Morkaya v Parkinson; Parkinson v Morkaya [2008] NSWSC 642 | Case summary

1 By Notice of Motion filed in Court today, the Defendant, Mr Parkinson, seeks an order that the order of Macready AsJ in these proceedings made on 13 June 2008, requiring the Mr Parkinson to pay the sum of $10,000 towards rent on certain premises, be set aside. The Motion also seeks an order that, pending the appeal, his Honour's order for the payment of money be stayed. It is only the second order that is pressed today. The circumstances may very briefly be recounted thus. 2 The Plaintiff, Ms Morkaya, and Mr Parkinson were in a relationship which has broken down. In the course of that relationship they undertook certain business activities together. They were the directors and shareholders of a company. The business which was operated by the company was carried on in leased premises. Ms Morkaya and Mr Parkinson as co-lessees and, therefore, co-obligors under the lease. At some stage, Mr Parkinson was no longer involved with the business carried on in the leased premises. He has moved to other premises and taken certain trading activities of the business with him. 3 Ms Morkaya has commenced proceedings under the Property (Relationships) Act 1984 (NSW) for the adjustment of property interests between herself and Mr Parkinson. There are also proceedings, in which Mr Parkinson is the plaintiff and Ms Morkaya is the defendant, as to their respective interests in the company of which they were shareholders and directors. 4 Ms Morkaya filed a Notice of Motion on 22 May 2008 in which she sought certain interim relief. One of the interim orders sought was an order that Mr Parkinson cause a sum equivalent to not less than one-half of the rental payments outstanding in respect of the leased premises to be paid to the lessor's agent in partial satisfaction of the parties' personal liability for unpaid rent under that lease. 5 Mr Crossland of Counsel, who appears for Mr Parkinson, disputes the full amount asserted by Ms Morkaya as outstanding for rent, but concedes that, as at the date that Mr Parkinson left the leased premises, there was outstanding a sum in excess of $40,000 for unpaid rent. 6 The Motion came on for hearing before Macready AsJ on 13 June 2008. His Honour dealt with a number of matters, the first of which was clearly in the nature of an asset preservation order. It was to do with the continued operation of the internet website for one of the businesses, the business that was then apparently being conducted by Ms Morkaya alone. 7 Mr Parkinson, apparently, had initially set up the website for that business as well as a website for his own business. He had the access password to both sites. Without that access, Ms Morkaya was unable to trade through the website relating to the business which she had retained. 8 His Honour made an order which was, obviously, intended to preserve the parties' respective positions pending a final hearing. In that context, he made an order that Mr Parkinson organise to separate the passwords for the two websites under his control, to the intent that the website for Ms Morkaya's business should be accessible by her for operation. His Honour said that if that process involved the expenditure of funds, those costs were to be paid by Ms Morkaya. His Honour then went on to deal with the question of arrears of rent of the leased premises. 9 His Honour said that, by the time that Mr Parkinson had ceased paying rent and left the leased premises site, there were outstanding payments of some $73,000. As I say, for the purposes of this application, Mr Crossland concedes that an amount in excess of $40,000 was outstanding. 10 Then his Honour had regard to the fact that when Mr Parkinson left the premises, he took some $14,000 from the account of the company which was operating the business on those premises. His Honour referred to a guarantee in support of the parties' obligation to pay rent under the lease. His Honour came to the conclusion that: "Without in any way prejudicing or in any way duplicating the liabilities which the parties individually have in respect of payment of the rent I think it is appropriate that I make an order that the defendant pay within seven days to the agent of the landlord of the premises C B Richard Ellis the sum of $10,000 and I so order."

