Palmer v Permanent Custodians Limited [2009] VSCA 164

Court of Appeal (Vic)|2009-07-21|Before: DODDS-STREETON JA and BEACH AJA

The application for leave to appeal is dismissed with costs, including reserved costs.

4 The summons is supported by the applicant's affidavit sworn 25 May 2009 and an outline of submissions dated 2 June 2009.

5 The applicant, who is not legally qualified, appeared in person.

7 Permanent, the plaintiff below, on 30 May 2008 issued proceedings against Virgin Investments Pty Ltd ('the company') as the first defendant, for recovery of possession of land situated at 388 Beach Road Beaumaris ('the property') and the repayment of a debt due; and against the applicant, as second defendant, for the payment of a debt.

8 On 11 July 2006, the Court entered judgment against the company in default of appearance for the recovery of the property and the payment of $1,429,744.38, together with interest of $22,066.64 and costs in the sum of $2,100.00.

9 On 15 August 2008, a warrant of possession for recovery of the property was issued. On 6 October 2008, the applicant filed a summons on behalf of the company, seeking to set aside the default judgment. On 11 February 2009, Daly AsJ dismissed that summons and ordered costs against both the defendants.

10 The company filed a notice of appeal from Daly AsJ's order, which was returnable on 24 February 2009.[1]

11 On 23 February 2009, the warrant of possession was executed by the sheriff. The property was empty, although the applicant was present for a short time. The sheriff changed the locks and legal possession was given to the respondent's agent.

12 On 24 February 2009, in the Practice Court, Smith J dismissed the company's appeal from Daly AsJ's order, with costs. His Honour observed that the applicant appeared on behalf of the company without objection. Smith J concluded that the company did not have an arguable defence, as the respondent's registered mortgage conferred indefeasible title and there was no basis on which to establish fraud. His Honour observed that the company received loan moneys of approximately $1.3 million ($1.23 million of which was used to pay out existing indebtedness and $68,168.36 of which was paid to Mr Palmer).

13 The applicant, as appellant, filed a notice of appeal dated 10 March 2009 from the orders of Smith J which relevantly stated:

Smith J. disregarded vital evidence, advanced by the defendants, contained within the Statistics of the Reserve Bank of Australia, which, if regarded give rise and evidence of [sic] an impossibility in the claims of the Respondent.

The Reserve Bank Act 1959 - SECT 85A mandates judicial notice be given to the Statistics of the Reserve Bank of Australia.

Further, Smith J. subjected the Defendants to Denial of Natural Justice in so much as he indicated he would not allow or grant a Trial that has potential to "bring down" the "financial system".

Due to the refusal the Defendants together are denied their right and entitlement to effectively defend claims against them.

14 On 17 April 2009, Buchanan JA and Kyrou AJA, on the application of the respondent, dismissed the applicant's appeal as incompetent because (as their reasons for judgment delivered on 24 April 2009 stated[2]) the order appealed from was interlocutory and leave had not been granted.

15 On 24 April 2009, Mr Palmer made an oral application for the necessary leave, which Buchanan JA and Kyrou AJA dismissed. Their Honours rejected as unmeritorious or contrary to the evidence the applicant's arguments that the company had not signed the loan contract or agreement with the respondent; that a legal firm cannot sign a statement of claim because it is not a separate legal entity; and submissions based on allegations that counsel representing the company breached natural justice, alleged fraudulent banking and lending practices and the company's alleged non-receipt of the writ.

16 On 22 May 2009, the applicant filed in the High Court an application for special leave to appeal from the decision of Buchanan JA and Kyrou AJA, which stated:

The Applicant applies for special leave to appeal from the whole of the judgment of Buchanan JA and Kyrou AJA of the Court of Appeal, Supreme Court of Victoria, given on the 17th (in the first instance) and 24th April (in the second instance), 2009.

The learned Justices erred by deeming the action before them may only proceed conditional of the Applicant applying for and receiving leave to appeal.
The learned Justices erred by giving undue weight to the irrelevant arguments (indefeasibility of title) of the Respondent.
The learned Justices erred by giving next to no weight to the relevant arguments (non-indorsement [sic] of the originating application) of the Applicant.
The learned Justices erred by paying no heed to, and making orders contradictory to, previous rulings and determinations of this honourable court.

