HIS HONOUR: Safwan Nizar Chalak is the applicant on a notice of motion filed on 6 April 2022 by which he seeks that orders made by me on 18 February 2022 be stayed pending the completion of the appeal process in proceedings 2022/76853. In the alternative, he seeks orders that my orders of 18 February 2022 be stayed until the day that is two months after the date of the determination of this motion. He further seeks an order for costs.
The applicant, as I will refer to him, is the defendant in substantive proceedings and also the applicant for leave to appeal in the Court of Appeal. The respondent to the motion is G & G Mikhael Pty Limited, the plaintiff in the substantive proceedings and the respondent to the application for leave to appeal.
The application for a stay, as I have indicated, relates to orders made by me on 18 February 2022: see G & G Mikhael Pty Ltd v Chalak [2022] NSWSC 191. On that date, on hearing a notice of motion brought by the respondent seeking summary judgment and a writ of possession, I made the following orders:
"1. Judgment for the plaintiff for possession of land comprised in folio identifier 1/SPXXXXX being the land situated at and known as Townhouse 1, X XXXXX XXXXXXXX, Chipping Norton, New South Wales thereafter the land.
2. Grant plaintiff writ to issue possession in respect of the land.
3. Order 2 is stayed for period of 8 weeks.
4. Judgment for the plaintiff against the defendant in an amount equal to the principal outstanding on the loan together with interest on that amount calculated at simple interest at the rate of 7% to date and thereafter interest to be calculated in accordance with the Rules.
5. The defendant is to pay the plaintiff's costs as agreed or assessed.
Direct the parties provide to my Associate by close of business tomorrow the terms of the order for judgment in order to give effect to the above reasons."
Subsequent to the making of those orders, the applicant indicated an intention to seek leave to appeal those orders and to seek a stay pending resolution of that application. On 1 April 2022, I granted leave to the applicant to file a motion and any evidence relied upon in support of the stay by 6 April 2022. The motion was filed on that day. Affidavits in support were not filed on that day but, indeed, only filed on 11 April, that being yesterday.
The principles applicable to a stay generally are found in Alexander v Cambridge Credit Corporation Ltd (1985) 2 NSWLR 685 at 694 where the Court said:
" … it is not necessary for the grant of a stay that special or exceptional circumstances should be made out. It is sufficient that the applicant for the stay demonstrates a reason or an appropriate case to warrant the exercise of discretion in his favour."
And, further:
"The Court has a discretion whether or not to grant the stay and, if so, as to the terms that would be fair. In the exercise of its discretion, the Court will weigh considerations such as the balance of convenience and the competing rights of the parties before it."
The Court continued (at 695):
"Two further principles can be mentioned. The first is that where there is a risk that the appeal will prove abortive if the appellant succeeds and a stay is not granted, courts will normally exercise their discretion in favour of granting a stay …where it is apparent that unless a stay is granted an appeal will be rendered nugatory, this will be a substantial factor in favour of the grant of a stay."
Where a stay is sought against an order for possession, further principles are set out in GE Personal Finance Pty Limited v Smith (2006) NSW ConvR 56-164; [2006] NSWSC 889. Relevantly, it was said in that case that, in a case where the defendant will be defending the proceedings, a stay may more readily be granted to preserve the subject matter of the litigation pending the determination of the proceedings by the Court. A stay may be sought on hardship grounds, although this must ordinarily be done in conjunction with other grounds if an extended stay is sought.
It should be added to the above that the onus is on the applicant to demonstrate a proper basis for a stay that will be fair to all parties. Further, that the mere filing of an appeal will not, of itself, provide a reason or demonstrate an appropriate case; nor will it discharge the onus. Additionally, it is not at all unusual for the Court to grant a stay on terms that the appellant give to the judgment creditor security in terms defined by the Court as appropriate to the fair adjustment of the rights of the parties.
Those principles were not, relevantly, in dispute in the proceedings before me.
I turn to the evidence relied on in this application.
The applicant relied on his own affidavit affirmed 11 April 2022. In that affidavit he sets out certain aspects with respect to his personal arrangements, in particular the fact that he lives at the property with his wife and three children, and that the children attend local schools. He further indicates that he has been suffering from particular health difficulties and states that he is currently dependent on a Centrelink benefit. He states that he and his family have no other sources of accommodation. He further indicates that, whilst they own one car, a 2000 Honda Odyssey which he estimates to be worth about $500, he also has the use of a 2016 Range Rover Sport which is owned by ADZA Projects Pty Limited ("ADZA Projects"). That vehicle is estimated to have a value of $55,000 but is apparently leased with an amount of $46,000 owing on it. The applicant says he has no beneficial interest in the Range Rover or in ADZA Projects.
