Lawrence v Gunner

Court of Appeal (NSW)|2015-12-04|Before: Gleeson JA, Stevenson J

Background

The Court made orders in this matter on 15 October 2015 dealing with an application for a stay pending appeal against judgments of Stevenson J given on 16 July 2015 and 21 August 2015 (Lawrence v Gunner; Gunner v Lawrence [2015] NSWSC 944 (the principal judgment); Lawrence v Gunner; Gunner v Lawrence [2015] NSWSC 1229 (the supplementary judgment)): Lawrence v Gunner [2015] NSWCA 322 (the October judgment).
It is desirable to set out the relevant orders made by Stevenson J on 21 August 2015, which were in the following terms: (1) The further amended statement of claim be dismissed. (2) Judgment that the plaintiffs/cross-defendants pay the defendant/cross-claimant $315,000. (3) Order, pursuant to s 100 of the Civil Procedure Act 2005, that the plaintiffs/cross-defendants pay interest to the defendant/cross-claimant on the judgment referred to in order 2 at the rates set forth in Uniform Civil Procedure Rules r 36.7 from 1 March 2012. (4) Order that the proceedings RT 12/15580 and RT 12/09391 transferred to the Court from the CTTT by reason of the order made by the CTTT on 12 September 2012 and remitted NCAT to be dealt with by NCAT in light of the reasons given in these proceedings on 16 July 2015 in Lawrence v Gunner; Gunner v Lawrence [2015] NSWSC 944. (5) Grant liberty to the parties to apply for such further orders as may be required arising out of NCAT's consideration of the matter. (6) Order that the further amended cross-claim be otherwise dismissed. (7) Order that the plaintiffs/cross-defendants pay 95 per cent of the defendant/cross-claimant's costs of the proceedings (other than the costs of preparation of affidavits of any witness not called to give evidence other than affidavits prepared solely for the purpose of an interlocutory application) on a party-party basis until 2 August 2013 and on an indemnity basis thereafter. ….

Variation of the stay

The applicants sought the following variations of the existing stay: 1. The first five words of order 1 ("Subject to order 2 below") and order 2 made on 15 October 2015 be rescinded. The effect of these orders, if made, would be to stay the enforcement of the whole judgment for $315,000 together with interest thereon. 2. The requirement in order 4 made by Stevenson J on 21 August 2015, when remitting the possession proceedings to NCAT, that those proceedings be dealt with by NCAT "in light of the reasons given in these proceedings on 16 July 2015", be stayed pending the appeal in the Court. 3. The costs order (order 7) in favour of Mrs Gunner be stayed pending the appeal in this Court.
As to (1), the applicants contended they have arguable grounds for challenging the finding of the primary judge that Mr and Mrs Lawrence obtained a profit, that is, a gain, of $315,000 from the sale of a property at 79-87 Malton Road, Beecroft (the Beecroft property) which settled in February 2012. To support this challenge the applicants have indicated that they will seek to rely upon further evidence on appeal: Supreme Court Act 1970 (NSW), s 75A(8).
As to (2), the applicants contended that when remitting the possession proceedings to NCAT, the primary judge did not have power to order that those proceedings be determined in the light of his Honour's reasons in the principal judgment.
As to (3), the applicants contended that if the Court made either or both of the variations to the present stay, then the Court should also stay the costs order made by Stevenson J.

Relevant principles

The principles to be applied when exercising the Court's power to grant a stay pending an appeal are well-known. It is unnecessary to repeat the matters referred to in the October judgment: at [11]-[13]. 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 at [17]-[20].

