sum of $3,215,123.17; judgment against Shano in the sum of $3,215,123.17. 44The relevant allegations in the statement of claim may be summarised as follows: By way of guarantee (the first Guarantee), Kosta and George guaranteed the punctual payment to the Lender of all money owing by the Borrower; By way of guarantee (the second Guarantee), Trena unconditionally guaranteed the punctual payment to the Lender of all money owing by the Borrower; The Lender made demand for payment of the amount owing by the Borrower from Kosta and George and from Trena; Kosta and George and Trena failed to pay the amount demanded; Kosta and George are the registered proprietors of the motel and the fish and chip shop; The Lender claims possession of the motel and of the fish and chip shop; The instrument from which the Lender's claim for possession is derived is the Mortgage; The Mortgage imposed an obligation on Kosta and George to pay money to the Lender as required under the terms of the first guarantee, and a breach of their obligation has occurred; The Mortgage confers a right to possession of the motel and the fish and chip shop on the Lender that is contingent on there being default under the Mortgage by Kosta and George; Kosta and George have defaulted under the Mortgage; The Lender's right to possession of the motel and the fish and chip shop arises from the failure by Kosta and George to pay money to the Lender, which failure began on or about 30 June 2010. 45Clearly, a number of the assertions made in the statement of claim are misconceived. First, the Mortgage did not impose any obligation on George and Kosta to pay money to the Lender. Further, the right to possession conferred on the Lender was not contingent upon there being default under the Mortgage by Kosta and George, but on default by Trena. Thirdly, Kosta and George have not defaulted under the Mortgage, but Trena has. 46The statement of claim was clearly drawn under the misapprehension that Kosta and George were the owners of the motel and the fish and chip shop at the time of the arrangements made between the Borrower and the Lender and that they had executed the Mortgage so as to incur personal obligations under the covenants contained in the Mortgage. However, while they acquired the legal fee simple in the motel and the fish and chip shop in their capacity as executors of the Will, by the operation of the transmission application, they did not become personally liable for the covenants given by Trena under the Mortgage, except in their representative capacity as executors of her Will. 47No defence was filed in the Common Law Proceedings. After unsuccessful applications for a stay of those proceedings, the Lender filed a notice of motion for summary judgment in the Common Law Proceedings on 3 May 2011. Orders for possession of the motel and the fish and chip shop were made in favour of the Lender on 4 May 2011 and those orders were entered on 5 May 2011. 48On 31 January 2012, the Lender appointed a receiver and managers to sell the motel and the fish and chip shop. On 4 May 2012, after writs for possession had been issued, Kosta obtained an ex parte stay of eviction with respect to the motel and, on 9 May 2012, filed a notice of motion seeking an extension of that stay. On 11 May 2012, the notice of motion was dismissed with costs. 49On 21 June 2012, the receiver and manager entered into a contract for the sale of the fish and chip shop for the sum of $720,000. That contract was completed on 15 October 2012 and the proceeds of sale of $589,152.70 were paid into an interest bearing account controlled by the receiver and manager. 50On 7 September 2012, the receiver and manager entered into a contract for the sale of the motel for the sum of $2,110,000. That contract has now been completed, although completion was initially deferred pending the outcome of the Equity Proceedings.

