Plaintiff v Defendants

Supreme Court of Victoria|2005-05-10|Before: WHELAN, J.

PRACTICE AND PROCEDURE - Claim of set-off - Application to amend Reply and Defence to Counterclaim after trial - Amendment not allowed.

PRACTICE AND PROCEDURE - Interest - Supreme Court Act 1986 ss 58, .

PRACTICE AND PROCEDURE - Costs - Application of contractual provision entitling party to costs indemnity.

PRACTICE AND PROCEDURE - Stay of execution of judgment - Applicable principles.

For the Plaintiff and the Defendants to the counterclaim

For the Defendants and the Plaintiffs to the counterclaim

1 On 22 December 2004 I delivered reasons for judgment in this matter.[1] I indicated that I would make orders in favour of WPG[2] against Reading Australia and Reading Properties for $3,000,000 plus interest, in favour of WPG against Reading Australia for $100,000 plus interest, and in favour of Reading Australia against Ms Khor, Mr Burr and Burstone Victoria in the sum of $2,200,000 plus interest, and such other orders as were necessary to give effect to those reasons. These reasons assume knowledge of my reasons for judgment delivered 22 December 2004.

2 On Wednesday 30 March 2005 this matter and two related matters were re-listed. The following issues were raised and require determination:

(a) The orders that should be made in this proceeding and in particular, whether certain set-offs sought by the Reading parties should be taken into account, and whether amendments to enable those set-offs to be made should now be permitted;

(b) the interest that should be allowed on the amounts the subject of the proposed orders;

(d) the further disposition of the two related proceedings, 7844 of 2000 (the winding up proceeding), and 4949 of 2003 (the USIPF proceeding).

3 On 6 May 2005, I heard the parties further on questions of interest and the form of certain of the orders.

4 The Reading parties submitted that the orders made in WPG's favour should give effect to a set-off in favour of Reading Australia "given that WPG is indebted to Reading Australia in the sum of $1,004,762."

5 A debt of $1,004,672 owed by WPG to Reading Australia is referred to in my reasons at para [470] in the context of the assessment of damages. The evidence concerning this loan (and a loan of the same amount by Burstone Australia), upon which this reference was founded, was an analysis of loss by an expert witness called by the Burstone parties, Michael Smith. His witness statement is Exhibit B771. Amongst the material he produced was a balance sheet for WPG as at 31 October 2001, which records loans of $1,004,672 each by Burstone Australia and Reading Australia. These loans do not appear in the WPG balance sheet as at 30 April 2000, which Mr Smith also produced.

6 In paragraphs 67 to 72 of the Sixth Further Amended Defence and Counterclaim, a claim is made seeking recovery from Reading Australia in favour of WPG of town planning costs. In the trial, the amount owing for these costs was agreed to be $100,000. In paragraph 118 of Reading's Reply and Defence to Counterclaim, it is alleged that, from time to time, Reading Australia made payments in respect of preparing a concept development plan and town planning costs, that the amount of those payments total $1,400,762.11, and that Reading Australia is an unsecured creditor of WPG in the sum of $1,400,762.11. In paragraph 119, Reading Australia pleads that if it is indebted to WPG for town planning costs it is entitled to set-off against that sum, the sum of $1,400,762.11 referred to in paragraph 118.

7 No evidence was led at the trial in relation to the terms of the loans to which I referred in my reasons. In particular, no evidence was led as to whether the loans bear interest, or as to whether they are repayable on demand or at any other time. Save for a reference in a written submission in response to submissions made by the Burstone parties on reliance loss, no submission was made concerning the loans or any set-off based upon them by the Reading parties. The Reading pleading, as it stands, alleges a debt of $1,400,762.11 for costs related to concept development plans and for town planning costs. No evidence was led at the trial as to any such debt. Assuming that the debt referred to in the pleading is intended to be the loan to which I referred, the pleading incorrectly alleges both the amount of the debt and its description. No such debt as pleaded was established by the evidence. The pleading as it stands then seeks to set-off that erroneously described debt, for an erroneous amount, against the town planning costs claim, and not against other claims WPG has against Reading Australia.

