Practice and procedure - Judgment for possession - Application for stay of execution

Application for extension of time in which to appeal

1 PULLIN J: The second defendant seeks an extension of time to appeal and a stay of execution pending the proposed appeal.

2 The background is as follows. The first and second defendants borrowed money from the plaintiff, and repayment was secured by a mortgage over a house property at 4 Walgreen Place, Calista. The defendants defaulted, and on 17 July 2002 the plaintiff commenced this mortgage action, seeking possession of the house property. In August 2002, the amount due under the mortgage was in excess of $55,000. A memorandum of appearance was filed by the second defendant, who is in possession of the property. An application for summary judgment was made under O 14, and pursuant to a decision of the Master judgment was entered on 31 October 2002, ordering the second defendant to give up possession within 28 days.

3 By summons dated 21 November 2002, the second defendant applied for a stay of execution pursuant to O 47 r 13(2), which provides that the Court may stay execution if by reason of special circumstances it is inexpedient to enforce the judgment. On the date of the summons, no appeal had been instituted. The decision of the Full Court in Commonwealth Development Bank of Australia Ltd v Nertec Pty Ltd & Ors [1999] WASCA 311 makes it clear that where judgment has been entered and no argument has been raised which seeks to set aside the judgment or impeach its integrity, then a stay should not be granted.

4 Since then the second defendant applied for, and was granted, a waiver of fees on 6 December 2002 to allow him to file an application for an extension of time in which to appeal and a notice of appeal. The application for an extension of time was filed on 6 December 2002. The application for an extension of time was necessary because the 21-day time limit for an appeal had expired on 21 November 2002.

5 Order 47 r 13(1) requires the applicant to show that there are "special circumstances" why it is inexpedient to enforce the judgment or order.

6 The court has a discretion to decide whether or not it is appropriate for a stay to be granted. In cases which do not involve securities, the court must consider whether there is an arguable case for appeal to ensure that the appeal has not been lodged simply to delay execution: Croney v Nand [1998] QCA 367; [1999] 2 Qd R 342 at 348-349. The onus is on the applicant to demonstrate a proper basis for a stay which will be fair to all parties, and the court will weigh the balance of convenience and the competing rights of the parties: Alexander v Cambridge Credit Corporation Ltd (1985) 2 NSWLR 685 at 694. A stay of execution may be granted if it can be demonstrated that if the stay is not granted, the appeal may be nugatory (Wilson v Church (No 2) (1879) 12 Ch D 454 at 458) or that serious injury will result to the applicant unless a stay is granted (McBride v Sandland (No 2) [1918] HCA 59; (1918) 25 CLR 369 at 375). An appeal will be nugatory whenever there is a real risk that it will not be possible for a successful appellant to be restored substantially to his or her former position: Federal Commissioner of Taxation v Myer Emporium Ltd (No 1) [1986] HCA 13; (1986) 160 CLR 220 at 223; Hamersley Iron Pty Ltd v Lovell (No 2) (1998) 20 WAR 79 at 89.

7 In this case, if an extension of time to appeal were granted and an appeal instituted and the appeal succeeded, then it is more probable than not that the appeal would be nugatory because by the time the appeal was heard, the second defendant would have been put out of possession and the property sold.

8 The circumstances mentioned in the previous paragraph would usually result in a stay being granted, applying the principles set out above.

9 The question arises, however, whether the situation is different when the action is a mortgage action and the mortgagee has obtained judgment for possession. In mortgage actions, the general rule is that where a party seeks to restrain the exercise by a mortgagee of his rights under a mortgage instrument, then failing payment into court of the amount sworn by the mortgagee as due and owing under the mortgage, no order should be made by the court restraining the exercise of the mortgagee's rights under the mortgage: Inglis v Commonwealth Trading Bank of Australia [1972] HCA 74; (1972) 126 CLR 161.

10 The plaintiff in this case has sworn that the amount due under the mortgage in August 2000 was in excess of $55,000.

11 If the general rule in Inglis' case applies, then a stay should not be granted if the second defendant is not prepared to, or cannot, pay into court the amount sworn to be due to the plaintiff under the mortgage.

12 The second defendant argues against this result, and does so by referring to the decision of Master Bredmeyer in Siglin v Choules [2001] WASCA 308. In that case, the applicant for the stay was 78 years old. Summary judgment was entered against her. She was required to pay over $400,000, and was required to vacate possession of her property. Master Bredmeyer concluded that if a stay of execution was not granted in that case, the appeal might be nugatory because if the property were sold pursuant to the terms of the judgment and the applicant won the appeal, the property could not be repurchased. The Master was referred to Commonwealth Development Bank of Australia v Nertec (supra) and Inglis v Commonwealth Trading Bank of Australia (supra). Master Bredmeyer said "I do not consider those authorities are relevant, however, on an appeal".