17 As appears from the applicant's affidavit, he unsuccessfully sought the respondent's consent to a stay of any sale of the property pending the determination of his special leave application.

18 Before us, the applicant contended that a stay was necessary in order to preserve the subject matter of the litigation. The applicant's outline of submissions stated:

I submit to the Court that allowing the Sheriff to take action against the property would firstly, put the subject matter of the litigation at risk of being sold and secondly, would leave me homeless and thus prejudice me greatly in my preparations for the eventual High Court case. Conversely, the Respondent would suffer no discernible loss what-so-ever, the application was to be granted.

...

[I]f the application for stay was not granted then the Respondent would sell the property and the application for Special Leave to appeal would be futile.[3]

19 The applicant submitted that 'in respect of the balance of convenience' the property is 'worth in excess of the amount claimed against the defendants and therefore there would be no loss to the Respondent if this stay was granted.' He submitted:

[I]f the Respondent was allowed to sell the subject property before a final determination in this matter was made, the Applicant would suffer substantial loss. Firstly, the Second Defendant would lose his place of residence and secondly, the Defendants would likely suffer financial loss as the Respondent would only be looking cover [sic] the amount of their claim as opposed to the full value of the property in the event of a sale.[4]

20 The applicant submitted that he and the company were both defendants to the respondent's proceeding and 'in case 3719 of 2009 in the Court of Appeal' and 'these two defendants and these two cases are inextricably linked and cannot be separated'.[5]

21 He submitted that the orders of 17 August 2008 and 24 April 2009 were made against Michael Palmer and it was those orders that were being appealed.

Furthermore, the Applicant has been afforded the opportunity to speak on behalf of Virgin Investments Pty Ltd on some 6 separate occasions now in respect to these matters - in the Supreme Court of Victoria, the Supreme Court of Victoria, Practice Court and the Supreme Court of Victoria, Court of Appeal.

I submit that Applicant [sic] would therefore have standing to have this application heard either in his own right or as sole Director, Shareholder and Secretary of Virgin Investments Pty Ltd.[6]

23 The applicant's affidavit was largely inadmissible, as it consisted principally of submissions. He submitted that his application for special leave had a substantial prospect of success because:

(a) It sought the High Court to uphold its decision in Halford v Price[7] that a law firm were not an entity;

(b) The Supreme Court Rules did not permit a law firm to indorse a writ and statement of claim. Alternatively, the Supreme Court Rules were 'not law' but 'administrative guidelines' and could not override Halford v Price or the requirements of s 127 of the Corporations Act 2001 (Cth) in the event of inconsistency;

(c) Buchanan JA and Kyrou AJA, 'in a case following the appellant's, had held that a default judgment was not interlocutory requiring leave to appeal, which inconsistency constituted evidence of error;

(d) 'New evidence has been uncovered ...which proves that the plaintiff ...knew that the signature on the documentations' was not that of the applicant and had sought to have the matter investigated as fraud, which would prove that Buchanan JA and Kyrou AJA erred in rejecting the submission that the documentation was not signed by the company or the applicant;

(e) the applicant had a 'trial underway' in relation to the litigation, which had not been dismissed as untenable, thereby establishing that Buchanan JA and Kyrou AJA had erred in denying him leave to appeal;

(f) the writ and statement of claim referred to the laws of Australia and 'there is no such thing as Law of Australia'; and

(g) RBA statistical figures evidenced that the respondent's claim was 'physically impossible' as no loan was ever advanced and there were actions of fraud, deceit and misleading conduct.

24 Mr Brown, in opposition to the application, deposed that following the execution of the warrant of possession on 1 June 2009, a notice was attached to the front window of the property and an eviction report and field report were prepared. A real estate agent was appointed to market and sell the property and a sign reading 'Forthcoming Auction' was attached to its boundary fence.[8] At the hearing of the application, we were informed that an auction of the property is scheduled for 25 July 2009.