$15,000 component of the $315,000 profit

At [22]-[30] of the October judgment, I dealt with the application for a stay of the judgment for $315,000 relating to the profit or gain which his Honour found Mr and Mrs Lawrence had obtained from the sale of the Beecroft property in breach of Mr Lawrence's fiduciary duty to Mrs Gunner.
I was prepared to assume, based on the evidence which Mr Lawrence indicated would be sought to be relied upon as additional evidence on appeal, that Mr and Mrs Lawrence have arguable grounds of appeal in relation to the $300,000 which his Honour found had been paid to Mr Lawrence (albeit, at his direction to another entity, Minsden Pty Ltd).
However, I was not satisfied (on the evidence advanced on that application) that there were arguable grounds in relation to the separate payment of $15,000 by SLN Developments Pty Ltd (SLN Developments) to Mrs Lawrence at the request of Mr Lawrence.
It was submitted that the new material put forward on this application (which counsel indicated that the applicants would also seek to rely upon as additional evidence on appeal), demonstrated that they have arguable grounds of appeal with respect to the separate payment of $15,000, because the bank statements for their joint account, Mrs Lawrence's individual account and Mr Lawrence's two individual accounts do not record a cheque for this amount being paid into any of those accounts in February 2012.
It was further submitted that there had been a miscarriage of justice on the whole question of the proceeds of sale of the Beecroft property entitling Mr and Mrs Lawrence to a new trial on this issue.
Three observations should be made in relation to this new material.
First, no attempt was made in the new affidavits of Mr and Mrs Lawrence to contradict the further evidence of Mr Mirosevich referred to in the October judgment (at [26]), which Mr and Mrs Lawrence have also indicated they will seek to rely upon as additional evidence on appeal. That evidence of Mr Mirosevich includes the bank statements of SLN Developments which record a cheque for $15,000 having been paid on 20 February 2012 from the account which received the balance of the proceeds of the Beecroft sale. Next to that entry in handwriting are the words "Valerie Lawrence".
Rather than casting doubt on his Honour's findings concerning the cheque for $15,000, the business records of SLN Developments are 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.
Secondly, neither Mr nor Mrs Lawrence gave affirmative evidence that they did not receive a cheque for $15,000 from SLN Developments in February 2012.
Thirdly, it should be observed that the bank statements of one of Mr Lawrence's personal accounts with the National Australia Bank records an entry on 20 February 2012 "Cash and/or Cheques Deposit" of $100,000. Importantly, Mr Lawrence did not attempt to explain the cheques included in this deposit, which was contemporaneous with the $15,000 cheque paid by SLN Developments on 20 February 2012. A copy of the relevant bank deposit slip or similar document was not tendered. Mr Lawrence's evidence went no higher than a submission that there was no record of $15,000 being paid into his personal account.
I am not persuaded that arguable grounds of appeal have been demonstrated in relation to the challenge to his Honour's findings concerning the separate payment of $15,000 in February 2012.