The Equity Proceedings 51George commenced the Equity Proceedings on 7 September 2012. The Equity Proceedings are brought for the benefit of Trena's estate. The defendants are the Lender and Kosta, although Kosta has played no part in the proceedings. The only basis for his joinder is that he is a necessary party as one of the executors of the Will. 52By the summons commencing the Equity Proceedings, George claimed, relevantly, a declaration that the Mortgage was executed by Kosta in breach of his obligations as Trena's attorney and claimed an order declaring the Mortgage void ab initio. In the statement of claim filed in the Equity Proceedings on 21 September 2012, George claimed, relevantly for present purposes, the following relief: declarations that Trena's Guarantee, purportedly executed by Kosta pursuant to the Power of Attorney, was executed beyond power as Trena's attorney and was executed for his own personal benefit and for the benefit of a third party, namely, the Borrower; declarations that the Mortgage was executed beyond power as Trena's attorney and was executed by Kosta for his own personal benefit and for the benefit of a third party, namely, the Borrower; an order declaring that the Mortgage and Trena's Guarantee are void and ineffective; declarations that the only money payable under the Mortgage is the money agreed to be paid by Trena under Trena's Guarantee and that no money is due and payable under the Mortgage; a declaration that the Lender was, and is, not entitled to receive any of the proceeds of sale of the motel and the fish and chip shop; damages; equitable compensation. 53George also alleged in the statement of claim filed in the Equity Proceedings that the sale of the fish and chip shop for $720,000 contravened s 420A of the Corporations Act 2001 (Cth) and s 111A of the Conveyancing Act 1919 in that the market value of the property at the date of sale was $1.2 million. He further alleged that the sale of the motel for $2,110,000 contravened those same provisions in that its market value at the date of sale was $3.42 million. 54In its defence filed on 5 November 2012, the Lender made, so far as is relevant for the present purposes, the following allegations: On 13 January 2011, the Lender commenced the Common Law Proceedings seeking, inter alia, an order for possession of the motel and the fish and chip shop; On 5 May 2011, the Court made final orders in the Common Law Proceedings requiring George and Kosta to give possession to the Lender of the motel and the fish and chip shop and gave judgment requiring the Borrower, and Kosta and George, to pay the sum of $3,312,182.01 to the Lender; By reason of the making of those orders, the Common Law Proceedings were concluded and all matters in relation to the validity and enforceability of the Mortgage and Trena's Guarantee merged in the judgment; By reason of the order for possession, George's claims in the Equity Proceedings for relief, other than damages for alleged sales at an undervalue, are barred by res judicata; Further, or in the alternative, George's claims in the Equity Proceedings, other than damages for the alleged sales at an undervalue, are barred by principles of issue estoppel and George is thereby estopped from bringing such claims; Further, or in the alternative, all of George's claims, other than claims for damages for the alleged sales at an undervalue, are claims that could have been made in the Common Law Proceedings and, in all of the circumstances, it was unreasonable for George not to have made those claims in the Common Law Proceedings, such that he is estopped from bringing such claims on the basis of Anshun estoppel; In the circumstances, so long as the order for possession stands, the claims described above are barred and ought to be summarily dismissed or struck out.

The Proceedings before the Primary Judge 55By notice of motion filed in the Common Law Proceedings on 3 October 2012, George sought to have the judgment for possession set aside. By notice of motion filed in the Common Law Proceedings on 14 March 2013, Kosta sought similar relief. By amended notice of motion filed in Court on 22 March 2013, the Lender sought an order under Rule 13.4 of the Uniform Civil Procedure Rules 2005 (UCPR) that the Equity Proceedings be dismissed or, alternatively, an order under Rule 14.28 that the statement of claim filed on 21 September 2012 be struck out. The Lender also sought alternative relief that is not presently relevant. 56All three motions were heard by a Judge of the Equity Division on 4 April 2013. For reasons published on 19 April 2013, the primary judge on that day ordered that the motions by George and Kosta be dismissed with costs. His Honour ordered that the Equity Proceedings, other than in relation to the cause of action based on the alleged sales of the motel and the fish and chip shop at an undervalue, be dismissed. 