25 The property was valued for the respondent by LMW Residential at a market value as of 4 March 2009 of $1,650,000 and at a forced sale value of $1,525,000.[9] Before us, the applicant sought to rely on a market appraisal of the property by Hocking Stuart dated 15 July 2009, which opined that the current market worth of the property was in the vicinity of $1,700,000 to $1,750,000, and perhaps more at a competitive auction. In the absence of objection by the respondent, we received the appraisal document provisionally. It was, however, an informal market appraisal directed to the applicant only, in contrast to the LMW Residential valuation report.

I am informed by Colleen Haigh of Bluestone Mortgages and verily believe that the amount owing to the respondent by the Company pursuant to the loan and mortgage as at 5 June 2009 is $1,662,570.08. The respondent is entitled to charge interest on the debt at the default rate of 11.44%, or $521.09 per day. Based upon the valuation figures and the current debt it seems clear that the sale of the Property will not clear the debt. Interest and costs continue to accrue, increasing the shortfall. The respondent will suffer ongoing prejudice if a stay is granted.

In my experience an application for special leave could take many months to be heard and at the default rate, the debt could increase with interest at the default rate of approximately $15,632.00 per month. No payments have been made by the Company (borrower) and applicant (guarantor) for over one year.[10]

27 On analysis, the applicant in essence seeks from the Court a stay of the default judgment which was entered against the company and an associated 'stay' of the orders dismissing the application to set it aside, the appeal to a trial judge from that application and the Court of Appeal's refusal of leave to appeal therefrom and its dismissal of the purported appeal, pending the hearing and determination of the application for special leave to appeal to the High Court (and any resultant appeal).

28 Although the applicant was not a party to the default judgment, the application to set it aside or the appeal to Smith J from the dismissal thereof, he was the sole appellant from the order of Smith J and the sole applicant for leave to appeal therefrom. He is also the sole applicant for leave to appeal to the High Court from all orders, including those made against the company only. Mr Palmer informed us that he is, and has been for some time, the sole director, secretary and shareholder of the company.

29 Pursuant to r 1.17 of the Supreme Court Rules, the applicant, who is not legally qualified, required leave to take steps on behalf of, or represent the company.

30 As appears from exhibit APB13 to Mr Brown's affidavit, Evans AsJ on 6 May 2009 ordered that an additional warrant of possession be issued and on 20 May 2009 refused to grant the applicant leave to represent the company. It would appear that Cavanough J subsequently dismissed an appeal from the decision to issue the warrant, but granted the applicant leave to represent the company.

31 In summary, while the applicant has no apparent standing or interest in relation to the judgments and orders against the company, he, rather than the company, is the applicant for leave to appeal to the Court of Appeal and the High Court.

32 In Jennings Constructions Ltd v Burgundy Royale Pty Ltd No 1 ('Jennings'),[11] Brennan J considered the principles applicable to the grant of a stay pending the hearing of an application for special leave to appeal. His Honour observed that s 77U of the Judiciary Act 1903 (Cth) applied when an appeal has been instituted, but did not apply to an application for special leave to appeal. His Honour recognised that the High Court nevertheless had an inherent jurisdiction to grant a stay pending the hearing of an application for special leave to appeal, which would arise 'if an application for special leave to appeal would be futile unless a stay is granted'.[12]

33 The jurisdiction was 'an extraordinary jurisdiction', which would not be exercised in the absence of special circumstances.[13]

34 Brennan J stated that the factors material of the High Court's discretion in exercising the jurisdiction were:

(a) whether there is a substantial prospect that special leave to appeal will be granted;

(b) whether the applicant has failed to take whatever steps are necessary to seek a stay from the court in which the matter is pending;

(c) whether the grant of a stay will cause loss to the respondent; and

(d) where the balance of convenience lies.[14]

35 His Honour noted that the application should first be made to the court below, and, in the case before him, that court, not wishing to pre-empt the High Court's view, had granted a short stay. His Honour considered that if the court below considered a stay to be appropriate, it should in future frame the order in such a way as to avoid the need for an application to the High Court.

36 Jennings makes clear that although s 77U of the Judiciary Act 1903 (Cth) does not confer jurisdiction to grant a stay pending the hearing of an application for special leave, both the High Court and an intermediate court of appeal have jurisdiction to grant a stay in such circumstances.

