Lawrence v Gunner

Judgment

1. GLEESON JA: Before the Court is an application for a stay pending the hearing of an appeal concerning judgments of Stevenson J given on 16 July 2015 and 21 August 2015: Lawrence v Gunner; Gunner v Lawrence [2015] NSWSC 944 and [2015] NSWSC 1229.
2. The first judgment dealt with a claim by the applicants, Mr and Mrs Lawrence, who were the plaintiffs in the proceedings below, for damages for breach of contract and/or equitable compensation and related relief on the basis of certain alleged agreements for the subdivision development of various properties at Old Bar, Beecroft, Mount Colah, 132 Clontarf Street, Balgowlah and 134 Clontarf Street, Balgowlah. In addition, his Honour dealt with a claim by Mr and Mrs Lawrence, who had moved into the property at 134 Clontarf Street in September 2006, that they are entitled to remain in occupation rent-free "for as long as they want". The judgment also dealt with a cross-claim by Mrs Gunner, who is the respondent to the appeal, seeking possession of 134 Clontarf Street and other relief, relevantly, a claim against Mr and Mrs Lawrence for breach of fiduciary regarding the sale of the Beecroft property by Mrs Gunner to a company, SLN Developments Pty Ltd (SLN Developments), without Mr and Mrs Lawrence disclosing their shareholding in SLN Developments.
3. His Honour did not accept any part of Mr and Mrs Lawrence's case and concluded that the amended statement of claim should be dismissed. With respect to Mrs Gunner's cross-claim, his Honour foreshadowed granting Mrs Gunner declaratory relief and remitting her claim for possession of 134 Clontarf Street to the New South Wales Civil and Administrative Tribunal (NCAT) for the making of orders terminating the residential tenancy agreement and for possession of that property. However, his Honour indicated that he would allow the parties the opportunity to make further submissions on the form of relief. His Honour concluded that Mrs Gunner should have judgment against Mr and Mrs Lawrence in relation to a profit of $315,000, which his Honour had found had been made by Mr and Mrs Lawrence from the sale of the Beecroft property.
4. In his second judgment, his Honour rejected the submissions made on behalf of Mr and Mrs Lawrence that the Court had no jurisdiction to make any declarations as to Mrs Gunner's entitlement to have the residential tenancy agreement terminated and for an order for possession of the property at 134 Clontarf Street. Nonetheless his Honour did not make any declarations. He made an order that two proceedings relating to 134 Clontarf Street, which had originally been transferred to the Court from the Consumer Traders and Tenancy Tribunal (CTTT) by order made by the CTTT on 12 September 2012, be remitted to NCAT to be dealt with by NCAT in light of his Honour's reasons given on 16 July 2015. His Honour gave judgment that Mr and Mrs Lawrence pay Mrs Gunner $315,000, together with interest, at the rates set forth in Uniform Civil Procedure Rules 2005 (NSW) (UCPR) r 36.7 from 1 March 2012. His Honour also dealt with the issue of costs.
5. On 8 October 2015 Mr and Mrs Lawrence filed a notice of appeal. The appeal grounds are lengthy and comprise 26 numbered paragraphs over 30 pages. The grounds are not well expressed, rambling in many parts and by no means clear. The notice of appeal was prepared by Mr Lawrence apparently without legal assistance.
6. It seems that following remittal of the CTTT proceedings to NCAT, directions hearings have been held before NCAT on 15 September and 23 September 2015, and a hearing date fixed for 15 October 2015 in relation to Mrs Gunner's application to terminate the residential tenancy agreement in respect of 134 Clontarf Street.