That is the order which Mr Parkinson now wishes to have stayed. 11 It is well established that an appeal to a single Judge of this Court from a decision of an Associate Justice of the Court is governed by the same considerations as apply when an appeal is taken from a single Judge to the Court of Appeal. There are two elements which I should consider in the application for a stay. 12 Firstly, is there any prospect of success in the appeal, or is the appeal misconceived, so that to grant a stay would be to defeat the end of justice. Secondly, assuming that there is sufficient prospect of success on appeal, where does the balance of convenience lie or, putting it more broadly, where do the interests of justice lie, as to whether or not a stay should be ordered pending the determination of the appeal. 13 I have only had a brief acquaintance with the matter in addresses this afternoon, so that it is not proper for me to express any concluded view as to whether the appeal would succeed or fail. Mr Crossland has pointed out what he says are a number of flaws in his Honour's reasoning. It seems to me that the appeal is, at the least, arguable. His Honour may, as Mr Crossland says, have misunderstood the effect of the guarantee in arriving at the conclusion which he did. It would not be possible to form a firmer view until the appeal is argued properly. 14 Therefore, the more substantial consideration for me to consider on this application is the second factor; that is essentially where do the interests of justice lie. This is not an appeal, as is so often the case, in which one side may be compelled to pay a judgment debt which may be irrecoverable if the appeal succeeds. 15 Here, Mr Parkinson is a co-obligor with Ms Morkaya under the lease to pay, not only ongoing and current rent but, of course, arrears of rent. As I have said, it is conceded that, as at the date that he departed the leased premises, there was an amount in excess of $40,000 owing in arrears of rent. Taken prima facie, at the very least, this means that an equitable proportion of Mr Parkinson's share of that outstanding rent as at the time that he left the premises must have been well in excess of $10,000, at least $20,000, as the figures presently stand. 16 If Mr Parkinson pays the amount ordered by his Honour, the amount will not be paid to Ms Morkaya, or even exclusively for her benefit. The money will be paid in reduction of an obligation in respect of which Mr Parkinson himself is co-obligor. Further, the payment will operate so as to reduce a liability in respect of an asset which, subject to orders of the Court in the Property (Relationships) Act suit, would enure for the benefit of both parties as co-lessees. 17 In other words, this is not a case where a payment may be made pursuant to an order later set aside and, thereafter, lost for the benefit of the party successful on appeal. Whether or not the appeal succeeds, the payment made by Mr Parkinson will have been substantially for his own benefit. 18 It seems to me that, bearing in mind the discretionary factors to which Macready AsJ adverted and bearing in mind that the interests of Mr Parkinson in making the payment are equally as well served as the interests of Ms Morkaya, I do not think that a strong ground is made out for interference with his Honour's order. 19 I have, however, some concern about the assertion made by Mr Parkinson that, if the order is not stayed, he may be forced into bankruptcy as a result of what is, in effect, an interlocutory order. He also expresses concern that his inability to comply with the order will mean that he will be in contempt of court and liable to punishment by the Court. 20 However, I have had regard to the affidavit by Mr Parkinson upon the basis of which he makes those assertions. The affidavit, which is dated 20 June 2008, is very sparse in the financial information which it provides. It makes the assertion that Mr Parkinson has no funds available to pay the sum of $10,000. It refers to specific credit card debts. It refers to a joint account which he has with his brother, but does not give either the particulars of that account or the amounts standing to its credit or what the position is in relation to that account. He refers to a business bank account which, apparently, has some $5,200 in credit. He says there are creditors' cheques to be drawn on that account, but he does not give the amounts of those creditors' liabilities, nor does he give any information which would lead to the conclusion that those creditors' debts are more pressing than compliance with an order of the Court for the payment of money. 21 The affidavit also states that Mr Parkinson owns properties at Roselands and Bankstown, both of which are mortgaged. He says that the mortgage debt exceeds the equity in the property, but there is no more information given, so that it is impossible to determine whether that conclusion is warranted on the facts. It is not possible to determine whether the conclusion is the expression of Mr Parkinson's own unverified opinion as to the market value of the properties or is supported by some other evidence. 22 It seems to me that the information provided by Mr Parkinson as to his financial incapacity to pay the debt created by the interlocutory order is inadequate to persuade me that the order should be stayed by reason of present financial incapacity. It is true that if Mr Parkinson fails to comply with the order he will, prima facie, be in contempt of an order of the Court. However, that does not mean that Mr Parkinson will be punished for non-compliance with an order of the Court without further opportunity being afforded to him to show that compliance was impossible for him, rather than a matter of his choice. 23 If contempt proceedings are brought, it will be for Mr Parkinson to demonstrate that the order was, in truth, impossible for him to perform. If he is to do that, then he will have to provide information of much greater detail than he has done in his affidavit of 20 June 2008. 24 The lack of information as to Mr Parkinson's position also induces me to place no weight on his assertion, at this stage, that if the order is not stayed he will be forced into bankruptcy. 25 It is for those reasons that I decline to stay the order made by Macready AsJ on 13 June 2008. The Court will now make directions as to when and how the Motion for the appeal is to be dealt with. 26 Mr Parkinson seeks a stay of the order made on 13 June 2008 for a period of seven days in order to enable him to make arrangements to comply with it. That application is not resisted by Ms Morkaya. Accordingly, I grant that application. The order made by his Honour on 13 June 2008 will be stayed up to and including 27 June 2008. 27 The costs of today are reserved.

oOo -

Morkaya v Parkinson; Parkinson v Morkaya

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Before

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Judgment (9 paragraphs)

Legislation Cited (1)

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