37 It is unclear, however, whether Brennan J's statements in Jennings constituted an exhaustive and prescriptive characterisation of the basis of an intermediate appellate court's jurisdiction to grant a stay pending an application for special leave and the factors relevant to its exercise, or whether some statements applied only to the High Court's exercise of jurisdiction in such an application.

38 The Court of Appeal has the power to grant a stay both pursuant to its inherent jurisdiction and the Supreme Court Rules.

Stay of execution

The Court may stay execution of a judgment.

Except so far as the Court of Appeal or a Judge of the Court, or an Associate Judge, as the case may be otherwise orders -

(a) an appeal shall not operate as a stay of execution or of proceedings under the decision appealed from;

(b) no intermediate act or step shall be invalidated.

41 I have previously summarised the well established principles applicable to the grant of a stay under r 64.25 in Maher v Commonwealth Bank of Australia.[15]

42 Rule 64.25 refers in terms to an appeal, rather than an application for special leave. While it is arguable that rules confer the power to grant a stay pending an application for special leave, in Australian Football League, Maguire, Le Brocq & Shilbury v Carlton Football Club Ltd & Williams ('Carlton Football Club'),[16] Tadgell JA (with whom Hayne JA and Ashley AJA agreed) identified Brennan J's statement in Jennings (rather than rule 64.25) as the basis of the Court of Appeal's power to grant a stay in such circumstances. His Honour also stated, citing Sibuse Pty Ltd v Shaw (No 2) ('Sibuse'),[17] that 'the jurisdiction to grant such a stay can be properly exercised only when a stay is appropriate'.[18]

The preservation of the subject matter of the litigation is, of course, a relevant consideration affecting the question whether a stay should be granted. It is, however, only one of the considerations that are relevant. It is also relevant to consider whether there is a substantial prospect that any application for special leave will be granted.[19]

44 In Sibuse, the New South Wales Court of Appeal considered the principles applicable to its grant of a stay pending an application for special leave in the High Court, in the light of Jennings.

45 The majority, Hope and Priestley JJA, in a joint judgment, recognised that since Jennings, the Court of Appeal's approach to such stay applications had changed. Whereas previously it had granted only a short stay in order to permit an application to the High Court itself, after Jennings, it had acted upon Brennan J's encouragement to 'intermediate courts of appeal to feel no inhibitions, in cases where a stay seemed appropriate, against making an order accordingly, until the hearing of the special leave applications by the High Court'.[20]

However the observations of Brennan J in Jennings Construction were not in our opinion directed to the situation where the Court thought no stay should be granted at all.

...

It seems to us that applications for orders in the nature of a stay of judgment should be dealt with by this Court on the footing that the judgment it has just handed down is right, but also with a realistic recognition that it is open to reversal by the High Court. This Court's view of the likelihood of that happening will vary from case to case. As already indicated, orders in the nature of stays are frequently made because of this Court's recognition of the arguability of an appeal in the High Court, if that Court were to grant special leave.[21]

47 Hope and Priestley JJA concluded that in the circumstances of the case before them (where it appeared probable that criminal offences were being committed by use of the subject premises as a brothel), 'the usual considerations flowing from the desirability of preserving the subject matter of litigation pending a possible appeal' could not have any significant weight.[22] They observed that the High Court would not be bound to approach an application for a stay 'on precisely the same basis as this Court'.[23]

48 Kirby P, while dissenting in relation to the order, characterised the principles and practice relevant to a stay similarly. His Honour also noted that 'most applications for special leave to appeal to the High Court from this Court are either refused or discontinued',[24] yet the protection of a stay could be necessary in order to avoid the frustration of the litigation or the rendering nugatory of the facility to seek special leave.

49 Kirby P observed that the Court of Appeal maintained its discretion 'to refuse such a stay where, for example, it deems such an application to be plainly hopeless.'[25]

50 In Advanced Building Systems Pty Ltd v Ramset Fasteners (Aust) Pty Ltd,[26] McHugh J observed that although exceptional circumstances must be demonstrated in order to obtain a stay in the High Court the applicant's burden was less onerous if special leave had been obtained.