7. On 9 October 2015, an application by Mr and Mrs Lawrence for an adjournment or a stay of the possession proceedings was refused by a member of NCAT. On 12 October 2015, Mr and Mrs Lawrence filed an application before NCAT for a stay of the member's decision pending an appeal to an internal appeal panel of NCAT. So far as the evidence reveals, that application for a stay has not yet been dealt with by NCAT.
8. Also on 12 October 2015, Mr and Mrs Lawrence filed a notice of motion in these proceedings seeking a stay of the judgment and orders of Stevenson J on 16 July 2015 and 21 August 2015 until the determination of their appeal. On hearing of the motion, Mr Lawrence appeared in person. No objection was taken by counsel for Ms Gunner to Mr Lawrence also advancing argument on behalf of his wife.
9. Although the notice of motion also sought in para 1 an order to "strike out the NCAT application file no RT 15/51215", that relief was not pressed on the hearing of the motion.
10. The principles to be applied when exercising the Court's power to grant a stay pending an appeal are well known: see Alexander v Cambridge Credit Corporation Ltd (1985) 2 NSWLR 685 at 694-695, and Kalifair Pty Ltd v Digi-Tech (Australia) Ltd [2002] NSWCA 383; 55 NSWLR 737 (Kalifair) at [17]-[20].
11. A successful party is prima facie entitled to the fruits of his or her judgment, but a stay may be granted where an applicant demonstrates an appropriate case to warrant the exercise of discretion in its favour. The mere filing of the appeal is insufficient, of itself, to demonstrate such a case. Usually it is demonstrated by showing that there are arguable grounds of appeal and that there is a risk that if money is paid it will be unable to be recovered if the appeal succeeds, or by demonstrating that unless a stay is granted the appeal will be rendered nugatory: TCN Channel 9 Pty Ltd v Antoniadis [No 2] [1999] NSWCA 104; 48 NSWLR 381 at [15]. The Court will weigh considerations such as the balance of convenience and the competing rights of the parties.
12. It is for the applicant to demonstrate a proper basis for a stay that will be fair as between the respective interests of the parties: see Alexander v Cambridge Credit Corporation Ltd at 694; Adeels Palace Pty Ltd v Moubarak [2009] NSWCA 130 at [5].
13. It is appropriate to consider first whether the appeal raises a serious question to be tried, in the sense of arguable grounds, and if so, where the balance of convenience lies: Kalifair at [18]; Vaughan v Dawson [2008] NSWCA 169 at [17] (Campbell JA).
14. As already mentioned, the notice of appeal is not particularly informative. The requirements of the rules concerning a notice of appeal are set out in UCPR r 51.18. The notice is required to state, briefly but specifically, the grounds relied upon in support of the appeal. In addition, subrule (2) requires the appellant to also specify any material facts that the appellant contends that the court below should, or should not, have found. Here the notice of appeal does not comply with these requirements.
15. As Campbell JA observed in Vaughan v Dawson [2008] NSWCA 169 at [22], having a notice of appeal that does not comply with the rules is an unpromising start for proving there is a serious question about whether the appeal will succeed. Nonetheless, Campbell JA accepted that it may not be fatal if there is reason to believe that the notice of appeal could be amended to state properly arguable grounds. This requires one to consider on a broader basis whether the appellants have shown a prospect of successfully appealing from the judgment. I adopt that approach here.
16. For the present purposes, there are two aspects of his Honour's decision, which are the focus of the appeal. The first concerns the remittal to NCAT of the CTTT proceedings for possession of the property at 134 Clontarf Street. The second concerns the judgment against Mr and Mrs Lawrence for $315,000 plus interest for breach of fiduciary duty. It is convenient to deal with each separately and in turn.