13 I am conscious that the Inglis case concerned an application for an injunction before trial and not an application for a stay of execution, but I cannot think of any reason in principle why Inglis' case should not be relevant in relation to an application to stay execution pending the hearing of an appeal. Master Bredmeyer gave no reasons why Inglis v Commonwealth Trading Bank of Australia (supra) and Commonwealth Development Bank of Australia v Nertec (supra) were not "relevant ... on an appeal". Finally, Master Bredmeyer did not refer to what was said by Murray J in Commonwealth Development Bank of Australia v Nertec (supra) at [10]. In that paragraph, Murray J referred to an earlier decision of his own in which he said:

"I can see no basis in this case for thinking that the court ought to adopt a different approach where the defendants seek a stay of execution of the plaintiff's judgment for possession than if they had in their action sought an interlocutory injunction to prevent any action being taken under the mortgages by the plaintiff to obtain possession. Where the court is dealing with a mortgage security therefore, it seems to me that the rule in Inglis's case, as it has come to be known, although not invariably to be applied, would generally, and in this case, provide an additional factor to be satisfied before the defendants might succeed under O 47 r 13. "

14 For those reasons I would conclude, with due respect to Master Bredmeyer, that he was wrong to say that Inglis' case and Nertec's case were not "relevant" in relation to an application for a stay of execution of a judgment for possession in a mortgage action. In my view, the general rule stated in Inglis' case does apply on an application for a stay of execution.

15 Having reached that conclusion, it is nevertheless important to bear in mind that the rule is a "general" rule. It will not apply in every case. The discretion the court has to grant a stay will be exercised, taking into account the general rule and the circumstances of the particular case.

16 I now turn to the application for the extension of time in which to appeal and the grounds of appeal. Order 63 r 4(1) allows an extension to be granted by the Full Court or a Judge. On 13 December 2002, I heard the second defendant's application for an extension of time. On such an application, the Court must take into account the length of delay, the reasons for the delay, the cogency of the explanation, and whether or not there is an arguable case on appeal: Girando v Girando (1997) 18 WAR 450 at 454. A strongly arguable case will enhance the prospects of a stay being granted.

17 The second defendant says that, as an unrepresented litigant, he has had problems formulating an appeal within the required time. The delay is relatively short, being only about two weeks. If the grounds of the appeal are arguable, those factors may justify the grant of an extension of time.

18 That leaves me to consider the plaintiff's submission that the grounds of appeal are not arguable and will have no prospects of success. A number of the grounds of appeal go to the second defendant's claim that he was a person under a disability. On 13 December 2002, the second defendant claimed that he was a "person under a disability" within the meaning of O 70 and claimed that a guardian ad litem should be appointed to represent him. I decided on 13 December 2002 that I would not declare the second defendant to be incapable of managing his affairs in respect of the proceedings, and gave reasons for my decision. While my decision on that point stands, the proposed grounds of appeal referring to the second defendant's incapacity cannot succeed.

19 Grounds 2 and 3 amount to a contention by the second defendant that he would have been able to pay arrears under the mortgage by certain dates. Those facts would have not have provided any defence and, in my view, afford no grounds for appeal. Ground 4 contains a complaint that the Master erred in not ordering the second defendant to be examined on oath under O 14 r 4(4)(b). There is no merit in that ground. Ground 6 says that the Master erred in not exercising his discretion to allow a trial. That ground is argumentative and affords no ground of appeal. Ground 7 complains that the Master did not take into account "future events" and asserts that the second defendant disputed the amount said to be in arrears. That affords no ground of appeal. The other grounds are argumentative or afford no reasonable grounds of appeal.

20 In my opinion, the proposed appeal has no prospects of success, and as a result an extension of time will not be granted. As a result, there is no appeal on foot, and in consequence the application for a stay should be refused.

21 Even if I were wrong in refusing to grant an extension of time, then, for the reasons given above, a stay should only be granted on condition that the amount sworn by the plaintiff to be due under the mortgage is paid into court. The second defendant frankly admits that he is unable to make such payment. On that alternative basis, I also refuse to grant the stay.

22 Further, the second defendant claims that the property is only worth about $50,000. If that is so, a stay will prejudice the plaintiff's chance of full recovery and it will increase the amount the second defendant would have to pay after the proceeds of sale were taken by the bank. That would be to no one's advantage and an added reason for refusing the stay.

23 I dismiss the second defendant's application for an extension of time in which to appeal, and I dismiss the second defendant's application for a stay of execution.