Landa v Perpetual Trustees Victoria Ltd

Judgment 1LEEMING JA: By notice of motion filed 3 July 2014, Dr Barry Samuel Landa applies for a stay of writs for possession of various land at Bondi Junction and Pyrmont, in respect of which mortgages have been granted to the respondent, Perpetual Trustees Victoria Ltd (Perpetual). 2The essential procedural background is as follows. Dr Landa is the appellant from a decision of a judge in the Equity Division of this Court given on 18 November 2013: Landa v Perpetual Trustees Victoria [2013] NSWSC 1685. Orders were made in favour of Perpetual on 25 November 2013. A notice of intention to appeal was filed shortly thereafter; a notice of appeal was filed on 24 February 2014. 3The parties have told me that in essential respects the appeal is ready for its orderly disposition on the day on which it has been set down for hearing, which is 1 September 2014, a little less than six weeks away. Perpetual caused writs for possession to be issued by the Sheriff on 13 and 17 June 2014. The occupants of the premises are required by those writs, unless stayed, to give vacant possession by 29 and 31 July 2014. It is those writs which have given rise to the present application. 4Constructively, it has been common ground on the hearing of the application that the appeal is reasonably arguable. The principles to be applied when exercising this Court's power to grant a stay pending an appeal are familiar: see Alexander v Cambridge Credit Corporation Ltd (1985) 2 NSWLR 685 at 694 and Kalifair Pty Ltd v Digi-Tech (Australia) Ltd [2002] NSWCA 383; 55 NSWLR 737 at [17]-[20]. Prima facie, a successful party following trial is entitled to the fruits of his, her or its judgment. What that "prima facie entitlement" means was explained by Campbell JA in Vaughan v Dawson [2008] NSWCA 169 at [16]; it means, in practical terms, that the onus rests with Dr Landa to make out a case that is suitable for the award of a stay. It is for Dr Landa to demonstrate a proper basis for a stay that will be fair as between the parties' respective interests: see also Adeels Palace v Moubarak [2009] NSWCA 130. Where, as here, it is common ground that the appeal is reasonably arguable, the determinative question is where the balance of convenience lies. Accordingly, for that reason, it is not necessary for me to address in any detail the subject matter of Dr Landa's indebtedness to Perpetual, and the nature of the decision at first instance and the appeal to be heard on 1 September 2014. 5It is also common ground between the parties at the Bar table that this is an appropriate case for a stay, subject to the provision by Dr Landa of an appropriate amount of money representing interest owing on his indebtedness to Perpetual. In recent days Dr Landa has caused payments to be made to Perpetual on account of interest. The evidence before me is that no payments of interest by Dr Landa have been paid, until recently, since late 2007; it is that fact that gives rise to the principal quantitative dispute between the parties. 6In the third week of July 2014, Dr Landa made three payments to Perpetual, by electronic funds transfer, totalling $71,380. Those payments reflect (or substantially reflect - I have been told that perhaps there is an arithmetical error of a minor nature in relation to the calculations on which they are based) a payment of outstanding interest from November 2013 (the time of judgment) until the end of June 2014. Those calculations are based on two matters with which Perpetual disagrees. The first is that they are based only on the amount of outstanding advances of principal (which it is common ground was $1.65 million) and at the various "lower rates", the subject of the loan agreement. (Each loan agreement provided for two interest rates, a "lower rate" and a "higher rate", 2% per annum higher; it was the latter rate payable in the event that there was any default.) 7Dr Landa also proposes in a fashion, the detail of which will be reflected in short minutes of order to be provided by him, to continue to make further interest payments into the future until the appeal is either heard or determined (as to these two, the position is not precisely clear at the moment). 8For its part, Perpetual contends that by reason of the present substantial default, interest should be calculated at the "higher rate", being 2% higher than the rates on which Dr Landa's payments have been based. That has some impact on the amounts (approximately an additional 30%). Much more substantively, Perpetual contends that interest should be calculated by reason of the total indebtedness of Dr Landa including capitalised interest. By reason of the non-payment of interest since 2007, the result is a much more substantial amount of outstanding interest that Perpetual should be paid as the price of a stay. 9Whether the loan agreements, pursuant to which Perpetual lent funds to Dr Landa, will survive in their written terms, or will be modified pursuant to, inter alia, the Contracts Review Act 1980 (NSW), will turn upon the success or failure of Dr Landa's appeal. As to that, it is common ground that it is reasonably arguable. The question for me on the determination of the terms on which a stay should be granted of the writs of possession which Perpetual has caused to be issued, does not turn - nor could it turn - in this case, upon an assessment of the likely success or failure of that appeal. Instead, it turns more broadly on whether or not Dr Landa has established "a proper basis for a stay that will be fair as between the respective interests of the parties": see Boutros v Nationwide Capital Pty Ltd [2013] NSWCA 246 at [29], where Gleeson JA reviewed the authorities mentioned above. 10Two matters persuade me that the substance of what Dr Landa has offered as the price of a stay satisfies that test. The first is that it is common ground, by reason of the mortgages Perpetual enjoys over the properties, that it is presently perfectly secured, on the evidence, a position which will remain in place until the appeal is heard and (at least in ordinary events) determined. Speaking very roughly, the total indebtedness, putting Perpetual's case at its highest, of Dr Landa is some $3.5 million (including capitalised interest); the equity in the properties is in the order of $4.3 million, and their value is in the order of $8 million. 11Secondly, there is the question of delay. The evidence adduced on behalf of Dr Landa is that he, between 14 November 2013 and 27 May 2014, believed that he did not consider seeking to obtain a stay of the orders of the primary judge because he had filed a notice of intention to appeal promptly on 11 December 2013, prior to the time when Perpetual could issue a writ of possession, and since 14 January 2014 he has believed that Perpetual would not issue a writ of possession until the determination of the appeal. His evidence also includes his belief that had he thought that Perpetual would seek to issue a writ of possession prior to the determination of the appeal, he would have sought a stay from the primary judge: see paragraph 12 of the affidavit of Mr Bray sworn 2 July 2014. 12In short, of the almost ten months between the delivery of judgment and making of orders, and the hearing of the appeal, some 85% of that time has, by now, elapsed. During that time, essentially all of the steps (save for submissions in reply and completing the filing of appeal books) have been performed, and the appeal is ready to be heard. There is no evidence that has been adduced on behalf of Perpetual by way of explanation for its delay to respond to the evidence adduced by the affidavit which accompanied the service of Dr Landa's motion. 13When making a determination as to whether an applicant has established a proper basis for a stay that is fair, there are, inevitably, leeways of choice. There are in many cases, of which this is one, a variety of interlocutory regimes which achieve, for a relatively short period of time prior to the final determination of the appellate process, an outcome that in substance is fair. In circumstances where it is common ground that Perpetual is perfectly secured, there is no explanation for its delay in causing writs of possession to be issued, and there is unchallenged evidence as to the state of mind of the appellant brought about by reason of that delay, I am satisfied that Dr Landa has discharged his onus of establishing a proper basis for a stay. Accordingly, I will, later today, make orders in accordance with the notice of motion filed 3 July 2014, in a form as to whose details the parties have assured me they will be able, in light of those reasons, to prepare. The costs of this motion should be costs of the appeal.