57The primary judge observed that the defence based on the Power of Attorney should have been raised before the judgment for possession was given on 4 May 2011. The application to set aside the judgment should have been made as soon as the matter came to the attention of the defendants. His Honour observed that prompt action to set aside a judgment is necessary to satisfy the demands of commerce and to maintain the interests of justice. However, in the present case, his Honour observed, there had been a complete failure in that regard. The only possible excuse for not making an application earlier was the failure of all five sets of lawyers retained on behalf of Kosta and George, except their most recent lawyers, to perceive the point now sought to be relied upon. 58The primary judge considered that Kosta and George had made a tactical decision to allow judgment for possession to be entered. They appeared to think that they would be able to realise some or all of the properties and thus to discharge the indebtedness of the Borrower. They elected not to defend the claim for possession. While his Honour accepted that there will often be valid commercial reasons for not raising a defence or not contesting a claim or not incurring the expense of obtaining counsel's advice, a party will usually be bound by the outcome of an election to take that course, even if that election proceeded on a false premise or an ignorance of a possibly available defence. 59In dealing with the application for summary dismissal of the claims made in the Equity Proceedings, the primary judge observed that there were many reasons that militated against the exercise of his discretion, under Rule 36.15(1) of the UCPR, to set aside the judgment for possession obtained on 4 May 2011. His Honour observed that, prior to the judgment for possession being obtained, and for almost a year and a half afterwards, George believed, and acted on the basis, that the Lender was validly entitled to possession. His Honour observed that Kosta appears to have maintained that view at all times. In the meantime, the Lender had incurred much avoidable expense because of the fanciful and optimistic expectations of George, and to a lesser extent Kosta, that they would be able to discharge the indebtedness of the Borrower. 60The primary judge concluded that the judgment for possession in the Common Law Proceedings prevented the validity of the Mortgage, based on alleged contravention of the Powers of Attorney Act, from being raised in the Equity Proceedings. His Honour held that the judgment for possession was predicated on the validity of the Mortgage and that there would be a fundamental inconsistency if George were allowed to proceed with his challenge to the Mortgage in the Equity Proceedings, having regard to the judgment for possession in the Common Law Proceedings. His Honour held that the judgment for possession precluded a challenge, in separate proceedings, as to the validity of the Mortgage and the indebtedness secured by the Mortgage. His Honour considered that it would be "invidious" if the point that was shut out by his refusal to set aside the possession judgment could then be raised in separate proceedings ([25]-[26]).

The Appeal 61Having served a Notice of Intention to Appeal on the respondents on 17 May 2013, George filed a Notice of Appeal on 18 July 2013. On 8 November 2013, George filed an Amended Notice of Appeal, in which he asserted that the appeal was brought as of right under s 101(1)(a) of the Supreme Court Act 1970. The Amended Notice of Appeal referred to both the Common Law Proceedings and the Equity Proceedings and claimed to appeal from "the whole of the decision below". The orders sought were that the appeal be allowed and that the orders made by the primary judge be vacated. However, George has confirmed that he does not challenge the dismissal of the Motions seeking to set aside the judgment for possession in the Common Law Proceedings and there has been no appeal from those orders. Thus, the present appeal is concerned only with the order made by the primary judge for dismissal of most of the claims in the Equity Proceedings. 62The grounds of appeal stated in the Amended Notice of Appeal may be summarised as follows: The primary judge erred in finding that the dismissal of the motions to set aside the judgment for possession in the Common Law Proceedings had the effect of justifying the dismissal of claims made in the Equity Proceedings, other than the claims relating to the sale of the fish and chip shop and the motel at an undervalue; The primary judge should have found that the Mortgage, upon which judgment for possession was based, was created in breach of s 12(1) of the Powers of Attorney Act and that the public policy in favour of the finality of judicial decisions, which is reflected in the res judicata doctrine, "may be trumped" by the public policy against the enforcement of illegal contracts; In the alternative, the primary judge should have found that the judgment for possession was based on the Lender's rights under the Mortgage alone and that the application of the res judicata doctrine should be limited to precluding George from challenging only the validity of the Mortgage and the rights arising from the Mortgage; In the alternative, the primary judge should have found that a proper application of the res judicata doctrine in response to the judgment for possession does not preclude George from continuing to assert in the Equity proceedings an entitlement to the relief claimed in relation to Trena's Guarantee. 63On the hearing of the appeal, George appeared in person. Kosta, who had been served, did not appear. George relied on written submissions prepared by experienced counsel who did not appear on the hearing. George also made very brief supplementary oral submissions. The Court heard at some length from senior counsel for the Lender, both by means of written and oral submissions.