51 In Bryant v Commonwealth Bank of Australia and Another,[27] Kirby J refused to stay a sequestration made against the applicant by a judge of the Federal Court and confirmed an appeal to the Full Federal Court, pending the determination of an application for special leave to the High Court.

52 Kirby J set out the applicable principles. His Honour observed that, although in some jurisdictions of Australia, at least, 'the stringency of the necessity, previously required, to show "special" or "exceptional circumstances"' had been relaxed, '[i]n the High Court, the old rule of stringency continues largely to be maintained, with particular force where no grant of special leave to appeal has yet been secured'.[28] The higher standard was justified in such a case, his Honour stated, because ordinarily it would have already proceeded through at least two tiers of the judicial process. His Honour also noted that success required something more than legal or factual error,[29] and that only a relatively small proportion of applications for special leave succeeded.

53 As McColl JA recently stated in Miller v Nationwide News Pty Ltd,[30] some New South Wales authorities[31] interpreted Sibuse to hold that the stringent test for stays pending special leave applications enunciated in Jennings applied only to the High Court and permitted intermediate appellate courts to adopt a less stringent test.

54 Her Honour observed that the High Court was aware of, and had not criticised, that approach.[32]

55 The Victorian Court of Appeal in Carlton Football Club relied on both Jennings and Sibuse. It recognised no tension in the authorities and did not refer to the possibility that they required or permitted a different, less stringent approach to a stay application brought in an intermediate court of appeal pending a special leave application.[33]

56 Although some states have modified the traditional test applicable to a stay, this Court's jurisdiction to grant a stay in a conventional case, whether pursuant to the rules or its inherent jurisdiction, is still characteristically invoked by special or exceptional circumstances, which encompass the likelihood that the appeal will otherwise be rendered nugatory. Such principles generally accord with Brennan J's description of the jurisdiction identified in Jennings. No fundamental difference is readily apparent.

57 It is, however, unnecessary to determine whether there are any differences in the basis or nature of the jurisdiction or the factors relevant to its exercise between the High Court and intermediate appellate courts or between intermediate courts inter se, because, in the present case, several fundamental considerations weigh against the present application.

58 Whatever the source of the jurisdiction to grant a stay in Victoria, it typically arises where it is necessary to preserve the subject matter or the integrity of the litigation, so that the relevant application or appeal would otherwise be rendered futile.

59 In the present case, in my opinion, a stay is not necessary to preserve the subject matter of the litigation or the possibility of adequate relief should the application for special leave to appeal and any consequent appeal succeed.

60 The applicant's lack of standing tends to obscure what he seeks to preserve by means of a stay. If it be the technical right to apply for special leave, a stay is unnecessary, as the applicant may proceed with that application unaffected by the refusal of a stay. If, however, as seems to be the case, it is the property, the company alone has the standing to apply to set aside the default judgment for possession of the property and for relief in relation to the refusal of that application.

61 Further, the traditional view that real property is necessarily unique, such that its loss is not compensable by damages, has been modified by modern authority. In Johnson v Cressy, Warren CJ and Coghlan AJA stated:

The applicant appears to be primarily submitting that the Prothonotary will sell the land for less than its market value. The applicant advances no evidence to support this allegation. Moreover, if the applicant is successful in his appeal, he would be entitled to be repaid the proceeds of sale. There is no evidence that if he was reimbursed he would be unable to purchase a similar investment property in a similar area. Further, there is no evidence or even a suggestion that he is at risk as to repayment of the proceeds of sale. The fact that the property may have a special significance to the applicant, and none has been made out, would not ordinarily justify a direction that the Prothonotary be prevented from exercising the power of the sale.[34]

62 In the present case, there is no evidence that the property is irreplaceable or of special significance to either the company or the applicant, such that damages would not constitute adequate compensation in the event of success on any appeal. Indeed, the applicant adduced no admissible evidence that he had any entitlement to, or interest in, the property. He asserted that it had previously been his residence and its sale would compromise his ability to prepare his appeal. The applicant also asserted that the property was owned by the company in its capacity as the trustees of a trust, of which he was a beneficiary. He provided no details of the trust or the basis, terms or length of his occupation of the property.