134 Clontarf Street

The particular challenge by Mr and Mrs Lawrence to order 4 made on 21 August 2015 raised a jurisdictional issue. It was submitted that only the Tribunal could determine whether to make an order terminating a residential tenancy agreement, and that the requirement of the remittal order that the possession proceedings be determined in light of his Honour's reasons in his principal judgement was inconsistent with the Tribunal's exclusive jurisdiction under Pt 5 of the Residential Tenancies Act 2010 (NSW) (the RT Act), in particular, s 81(1).
Section 81(1) of the RT Act provides that a residential tenancy agreement terminates only in the circumstances set out in that Act; those circumstances include where the Tribunal makes an order terminating the residential tenancy agreement: s 81(3).
It was contended that the Tribunal, upon remittal, considered itself bound by the terms of order 4 made by Stevenson J on 21 August 2015 not to make any other order than an order for possession. Reliance was placed on the Tribunal's reasons where the Tribunal accepted that the primary judge had found (at [504] of the principal judgment and [5] of the supplementary judgment), that the agreement between the parties was a residential tenancy agreement within the meaning of the RT Act: Gunner v Lawrence; Lawrence v Gunner (Civil and Administrative Tribunal (NSW), Senior Member Rosser, 6 November 2015, unrep) at [50], [52] and [55].
The applicants' contention ignores the power of the Consumer, Trader and Tenancy Tribunal (the CTTT) to transfer possession proceedings to the Supreme Court. In this regard, it is necessary to refer to the circumstances in which his Honour came to deal with Mrs Gunner's cross-claim for possession of 134 Clontarf Street: see principal judgment at [510].
The application by Mrs Gunner for orders for termination of the residential tenancy agreement and for possession of the premises at 134 Clontarf Street was initially brought in the CTTT. On 12 September 2012, and with the consent of the applicants, the CTTT vacated the hearing date and made an order that the proceedings be transferred to the Supreme Court to be heard in conjunction with the proceedings commenced by the applicants by statement of claim on 5 September 2012.
The CTTT's power to transfer its proceedings to a court "that has jurisdiction in the matter" arose under s 23 of the Consumer, Trader and Tenancy Tribunal Act 2001 (NSW) which provided: (1) If the parties in any Tribunal proceedings so agree, or if the Tribunal of its own motion or on the application of a party so directs, the proceedings are: (a) to be transferred to a court (in accordance with the rules of that court) that has jurisdiction in the matter, and (b) to continue before that court as if they had been instituted there.
His Honour was not satisfied that there was any life tenancy agreement between Mr and Mrs Lawrence and Mr Gunner, or later Mrs Gunner, in respect of 134 Clontarf Street: principal judgment at [500]. Accordingly, his Honour was satisfied that the applicants had no entitlement to continue in occupation of that property: at [501].
In this Court, counsel for Mrs Gunner submitted that his Honour's finding at [501] only concerned the applicant's right of occupation under the alleged life tenancy agreement, and was not a finding that there was no entitlement to possession under a residential tenancy agreement (tcpt, CA, at 16, lines 5-12). So much may be accepted for the purposes of the present application.
His Honour then dealt with the issue of a residential tenancy agreement at [502]-[525], in the context of Mrs Gunner's cross-claim seeking judgment for possession against Mr and Mrs Lawrence. Counsel for Mr and Mrs Lawrence submitted before his Honour that Mrs Gunner's claim for possession was "barred" by s 119 of the RT Act. Section 119 provides: A landlord or former landlord must not commence proceedings against a tenant or former tenant of the landlord in the Supreme Court, the District Court or the Local Court to obtain recovery of possession of residential premises subject to a residential tenancy agreement.
At [517] his Honour referred to authorities which hold that the predecessor to s 119 of the RT Act (s 71 of the Residential Tenancies Act 1987 (NSW) which is in similar terms to s 119) provides a defence to proceedings brought contrary to the terms of the section, but should not be read as denying jurisdiction to the Court: Whiteford v Commonwealth of Australia (1995) 38 NSWLR 100 (Kirby P at 106; Sheller JA at 114). See also Celermajer Holdings Pty Ltd v Kopas [2011] NSWSC 40 at [18] (Ward J, as her Honour then was). His Honour found that proceedings brought by cross-claim by Mrs Gunner against Mr and Mrs Lawrence did not, in any event, constitute proceedings "commenced" contrary to s 119.
Unsurprisingly, his Honour recorded that it was "common ground" that Mr and Mrs Lawrence occupied 134 Clontarf Street pursuant to a "residential tenancy agreement" for the purpose of s 119 of the RT Act: principal judgment at [504]. This was the premise of their counsel's contention at trial based on s 119.
Although finding that s 119 of the RT Act did not prevent the Supreme Court from having jurisdiction to deal with the matter, his Honour noted that s 81 of the RT Act did not confer power on a court to terminate a residential tenancy agreement, even in circumstances where the CTTT has transferred proceedings to that Court pursuant to s 23 of the Consumer, Trader and Tenancy Tribunal Act. (The equivalent provision in relation to the transfer of proceedings by NCAT to a court in the Civil and Administrative Tribunal Act 2013 (NSW) is now cl 6 of Sch 4.) His Honour found that s 81 of the RT Act did not have the consequence that a court, and in particular the Supreme Court, had no jurisdiction otherwise to adjudicate on a dispute concerning a residential tenancy agreement: principal judgment at [523].
In his supplementary judgment, his Honour rejected the submission on behalf of Mrs Gunner that the Court had jurisdiction to make an order for termination under s 81 of the RT Act and also an order for possession under s 83. (It is unnecessary for present purposes to consider whether that construction of s 81 of the RT Act is consistent with the power of the CTTT, and now NCAT, to transfer possession proceedings to a court having jurisdiction in the matter.)
His Honour concluded that declaratory relief was neither necessary nor appropriate as his conclusions as to the merits of Mr and Mrs Lawrence's position and that of Mrs Gunner were clear enough from his reasons. Accordingly, his Honour remitted the possession proceedings to NCAT to be dealt with in light of the reasons in his principal judgment, that is, in accordance with law.
In my view, there is no merit in the applicants' contention that the Supreme Court had no jurisdiction to make findings with respect to the existence of a residential tenancy agreement in respect of 134 Clontarf Street. Assuming, favourably to Mr and Mrs Lawrence that a court, including the Supreme Court, cannot make an order terminating a residential tenancy agreement under s 81 RT Act, it is clear that order 4 made by his Honour on 21 August 2015, did not go so far. Nor did his Honour make any finding that Mrs Gunner had validly terminated the residential tenancy agreement in respect of 134 Clontarf Street, for the purposes of s 85 of the RT Act.
Although the Tribunal's decision when dealing with the possession proceedings on remittal is not in issue before this Court, it may be observed that the Tribunal considered for itself the question of the validity of the notice of termination given by letter dated 27 October 2011 by Mrs Gunner's solicitor. The Tribunal found that the residential tenancy agreement was a periodic agreement within s 85 of the RT Act (at [65]); that a valid termination notice had been given, ending the periodic tenancy (at [72]); and that the temporal requirements of s 83(2) of the RT Act with respect to the commencement of an application to the Tribunal for a termination order had been met (at [87]); before concluding that the Tribunal had no discretion to refuse to terminate the residential tenancy agreement: at [89].
I am not persuaded that arguable grounds of appeal have been demonstrated in relation to the terms upon which the remittal order (order 4) was made.