Public Policy and Illegality 64George does not challenge the decision made by the primary judge to decline to set aside the judgment for possession given in the Common Law Proceedings. Nevertheless, he contends that the primary judge erred in finding that the correlative effect of the continuation of the judgment for possession justified the dismissal of most of the claims in the Equity Proceedings. He says that the public policy in favour of the finality of judicial decisions, which is reflected in the res judicata and issue estoppel doctrines, may be "trumped" by the public policy against the enforcement of illegal contracts. He relies on that public policy as a complete answer to the defence of res judicata, issue estoppel and Anshun estoppel. 65No reply was filed in the Equity Proceedings to the defence of res judicata, issue estoppel and Anshun estoppel pleaded by the Lender. It is therefore necessary to deduce, from written submissions prepared on behalf of George, the case relied on by George in answer to that defence. That highlights the undesirability of dealing with questions of res judicata or issue estoppel on a summary basis. Ordinarily, such questions of res judicata or issue estoppel involve factual enquiries that should seldom be dealt with in summary proceedings. That is particularly so in the case of Anshun estoppel, which will depend upon the reasonableness or unreasonableness of the conduct of the party against whom it is pleaded. 66The proposition advanced on behalf of George is that, despite a declaration as to the validity of a contract, the court can go behind the declaration where the contract is shown to be against public policy, such as, for example, where it related to the importation of illegal drugs (see ED & F Man (Sugar) v Haryanto (No 2) [1991] 1 Lloyd's Rep 429 at 436). He also relied on the proposition that, where the law that confronts an estoppel can be seen to represent a social policy to which the Court must give effect in the interests of the public, the estoppel will not be available, despite any rules of evidence as between themselves that the parties may have created by their conduct or otherwise (see Kok Hoong v Leong Cheong Kweng Mines Ltd [1964] AC 993 at 1016). 67George contends that the Powers of Attorney Act represents a social policy to which the Court must give effect in the interests of the public, despite the rules of evidence that may otherwise give rise to an estoppel as between Trena's estate and the Lender. He says that Kosta executed the Mortgage on behalf of Trena in breach of ss 12 and 13 of the Powers of Attorney Act. He asserts that, therefore, any public policy underpinning the res judicata doctrine would be "trumped" by the public policy inherent in ss 12 and 13 of that Act. 68However, the short answer to the contention is that the Powers of Attorney Act does not prohibit anything. Sections 12 and 13, as their terms make clear, are intended to do no more than restate the principles of the general law, namely, that, without the express authority of the grantor, an attorney is not authorised by a power to execute instruments in his own favour or in favour of a third party. Further, in the present context, the question of whether Kosta acted beyond the authority conferred on him by Trena is a question of fact that would need to be explored if that question went to trial. Whatever effect the provisions of ss 12 and 13 of the Powers of Attorney Act might have, they did not purport to invalidate any instrument or to render any conduct illegal. They do no more than impose a limitation on the prima facie effect of a power of attorney in conferring authority on the grantee of a power. 69It follows that, if the doctrine of res judicata was attracted by the judgment for possession in the Common Law Proceedings or an issue estoppel arose from that judgment or the principles of Anshun estoppel were applicable, neither s 12 nor s 13 of the Powers of Attorney Act would affect the operation of the defence that would otherwise be available to the Lender in the Equity Proceedings. It is therefore necessary to examine whether the judgment in the Common Law Proceedings had the effect pleaded by the Lender in its defence in the Equity Proceedings.