8 On 30 March 2005, Mr Glacken, counsel for the Reading parties, applied to amend paragraphs 118 and 119 so as to introduce a wider description of the debt, to alter the amount to $1,004,762 (still not the same figure as appears in Mr Smith's balance sheet), and to seek to set that sum off against any indebtedness of Reading Australia or Reading Properties, not only for town planning costs but also in damages. The inclusion of Reading Properties in the amended set-off plea was not originally foreshadowed but was included in an amended proposed amendment handed up during the hearing.

9 The application to amend was opposed by the Burstone parties.

10 I am not prepared to allow these amendments at this stage. It may be that, if the matter were explored, the amount and the relevant terms of these loans would be uncontroversial, but I cannot presume that to be so. The debt referred to in the existing pleading has not been established by the evidence, but it is probably one of the loan debts erroneously described. I referred to these loans in the context of assessing damages, and the Reading parties referred to them in the context of reliance loss submissions, but they were not the subject of evidence or submission sufficient for me to now give, in effect, judgment for the recovery of one of them by way of reduction in the amount of the judgment to which WPG is entitled. I do not think the evidence should now be re-opened to enable that position to be rectified, and no application was made to that effect in any event.

11 The application to amend is refused. The pleaded set-off has not been established in this proceeding. Any loan debt between relevant parties may need to be taken into account when the question of satisfying the judgment arises.

12 The debt of $2,200,000 owed by Ms Khor, Mr Burr and Burstone Victoria to Reading Australia is due under the Loan Agreement, which provides for interest at the rate of 7.5% per annum, compounded annually in arrears. In the Writ, interest at this rate is expressly claimed "to the date of issue". The date of issue was 30 October 2000. Interest is also claimed pursuant to statute. I will allow interest at the contract rate to 30 October 2000 as claimed, and thereafter until today at the rate provided for in s.58 of the Supreme Court Act 1986 (Vic). The parties agreed that interest calculated on this basis to 6 May 2005 totalled $1,946,288.13; to 10 May it totals $1,949,717.50.

13 I reject the submission made on behalf of the Burstone parties that s.58 is not applicable: David Leahey (Aust) Pty Ltd v McPherson's Ltd.[3] I also reject Burstone's contention that interest under the Loan Agreement is not payable from the date of the loan. I find that it is, and I have allowed interest at the contract rate from 21 November 1997.

14 As to interest on the damages in favour of WPG, the applicable provision is s.60 of the Supreme Court Act. The Reading parties submitted that I should not allow damages in the nature of interest from the commencement of the proceeding by counterclaim (7 December 2000), but rather should only allow interest from 10 August 2004, when it was submitted that the opportunity loss claim was first pleaded, or from 9 March 2001 when, it was said, WPG was first joined.

15 As I observed in my judgment,[4] the claim under the agreement to lease was introduced as a claim by a beneficiary to enforce the rights of a trustee (WPG) consequent upon leave given by Mandie J on 9 March 2001. It is not true, however, that WPG was first joined by that order. WPG was the second defendant to the counterclaim at its inception on 7 December 2000. That original Defence and Counterclaim pleaded that WPG was trustee of the Whitehorse Property Unit Trust, that it was lessee of the Property, that it was a party to the joint venture agreement, that Reading had agreed to construct a cinema complex which would be owned by WPG and which WPG would lease to Reading, that Reading breached the joint venture agreement by, amongst other things, informing Burstone that it would not construct the cinema complex in any circumstances, that Burstone had suffered a loss represented by the loss in the value of its units, and that WPG "is joined as a defendant to the counterclaim as a necessary and proper party but no relief is sought against it". There are obvious deficiencies in the claim as originally pleaded compared to that which succeeded in due course. The significant deficiencies for present purposes are the absence of any claim against Reading Properties under the agreement to lease, and the absence of a claim on behalf of WPG to recover its loss, as opposed to the derivative loss said to have been suffered by the unit holder. These deficiencies constitute good cause for not applying the express provisions of s.60.