Costs order

It was ultimately common ground that any stay in relation to order 7 concerning the costs of the proceedings below, would follow the outcome of the application to vary the existing stay. Since the applicants have not demonstrated arguable grounds of appeal in respect of either of the matters addressed above, no case has been made out to stay the costs order made by the primary judge.

Balance of convenience

Although unnecessary for the resolution of the application to vary the stay, it is appropriate to note two matters relating to the balance of convenience.
First, no offer was made by Mr and Mrs Lawrence to either pay into court or provide security for that part of the money judgment, namely $15,000 and interest thereon, which is not the subject of the existing stay. Nor was there any evidence concerning the current financial circumstances of Mr and Mrs Lawrence.
As this Court explained in Alexander v Cambridge Credit Corporation Ltd at 697, a person "seeking the benefit of a stay and, if they are entitled to it, having shown a reason or demonstrated an appropriate case, they must still provide the court with material upon the basis of which the court can fix the terms of the stay that will be just to both parties".
Mr and Mrs Lawrence have failed to provide relevant material as to their assets and liabilities so that, if necessary, it could be tested by cross-examination. They have not made out a case of hardship in relation to payment of part of the judgment debt in the amount of $15,000 and interest thereon, or that the absence of a stay of that part of the money judgment would stifle the appeal by the applicants.
Secondly, as to 134 Clontarf Street, no offer was made by Mr and Mrs Lawrence on the present application to pay any rent or occupation fee to Mrs Gunner. Nor was there any offer on the present application to pay council and water rates, which on the case advanced by Mr and Mrs Lawrence at trial, they had agreed to pay during their occupation of that property. The balance of convenience favours the respondent in circumstances where delay in enforcement of the judgment for possession ordered by the Tribunal would be a source of loss to the respondent.
If Mr and Mrs Lawrence were otherwise entitled to an order for variation of the existing stay it would have been appropriate to do so upon terms imposing a condition requiring security, or that part of the money judgment as to $15,000 and interest thereon, be paid into court or otherwise preserved in a fund and also that an occupation fee, together with council and water rates, be paid to Mrs Gunner in relation to 134 Clontarf Street pending the appeal. However, this issue does not arise in view of my conclusion that the applicants have not demonstrated an arguable case for appeal in respect of the two matters referred to above.

Costs

For the reasons given above, paragraph 1 of the applicants' further amended notice of motion filed 24 November 2015 was dismissed. With respect to costs, no reason was shown why costs should not follow the event in relation to the unsuccessful application to vary the stay: UCPR r 42.1.

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: 11 December 2015

Consumer, Trader and Tenancy Tribunal Act 2001(NSW)s 23

Residential Tenancies Act 1987(NSW)s 71

Solicitors: Applicants (Self-represented) Marshall Law (Respondent) File Number(s): 2015/258609 Decision under appeal Court or tribunal: Supreme Court Jurisdiction: Equity Division Citation: [2015] NSWSC 944; [2015] NSWSC 1229 Date of Decision: 16 July 2015 Before: Stevenson J File Number(s): 2012/277403

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