Estoppel and the Pleading Deficiencies in the Common Law Proceedings 70George contends, in the alternative, that the doctrine of res judicata and principles of issue estoppel or Anshun estoppel are not attracted by the judgment entered in the Common Law Proceedings in relation to Trena's Guarantee. He relies on the pleading of the Lender's claims in the statement of claim filed on its behalf in the Common Law Proceedings. 71As I have indicated, it is apparent that the pleader was under the misapprehension that George and Kosta were the owners of the motel and the fish and chip shop, and had executed the Mortgage as security for their obligations under the guarantee executed by them. The pleader was obviously unaware that George and Kosta were the registered proprietors of the motel and the fish and chip shop only by reason of the transmission of title to them in their capacity as executors of the Will. Thus, the statement of claim alleged that George and Kosta were in default under their guarantee and under the Mortgage, which the statement of claim alleged secured their obligations under their guarantee. Accordingly, the statement of claim alleged, the Lender became entitled to possession under the Mortgage by reason of the default of George and Kosta under the Mortgage and under their guarantee. 72Insofar as the judgment for possession was entered on the basis of the allegations made in the statement of claim filed in the Common Law Proceedings, it was entered on a false basis. That is to say, the Mortgage did not secure any obligation of George and Kosta under their guarantee. Further, they had no personal liability under the Mortgage, which was given by Trena, albeit that it was executed by Kosta on her behalf. While George and Kosta acquired title to the motel and the fish and chip shop by reason of the transmission, and held that title subject to the rights of the Lender under the Mortgage, they incurred no personal liability under the Mortgage. Their liability under the Mortgage was that of the legal personal representatives of Trena. They incurred that liability by reason of the grant of probate of the Will. 73The present case is not strictly one of res judicata. It is at best a case of issue estoppel or Anshun estoppel. Thus, the principle upon which George and Kosta, as the legal personal representatives of Trena, are prevented from denying that Trena's Guarantee is effective is issue estoppel. Under that principle, a judicial determination directly involving an issue of fact or of law disposes once and for all of that issue. It cannot thereafter be raised between the same parties or their privies. 74However, the estoppel covers only those matters that the prior judgment or order necessarily established as the legal foundation or justification of its conclusion, whether that conclusion be that a money sum be recovered or that the doing of an act be commanded or restrained or that a right to possession be declared. On the other hand, nothing but what is legally indispensable to the conclusion is thus finally closed or precluded. In relation to matters of fact, the issue estoppel is confined to those ultimate facts that form the ingredients in the cause of action that is the title to the right established. Where the conclusion is against the existence of a right or claim that, in point of law, depends upon a number of ingredients or ultimate facts, the absence of any one of which would be enough to defeat the claim, the estoppel covers only the actual ground upon which the existence of the right was negatived. However, the estoppel is not confined to the final legal conclusion expressed in the judgment or order. The earlier judgment or order is conclusive not merely as to the point actually decided, but as to any matter that it was necessary to decide and that was actually decided as the groundwork of the decision itself, even if it was not then directly the point at issue. Matters cardinal to the original point at issue cannot be raised if to do so is necessarily to assert that the former decision was erroneous (see Blair v Curran (1939) 62 CLR 464 at 531-2). 75Thus, it is important to consider the ingredients that were necessary to be established in order to justify the judgment for possession ordered in the Common Law Proceedings. Those ingredients must be examined independently of the allegations made in the statement of claim. It was an essential ingredient of the claim for possession that the Lender was entitled to enforce the security conferred by the Mortgage against the motel and the fish and chip shop. The Lender was entitled to do so only if the Mortgage was valid and effective to secure an obligation owing by Trena, or Trena's legal personal representatives, in their capacity as legal personal representatives. There was no such obligation on the part of Trena if Trena's Guarantee was invalid or ineffective to create such an obligation on her part prior to her death. 