63 There was no evidence that the sale of the property would adversely impact upon the applicant, who advised us that he had already vacated it. While it appears that the respondent sued the applicant in his capacity as a guarantor of the company's debt (and it may be inferred that a shortfall in the proceeds of sale would adversely affect his position) any loss would be compensable by an award of damages.

64 Therefore, I am not persuaded that a stay is required to preserve the subject matter of, or the capacity to award relief in, any litigation. It follows that the jurisdiction to grant a stay does not arise, or that a fundamental factor which characteristically invokes it is absent.

65 Further, in my opinion, there is no substantial prospect that special leave to appeal would be granted. Special leave applications are rarely granted.[35] The

applicant identified no valid question of wide general importance or public concern. Although mere legal or factual error will ordinarily not suffice for a grant of leave, the applicant's arguments (which essentially reiterate in various guises, those rejected by Smith J, Buchanan JA and Kyrou AJA) are, in any event, in my view based on fundamental misconceptions of the relevant issues and devoid of merit.

66 The applicant asserted that the balance of convenience favoured a stay because the property was his residence, its sale would handicap his preparations of an appeal, and that it was likely to be sold for less than its true market value in an unfairly accelerated fire sale. There was no evidence before the Court to support an inference of misconduct or breach of duty in relation to the proposed sale of the property. Remedies are, moreover, available should any breach of duty in relation to the sale subsequently be established.

67 The respondent is prima facie, entitled to the fruits of its judgment. It has set in train arrangements for sale. An auction has been scheduled for late July 2009. The debt is currently accruing at the rate of approximately $15,000 per month. The applicant did not dispute that no payments have been made. The respondent's valuation of the property approximates the balance of the debt, giving rise to a strong probability of a shortfall with no identified source from which it can be recouped.

68 In my opinion, the application should be dismissed.

[1] Contrary to the applicant's submission before us, the company was the sole party to the appeal.

[3] Applicant's Outline of Submissions, filed 2 June 2009, [5] and [14].

[4] Affidavit of Michael Gareth Palmer, filed 28 May 2009, [15].

[5] Applicant's Outline of Submissions, filed 2 June 2009, [8].

[8] Affidavit of Andrew Phillip Brown, filed 9 June 2009, [11].

[16] (Unreported, Supreme Court of Victoria, Court of Appeal, Tadgell and Hayne JJA and Ashley AJA, 1 August 1997).

[17] (1988) 13 NSWLR 125, 131-2 (Hope and Priestly JJA).

[18] Australian Football League, Maguire, Le Brocq & Shilbury v Carlton Football Club Ltd & Williams (Unreported, Supreme Court of Victoria, Court of Appeal, Tadgell and Hayne JJA and Ashley AJA, 1 August 1997), [1].

[27] (1996) 134 ALR 460; [1996] HCA 3.

[31] Her Honour cites Advanced Building Systems Pty Ltd v Ramset Fasteners (Aust) Pty Ltd [1997] HCA 24; (1997) 145 ALR 121; Bryant v Commonwealth Bank of Australia and Another (1996) 134 ALR 460 and White v State Bank of NSW [2002] NSWCA 408 (Giles JA).

[33] See, for example, Minister for Local Government v South Sydney City Council (No 3) [2002] NSWCA 327 (Spigelman CJ).

[34] [2009] VSCA 123, [50]. Also see Tabet v Commonwealth Bank of Australia Ltd [2008] VSCA 197.

[35] In Stingray Boats v Denmeade [2003] FCA 1172 Spender J stated:

[8] It is a fact that only a relatively small proportion of applications for special leave succeed. The reason for that is not hard to see. The High Court, in considering a special leave application, is not concerned with the question simply of whether there has been legal or factual error by the courts below the High Court. It is not, in that sense, an ultimate Court of Appeal. It is concerned with exercising a jurisdiction which focuses on questions of wide general importance, or of considerable public concern.

[10] Much of that lack of success is because there is not demonstrated either a strong public interest in the matter or a matter of general principle applying beyond the circumstances of the particular parties to a particular piece of litigation.

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