134 Clontarf Street

1. The case below with respect to occupation of 134 Clontarf Street involved significant credit issues. The relevant findings of the primary judge that would need to be challenged are all ones that would have been affected by his view concerning the credibility of the witnesses. His Honour rejected the evidence of Mr and Mrs Lawrence on this issue and made adverse credit findings against each of them generally. His Honour gave reasons for his credit findings against Mr and Mrs Lawrence, the inconsistency between their claims and Mr Lawrence's conduct following Mr Gunner's death, and the inherent improbability of their case, relevantly in relation to 134 Clontarf Street.
2. Success in the present appeal requires Mr and Mrs Lawrence to show that the findings of the primary judge are contrary to incontrovertibly established facts or uncontested testimony, or that his Honour has failed to use or palpably misused his advantage, or that the findings are glaringly improbable or contrary to compelling inferences: Fox v Percy [2003] HCA 22; 214 CLR 118 at [28]-[29]; Devries v Australian National Railways Commission [1993] HCA 78; 177 CLR 472 (Devries) at 479. Nothing in the material relied upon by Mr and Mrs Lawrence, nor in the oral submissions by Mr Lawrence, attempted to explain how the Fox v Percy and Devries tests would be met in the present case.
3. At its highest, Mr Lawrence submitted that Mrs Lawrence gave affidavit evidence contrary to the evidence of Mrs Gunner and that his Honour erred in accepting Mrs Gunner's evidence in preference to that of Mrs Lawrence. This complaint was not based on either incontrovertibly established facts, or uncontested testimony that was inconsistent with his Honour's findings.
4. It was not suggested that his Honour had failed to use or had palpably misused his advantage in assessing the witness' evidence. Nor did Mr Lawrence point to any way in which it might be argued that his Honour's findings were glaringly improbable or contrary to compelling inferences.
5. The notice of appeal contends, simply, that the trial judge reached the wrong conclusion in rejecting Mr and Mrs Lawrence's claim to be entitled to occupy 134 Clontarf Street rent free during their lifetime, or until the subdivision development was completed. Having regard to what needs to be established for an appeal against credit-based factual findings to succeed, I am not persuaded that Mr and Mrs Lawrence have shown that there are arguable grounds of appeal in relation to 134 Clontarf Street. That is a sufficient basis for rejecting the application for a stay in relation to orders 4 and 5 made by his Honour on 21 August 2015.