76Thus, the judgment for possession could only have been entered if both Trena's Guarantee and the Mortgage were valid and effective. If either of them was invalid or ineffective, there could be no judgment for possession. Thus, it follows that the entry of judgment for possession can only have been ordered on the basis that Trena's Guarantee and the Mortgage were effective and valid, so as to be binding on Trena and, subsequently, upon her legal personal representatives. It follows that it is not open to her legal personal representatives to contend that either Trena's Guarantee or the Mortgage was not valid and effective. 77While Kosta and George had guaranteed the obligations of the Borrower, the obligations of George and Kosta under their guarantee were not secured by the Mortgage. The only obligations that they incurred, as a consequence of the grant of probate of Trena's Will, were obligations in their capacity as Trena's legal personal representatives. That liability was limited to the assets in their hands in their capacity as legal personal representatives. No obligation that they had in their own personal capacity was secured by the Mortgage. 78True it is that the judgment for possession in the Common Law Proceedings cannot be supported by the allegations made in the statement of claim. The only basis upon which the judgment for possession can be justified is that indicated above, namely, that the Mortgage was security for the obligations of Trena under Trena's Guarantee. That assumes that both were valid and effective. It follows that George and Kosta, in their capacity as legal personal representatives of Trena, are estopped from asserting that either the Mortgage or Trena's Guarantee is invalid or ineffective. 79Accordingly, the defence pleaded by the Lender in the Equity Proceedings, in the absence of any other matter that might be pleaded by way of reply, will be a complete answer to the claims in the Equity Proceedings that either Trena's Guarantee or the Mortgage was invalid or ineffective. In those circumstances, there would have been no utility for there to be a trial of the questions raised in the defence filed on behalf of the Lender. There was, therefore, every reason why the primary judge should have directed dismissal of the relevant claims made in the Equity Proceedings. The contentions advanced by George on behalf of Trena's estate must be rejected.

Leave to Appeal 80However, there is a question as to whether leave to appeal should be granted. Leave to appeal was opposed by the Lender. The Lender contends that the matters considered by the primary judge in dealing with the application to set aside the judgment for possession militate against the grant of leave to appeal. In that regard, it is desirable to say something about the history of the Common Law Proceedings. 81The Common Law Proceedings were commenced on 13 January 2011. On 16 March 2011, a firm of solicitors acting for Kosta and George filed a notice of appearance on their behalf, together with an affidavit sworn jointly by Kosta and George. In their affidavit, they sought "the Court's compassion" in allowing them the opportunity to handle personally the sale of the motel and the fish and chip shop as opposed to a sale by the Lender as mortgagee in possession. The solicitors filed a notice of motion seeking orders on behalf of Kosta and George that the Common Law Proceedings be stayed for a sufficient period of time to allow them to sell the motel and the fish and chip shop. They also sought an order that they retain possession pending the sale and repayment of the moneys owing to the Lender. 82On 21 March 2011, the Lender's solicitors pointed out that there did not appear to be a proper legal basis for the application for a stay and that it was, in effect, an application to stay the enforcement of any judgment that might be obtained. The solicitors for George and Kosta responded, saying that their clients would agree to sign a consent judgment, to be held in escrow, provided that they be granted a period of six months to complete a sale and repay the entire loan or, alternatively, the arrears. 83Further correspondence ensued between 24 March 2011 and 2 May 2011. The premise on which that correspondence proceeded on both sides was that the Lender was entitled to possession, but that Kosta and George wanted time to repay the loan made to the Borrower by the Lender. On 2 May 2011, the solicitors for George and Kosta said that they were again instructed to press for additional time before the Lender filed for judgment or sought an order for possession. 84The Lender applied for default judgment on 3 May 2011 and judgment was given on 4 May 2011. The order for judgment was entered on 5 May 2011. 85On 21 June 2011, George and Kosta's solicitors wrote to the Lender's solicitors requesting that the Lender agree to a stay of the enforcement of the judgment to allow for the sale of the motel to proceed. On 28 June 2011, the Lender's solicitors indicated to George and Kosta's solicitors that the Lender was prepared to delay enforcement action for a period of two weeks. 