In his affidavit he also makes various assertions as to financial arrangements he had in place with George Mikhael, sole director of the respondent. The thrust of those assertions is that he is owed a substantial amount of money by the respondent which on his estimation would exceed the amount claimed by the respondent in the substantive proceedings. The paragraphs relating to those claims were objected to by the respondent. They were admitted on the basis that these were simply claims made by the applicant. In the final paragraph of his affidavit he says he intends to seek leave to amend his cross-claim to add a claim for the amounts owing as a result of the financial arrangements referred to earlier in the affidavit. From all of that, I can take that the applicant at least claims to be owed money and has a present intention to amend his cross-claim to claim those moneys.
The respondent tendered on the application a company search in relation to the company ADZA Projects referred to by the applicant in his affidavit. The purpose of that tender was to establish that, whilst the applicant claims no beneficial interest in the company or the vehicle, he is, in fact, the director and secretary of the company. Moreover, the shareholders of the company share the applicant's surname; albeit it is not known as to what, if any, relationship they have with the applicant. I pause to note, however, that, given the applicant's role as an officer of the company, it would appear to be at least very likely that the shareholders are close relations of the applicant.
In accordance with the principles I have referred to, it is necessary for me to consider the balance of convenience and the strength of the application for leave to appeal.
[2]
Balance of Convenience
I turn to the first of those considerations: the balance of convenience.
[3]
Likely Period of Stay
Perhaps the first matter to be noted in relation to this is the likely period of any stay, should such stay be granted. The applicant has filed a notice of appeal. The matter is listed for directions before the Court of Appeal on 2 May 2022. The applicant has also filed the white book, including his submissions on the application. I am told that the respondent's submissions are shortly due and are likely to be filed in accordance with the orders or very soon thereafter. I understand that will take place, therefore, this week or very soon afterwards. Once that occurs, the only step remaining prior to the matter being ready to be heard is the filing of any reply on behalf of the applicant.
On that basis, it seems that the matter will be ready to take a date on 2 May or very soon thereafter. I would expect that any determination of the leave application would be determined within one to two months of 2 May or at least not long after that. I accept that if the appeal is not heard concurrently with the application for leave to appeal, any appeal itself would be somewhat later. However, the existence of any such appeal would, of course, be contingent on leave having been granted. That would change the circumstances somewhat as in that case the applicant will have obtained at least a determination from the Court of Appeal that leave should be granted. That would in turn likely say something of significance with respect to the merits of the application.
[4]
Applicant's personal circumstances
The next matter that I consider with respect to the balance of convenience is the personal circumstances of the applicant. As I have indicated, on the evidence, it is apparent that he lives in the home the subject of the dispute with his family. In the event that a stay was not granted, it would be sold from under them. He says he has additional particular issues with respect to his health. I give limited weight to that evidence having regard to the form in which it was presented. Further, insofar as he says he is not able to find alternative rental accommodation, there is perhaps some reason to have doubts about his circumstances given what he said about his use of the vehicle and the ownership of that vehicle by a company of which he is a director and secretary and whose shareholders share his family name. That being said, it is also apparent that the applicant qualifies for Centrelink benefits. Further, it is undeniable that, whatever the health issues of the applicant, it is a significant matter for a family to have their home sold from under them.
The respondent, while not disputing the significance of a home to a family, points out that the evidence of the hardship is questionable. The respondent further points out that, even if the applicant is correct in his contention that the mortgage is not enforceable, the applicant still owes the moneys which had been advanced by the respondent. The respondent makes the point that, this being the case, judgment in relation to the moneys would ultimately be likely to be enforced against sale of the property. In other words, even if the mortgage is not enforceable, the property will ultimately need to be sold to realise the amount of the principal debt owed by the applicant as a result of the moneys advanced to him by the respondent. The respondent indicated that while the order made by me is, in its terms, for the principal and the interest, the respondent's counsel anticipated that he would be able to obtain instructions to only enforce the principal. This was in order to ensure that enforcement of the summary judgment was limited only to the principal in circumstances where the respondent accepts there is room for argument as to the payment of any interest in the event that the mortgage is found to be unenforceable.
Against this, the applicant stressed that the principal sum is still in issue. As I have already indicated, the final paragraph of the applicant's affidavit indicates that he intends to amend his cross-claim in order to seek payment of substantial sums of money he says are owed by the respondent to him.