$315,000 profit

1. His Honour's finding of breach of fiduciary duty in relation to the sale of the Beecroft property is not apparently challenged. What is challenged is the finding that Mr and Mrs Lawrence obtained a profit, ie a gain, of $315,000 from the sale of the Beecroft property. This finding is based upon an acceptance of the affidavit evidence of Mr Mirosevich set out at [295] in the first judgment.
2. The case which Mr and Mrs Lawrence seek to advance on appeal relies upon the Court receiving further evidence on appeal from Mr Mirosevich which contradicts his affidavit evidence at trial and the evidence given by him in cross examination. That further evidence is in the form of two affidavits sworn by Mr Mirosevich dated 21 September 2015 and 24 September 2015.
3. The first affidavit, which is described as "first draft only for consideration", contains largely inadmissible material because it is either argumentative or by way of submission. The proposition sought to be advanced by Mr Mirosevich is that he signed his affidavit in the proceedings dated 25 August 2014 at the request of the solicitor for Mrs Gunner although telling the solicitor "it's not right", and later "[a]gainst my better judgment and state of mind I attended court and gave witness".
4. In his second further affidavit of 24 September 2015, Mr Mirosevich gives an explanation as to how he dealt with the $555,720.64 that SLN Developments received on settlement of the on-sale of the Beecroft property by SLN Developments to Henlong Property Group Pty Ltd in February 2012. The effect of his affidavit evidence, if accepted, seems to be substantially corroborated by the bank statements of SNL Developments attached to that affidavit. If admitted on appeal, this evidence gives support to the contention of Mr and Mrs Lawrence that, contrary to the finding of the primary judge at [298] of his first judgment, they did not receive, at least, the $300,000 from the $555,720.64 that SLN Developments received in February 2012 on the on-sale of the Beecroft property. That does not however exclude the possibility, contrary to his Honour's assumption at [297] in his first judgment, that the $300,000 deposit paid by SLN Developments to Minsden in respect of the Nelson Bay transaction, was confected to disguise a profit distribution by SLN Developments to Mr Lawrence.
5. The position in relation to $15,000 is less clear. The bank statements of SLN Developments record a cheque for that amount having been paid on 20 February 2012. Next to that entry in handwriting are the words "Valerie Lawrence". This is consistent with Mr Mirosevich's evidence at trial, which his Honour accepted, that in February 2012, after settlement of the Beecroft sale, Mr Lawrence requested that the rest of his share of the profits be paid to his wife, and that Mr Mirosevich paid a separate cheque for $15,000 to Mrs Lawrence.
6. Section 75A(8) of the Supreme Court Act 1970 (NSW) applies to prohibit this Court receiving the further evidence tendered on appeal "except on special grounds": Akins v National Australia Bank (1994) 34 NSWLR 155 (Akins) and cases which have followed it, such as Tjiong v Tjiong [2012] NSWCA 201 at [166] and Ramsay v BigTinCan Pty Ltd [2014] NSWCA 324 at [50] establish that, although it is not possible to formulate a test which should be applied in every case, in general, the following three conditions need be met to satisfy this requirement: (1) It must be shown that the evidence could not have been obtained with reasonable diligence for use at the trial; (2) The evidence must be such that there must be a high degree of probability that there would be a different verdict; (3) The evidence must be credible (Akins at 160).
7. Whilst the evidence in the form of the bank statements seems credible, it can be expected that there would be a significant contest on appeal as to the credibility of Mr Mirosevich's further affidavit evidence which seeks to recant the evidence given by him at the trial. Nonetheless I proceed upon the basis that Mr and Mrs Lawrence may succeed in relying upon the further evidence on appeal, which is essential if they are to demonstrate error in the finding of the primary judge in at [298] of his first judgment.
8. The best however that Mr and Mrs Lawrence could hope for is a new trial on the question of relief with respect to the established breach of fiduciary duty relating to the sale of the Beecroft property. In this regard, they would need to establish a miscarriage has been occasioned by the absence of the further evidence sought to be relied upon on appeal: UCPR 51.53(1).
9. For the purposes of this application, I am prepared to accept that Mr and Mrs Lawrence have arguable grounds of appeal in regard to the $300,000 payment, but not the separate payment of $15,000 to Mrs Lawrence.
10. As to the balance of convenience or balance of hardship, there is scant evidence before the Court on this aspect from both parties. In part, this reflected the urgency in which the application came before the Court.
11. It was not submitted by Mr and Mrs Lawrence that there was a risk that if money was paid by them to Mrs Gunner in satisfaction of the judgment it would be unable to be recovered from Mrs Gunner if the appeal succeeds on this aspect. Nor was it suggested that there may be difficulty or delay in recovering from Mrs Gunner. Other than that Mrs Gunner is the owner of 134 Clontarf Street (and there was no suggestion that this property was not unencumbered), there was no evidence of Mrs Gunner's financial position.
12. Mr Lawrence referred in oral submissions to his apprehension of bankruptcy proceedings being taken against him and his wife unless a stay is granted. There was no evidence of their financial position other than an available inference that their financial circumstances are not good, they having been self-represented in the proceedings below between July 2013 and the start of the trial in November 2014, and thereafter reliant upon pro bono representation at the trial, which representation has now ended. Although not articulated precisely in this way, I would treat Mr Lawrence's reference to the apprehension of bankruptcy proceedings, as a submission to the effect that unless a stay is granted the appeal will be rendered nugatory.
13. I am prepared to assume, there being no undertaking proffered by Mrs Gunner, that in the absence of a stay, she will seek to enforce the judgment for $315,000 against Mr and Mrs Lawrence. In the event of being declared bankrupt, there would be very significant consequences for Mr and Mrs Lawrence and practical consequences for the conduct of the appeal. The prospect of their bankruptcy is a strong factor justifying a stay.
14. In the circumstances, the balance of convenience favours the grant a stay of the money judgment to the extent that the judgment relates to the $300,000 "gain" and interest thereon.

Conclusion and orders

1. I am satisfied that this is an appropriate case in which to grant a stay of the money judgment insofar as it exceeds $15,000 and interest thereon pending the determination of the appeal but not in respect of the other orders made by Stevenson J.
2. Accordingly the orders I make are as follows:
3. Subject to order 2 below, stay the enforcement of orders 2 and 3 made by Stevenson J on 21 August 2015 until the determination of the appeal or earlier further order.
4. The stay in order 1 above does not prevent the enforcement of orders 2 and 3 made on 21 August 2015 up to a maximum amount of $15,000 together with interest thereon.
5. Otherwise dismiss the applicants' notice of motion filed on 12 October 2015.
6. Costs of the motion be the applicants' cost in the appeal.

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