Merton v Bank of Queensland Ltd

Judgment 1HIS HONOUR: This is an application by notice of motion filed 9 July 2013 by the applicants, Mr Merton and his wife, Ms Butler, for a stay of the judgment of the Court of Appeal given on 14 May 2013 dismissing an appeal from a decision of Stevenson J given on 8 August 2012: see Merton v Bank of Queensland [2013] NSWCA 115. 2The applicants seek a stay of proceedings while an application is dealt with by the High Court for special leave to appeal from the decision of the Court of Appeal. The applicants also seek an order that the respondent bank be restrained from selling three security properties held by the bank as security for the judgment debt. 3Mr Merton appeared on his own behalf and was granted leave, as occurred in relation to the appeal itself, to also appear on behalf of his wife. There was no objection by the respondent to that course being taken. 4The Court has previously considered and refused an application for a stay of proceedings on 27 May 2013: see Merton v Bank of Queensland [2013] NSWCA 159. At the time of that earlier application, Mr Merton had not yet filed the necessary papers with the High Court. He has now done so, and has provided to the Court in support of the current application, firstly, a document entitled "Application for Special Leave to Appeal", secondly, the "Applicant's Written Case" and, thirdly, a draft notice of appeal. 5The application for special leave states in paragraph 2 as the ground of appeal: "The applicants have been denied natural justice under both common law and the law of contract." 6The applicants' draft notice of appeal contains a similar ground in paragraph 2 to the following effect: "The Court of Appeal erred in its judgment as the finding is in breach of the law of contract by failing the test of 'intent' on the part of the [r]espondent and as a result the [a]ppellants have been denied natural justice." 7Following the decision of this Court in Rinehart v Welker [2012] NSWCA 1; (2012) 285 ALR 191, the approach to be taken upon an application such as the present is that stated in the judgment of Brennan J in Jennings Construction Ltd v Burgundy Royale Investments Pty Ltd (No. 1) [1986] HCA 84; (1986) 161 CLR 681 at 684-685. Exceptional circumstances are required to be shown before a stay is warranted, as the grant of a stay is an extraordinary jurisdiction. 8In exercising the extraordinary jurisdiction to grant a stay, the following factors are material to the exercise of the Court's discretion. Firstly, whether there is a substantial prospect that the special leave to appeal will be granted; secondly, whether the applicant has failed to take whatever steps are necessary to seek a stay from the Court in which the matter is pending; thirdly, whether a grant of the stay will cause loss to the respondent; and fourthly, where the balance of convenience lies. In the present case, the second question does not arise. 9The first consideration is whether there is a substantial prospect that special leave to appeal will be granted by the High Court. In this regard, I limit my consideration to the grounds stated in the application for special leave to appeal to which I have already referred and proceed on the basis that the approach the High Court will take is that dictated by s 35A of the Judiciary Act 1903. Under that section, the High Court may have regard to any matter that it considers relevant, but is compelled to have regard to two particular matters: first, whether the proceedings involve a question of law that is of public importance, either because of its general application or otherwise, or in respect of which a decision of the High Court is required to settle the state of the law. Secondly, whether the interests of the administration of justice, either generally or in the particular case, require consideration by the High Court of the decision to which the application for special leave relates. 10The ground stated in paragraph 2 of the application for special leave to appeal is, in substance, that the judges of appeal came to the wrong conclusion on the question of the proper construction of the contract which was in issue in the proceedings. The paragraph does not identify any particular instance of error. The case before the primary judge turned on the construction of a private agreement and its own special facts. I do not consider that there are substantial prospects of obtaining special leave to appeal. 11Mr Merton referred to a related aspect of the application for special leave, being the decision of this Court to refuse the application to adduce further evidence on appeal. That issue was addressed at paragraph [28] to [36] of the judgment of 14 May 2013. As is apparent from those reasons, the application to adduce further evidence ultimately concerned four documents. The Court declined to receive those additional documents on appeal because they had been available to the applicants at the trial, having been included in the respondent's list of documents. See paragraph [35] of this Court's reasons. The applicant has not identified any error in the Court's approach or decision on this issue. The prospects of leave to appeal being granted on a discretionary matter of the refusal of this Court to receive further evidence on appeal is, in my view, negligible. 12Turning to the other matters which require consideration, namely, whether the grant of a stay will cause loss to the respondent and where the balance convenience lies. As to loss to the respondent bank, the position is that it has renewed its application to file writs of possession in relation to the security properties. The evidence is that the notice to vacate given in those writs will expire on 25 July 2013. The properties involved are lots 2 and 7, Fleming Street, Nulkaba, which comprise a two acre property which provides an access drive to a larger five acre property. Mr Merton gave an estimate from the bar table, without objection from Mr Schneider who appeared for the respondent, of a value in the order of $20,000 for lot 7 and $90,000 to $100,000 for lot 2. 13The other security property is a retail shop and a flat at the back of the premises at 103 Main Street, West Wyalong. The evidence discloses that the shop is currently tenanted, but the flat is uninhabitable, at least in relation to the kitchen. Mr Merton says the other rooms in the flat are in a habitable condition. Mr Merton gave an estimate from the bar table of the value of this property, again without objection from Mr Schneider, in the order of $115,000. 14The judgment given by Stevenson J on 21 August 2012 included judgment against Mr Merton and Ms Butler in the sum of $588,345.16. The evidence discloses that since that date the only amount received in reduction of the judgment is the sum of $15,212.10, which was received by the respondent bank on 28 September 2012 and applied in reduction to the debt on 5 October 2012. Mr Schneider points to the interest which continues to accrue under the judgment debt, as a relevant loss to the bank if Mr Merton's application for a stay was granted. It appears virtually certain that the sale of the three security properties will leave the respondent with a significant shortfall. The grant of a stay would therefore cause that shortfall to increase and would be the source of further loss to the respondent bank. 15Turning to the question of balance of convenience or the balance of hardship, I have taken into account that the security properties on the one hand comprise vacant land at Nulkaba and on the other comprise a retail shop and an untenanted flat at the back at West Wyalong. The position is that the applicants have embarked on an application for special leave to appeal that has no evident prospects of success in circumstances where a stay would only increase the bank's loss. In my view, the balance of convenience favours the respondent bank. 16I have concluded that it is not appropriate to grant a stay of proceedings, or restrain the respondent from exercising its power of sale in respect of the security properties. 17I make the following orders: (1)The notice of motion filed by Mr Merton and Ms Butler on 9 July 2013 be dismissed. (2)The applicants to pay the respondent's costs of the motion.