I pause to note that this is an extremely unsatisfactory aspect of the applicant's overall case. When the matter was before me, a cross-claim had been filed; however, that cross-claim was limited to seeking orders that the respondent provide an accounting in respect of all moneys advanced and properly accruing in terms of the mortgage, taking into account moneys received as a consequence of sale of the properties sold, and an order that the mortgage be varied to make provision for the interest to be calculated at the rate of 7 per cent per annum calculated on a simple interest basis monthly in arrears. There was no reference in that claim to any larger claim which would effectively or at least largely offset the respondent's claim. There was no application to amend that cross-claim. Rather, the assertion comes in an affidavit filed late, one day before this matter was to be heard, and with nothing to support it other than the applicant's claims. Mr Sulan, senior counsel who appears for the applicant, described it, in terms that are perhaps overly favourable, as embryonic.
Be that as it may, it has been put by the applicant in an affidavit filed in this Court; and, moreover, an affidavit prepared by his solicitor who has been instructed in relation to this motion, the summary judgment application and the appeal. One can at least infer from this that the applicant's solicitor at least has those instructions, and one would expect that something will happen relatively soon to regularise this claim.
[5]
Respondent's circumstances
With respect to the circumstances of the respondent, I accept that, on the basis of the orders made by me on 18 February, the respondent is entitled to his judgment. There is, however, no suggestion of any pressing need on the part of the respondent due to any hardship to him or otherwise. Further, I have today been told that the applicant will undertake to pay an amount of $20,000 to the respondent in order to offset any prejudice to the respondent by way of further delay during the period of any stay. Given what I have said with respect to the anticipated length of time before the appeal proceedings are disposed of, that is a not insignificant aspect of the matter when considering the balance of convenience.
[6]
Determination
Weighing all those matters together, while there are undoubtedly unsatisfactory aspects to the applicant's conduct, his evidence and the weight I am able to give to it, the balance of convenience does, in my view, ultimately favour the granting of a stay. The simple fact is that the property is the subject of the orders. Any success on appeal is potentially rendered nugatory in the event that the stay is not granted. That, of course, is not the end of the matter. Consideration needs to be given to the strength of the application for leave to appeal.
[7]
Strength of the application for leave to appeal
The first thing that might be noted in this regard is the applicant has instructed solicitors and counsel. Indeed, detailed submissions have been filed in support of his application for leave to appeal. In those submissions, the applicant contends that I was wrong to construe the dispute as merely one limited to the interest rate. He contends that there was, at the hearing before me, a real dispute as to the existence of an enforceable mortgage. Belatedly, he contends that I was wrong to construe the pleadings in the way that I did. Further, it is contended that I was wrong to treat the respondent's evidence in the way that I did. In particular, it is contended that I was wrong to accept the respondent's evidence in circumstances where that evidence was at least open to question. Further, it is submitted that I was wrong in failing to appreciate the significance of the cross-claim.
The respondent says the appeal is without merit. The arguments are, to use the expression of Mr Young, counsel who appears for the respondent, "colourable". The respondent says the dispute was only about interest and that I was correct to view it in this fashion; further, that I was entitled to treat the respondent's evidence on the motion as compelling.
I prefer the respondent's submissions in this regard, however, I am not prepared to find that the applicant's contentions are unarguable. If the argument related only to the manner in which I treated the evidence of the respondent, I may have had a different view. However, I do regard it as at least arguable that my construction of the pleadings, read in the context of the evidence, failed to consider the respondent's argument that the mortgage was not enforceable at all and, in turn, failed to consider what might flow from that.
I accept that at present the applicant has no more than an application for leave to appeal to the Court of Appeal; and, further, as submitted by the respondent, the principles are not necessarily the same. That said, the relief granted to the respondent on the application for summary judgment, while technically interlocutory, does have the quality of final orders given the significance of the property to the substantive proceedings.
Ultimately, I am satisfied that a sufficiently arguable case has been shown to warrant the grant of a stay given what I have found with respect to the balance of convenience.
I make the following orders:
1. The orders made by me on 18 February 2022 be stayed pending completion of the appeal process in proceedings 2022/76853.
2. That order 1 be conditioned on compliance by the applicant with:
1. the rules of the Court in relation to the application for leave to appeal or any subsequent appeal;
2. any directions given by the Court in relation to the conduct of the application for leave to appeal or any subsequent appeal; and
3. the payment of an amount of $20,000 by the applicant to the trust fund of the respondent's solicitor for payment to the respondent.
1. A draft amended defence and draft amended cross-claim be filed by the applicant within 28 days of today's date.
2. Costs be costs in the appeal.
3. That the listing of the substantive proceedings on 14 April 2022 be vacated and the matter be listed for directions on 13 May 2022.
[8]
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Decision last updated: 04 May 2022