86By 12 October 2011, Kosta and George had instructed new solicitors. On that day, the new solicitors provided to the Lender's solicitors a copy of the first page of a contract for the sale of the motel. However, by 18 November 2011, it was clear that no sale had occurred or would occur. As I have indicated, the Lender appointed a receiver and manager on 31 January 2012. By the following day, 1 February 2012, a third firm of solicitors appears to have been instructed by Kosta and George. 87On 12 March 2012, the Lender obtained a writ of possession for the motel and the fish and chip shop. Notice was given requiring vacation of the motel and the fish and chip shop by 7 May 2012. However, on 4 May 2012, Kosta, through a fourth firm of solicitors, applied for an ex parte order staying the enforcement of the writ of possession. On 9 May 2012, Kosta filed a notice of motion seeking continuation of the ex parte order staying the enforcement of the writ of possession. That application was supported by an affidavit that did not purport to disclose a substantive defence, but simply asserted that Kosta believed that a contract for sale would be settled in approximately four weeks and that the Mortgage would be discharged. 88On 11 May 2012, the Common Law Proceedings came before Garling J of the Common Law Division. The fourth firm of solicitors referred to above represented Kosta. George appeared in person. The solicitor for Kosta indicated to Garling J that the parties had come to an arrangement with which Kosta was happy and that she had been instructed to consent to certain orders. The solicitor indicated that she was confident that her client understood "exactly". She said, however, that she believed that George required "a little bit more time" to decide. 89Garling J then indicated to George that his Honour did not feel inclined to give him another week to sell the properties. His Honour observed that at no time, as far as the file indicated, had the debt owing to the Lender been disputed. His Honour said that at no time had there been any dispute about the existence of the Mortgage or the right of the Lender to get judgment against George. His Honour referred to the fact that the Lender had obtained judgment 12 months previously and that no one had asked to set the judgment aside. His Honour said that the matter had been stayed for 12 months, enabling George to do something about selling the property and that George was now asking the Court to stay the matter for yet another week, if not more. His Honour asked why there was any good reason why he should not let the Lender take possession of the property. 90After further discussion, Garling J dismissed Kosta's application for a stay. George had not made any formal application of his own. In his Honour's reasons for judgment, Garling J observed that the proceedings had been on foot for nearly 16 months and that judgment had been entered 12 months previously. His Honour said that the Lender was entitled to possession as a consequence of that judgment and that no attempt had been made by any of the parties affected by the judgment to apply to set the judgment aside. Indeed, his Honour said, no defence had been filed by any party to the claims made in the statement of claim in the Common Law Proceedings. 91Garling J noted several agreements between the parties, including the following: an undertaking by Kosta and George that they would not make any further application to stay the writ of possession; an agreement that the sheriff would be requested to reschedule the eviction from the properties to a date after 25 May 2012; an agreement by Kosta and George that, before 25 May 2012, they would provide to the Lender $700,000 together with the deposit of $250,000 in respect of the contract for sale of part of the mortgaged properties, together with the exchanged contract for sale. 92Kosta and George failed to comply with those agreements. On 25 May 2012, the sheriff issued a further notice to vacate. George then commenced the Equity Proceedings, as indicated above. 93In the circumstances, there are good reasons for concluding that the interests of justice would not be served by granting leave to appeal from the decision of the primary judge in dismissing most of the claims made in the Equity Proceedings. On the other hand, the arguments concerning the application of the doctrine of res judicata and the principles of estoppel are by no means straightforward. The problem arises by reason of the manner in which the claims in the Common Law Proceedings were pleaded. The fault in that regard lies with the Lender and those advising the Lender. In the circumstances, I consider that leave to appeal should be granted. However, for the reasons indicated above, the appeal must be dismissed.

Conclusion 94It follows from the above that the orders of the Court should be as follows: (1)Leave to appeal be granted. (2)The amended Notice of Appeal filed on 8 November 2013 be taken, nunc pro tunc, to be filed pursuant to that leave. (3)The appeal be dismissed. (4)The appellant pay the costs of the first respondent to the appeal. 95BERGIN CJ in Eq: I agree with Emmett JA.

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 March 2014