16 The first of these deficiencies was rectified on 9 March 2001. Whilst it is true that, as far as the claim against Reading Australia is concerned, the second of these deficiencies was not finally and unambiguously rectified until the amendments made on 10 August 2004, in my view there was enough of the substance of the claim which eventually succeeded present in the pleading from 9 March 2001 to warrant damages in the nature of interest from that date. In this respect, in addition to the paragraphs of the original Defence and Counterclaim referred to above, I refer to the Amended Defence and Counterclaim dated 19 February 2001, which was the subject of Mandie J's order of 9 March 2001. In particular, in addition to the allegations against Reading Properties, I refer to the allegations added in paragraph 18A and in the prayer for relief paragraph 1B against Reading Australia.

17 I will accordingly allow damages in the nature of interest at the maximum prescribed rate on the $3,000,000 damages from 9 March 2001. The parties agreed that figure at $ 1,449,731.51 to 6 May 2005. Extended to 10 May 2005 it amounts to $1,453,512.11.

18 As to the sum of $100,000 due for town planning costs, the Burstone parties seek interest at the prescribed rate under s.58 from the date of commencement of the proceeding. The claim was first introduced in the Amended Defence and Counterclaim dated 19 February 2001, filed on 20 February 2001, and the subject of the order of Mandie J made 9 March 2001. I will allow interest under s.58 from the date that the pleading first introducing the claim was filed, being 20 February 2001. The parties have agreed that that figure is $48,897.26 to 6 May 2005. Extended to 10 May 2005, the figure amounts to $49,023.28.

19 The parties made written and oral submissions on costs. The Burstone parties submitted that the counterclaim had succeeded and that an order for costs should be made in their favour. They conceded that Reading Australia was entitled to an order for costs on the claim. The Reading parties submitted that there was no absolute rule that costs follow the event; that Reading Australia was contractually entitled to its costs on an indemnity basis under the Loan Agreement and the Securities Mortgage; that the counterclaim by Burstone Victoria (for its derivative loss) and by Ms Khor and Mr Burr, as well as their attempts to establish a set-off, had failed; that on many issues in the counterclaim the counterclaimants had failed; that Ms Khor and Mr Burr were litigants in person acting for themselves; and that Burstone Victoria, Ms Khor and Mr Burr had not done better than the terms of an offer of compromise made on 25 July 2002.

20 The Loan Agreement between Ms Khor and Mr Burr as borrowers, Reading Australia as lender, and Burstone Victoria as guarantor provides that Ms Khor and Mr Burr shall pay to Reading Australia,[5] and Burstone Victoria guaranteed payment,[6] of the "Monies Advanced". That expression is defined to include "all costs, expenses and fees calculated on a full indemnity basis, incurred by the Lender ... in acting in or about recovery ..." of the Monies Advanced.[7] Under the Securities Mortgage, "Secured Moneys" is defined to include " ... all reasonable legal and other costs, charges and expenses (including all legal and other costs charges and expenses as between solicitor and own client) of and incidental to ... the performance or the failure to perform by the Mortgagor or the Borrowers of their obligations ..."[8]

21 The Reading parties submitted that under these provisions Reading Australia was entitled to all costs reasonably and properly incurred in both recovering the secured loan debt and in defending the counterclaim relied on to impeach its title to sue. They submitted that the Court's discretion as to litigation costs should ordinarily be exercised so as to reflect the contractual entitlement.

22 In relation to this submission two principles seem to be clear. They are:

The question in each case is ultimately one of construction of the contractual provisions in question: Elders Trustee & Executor Co Ltd v EG Reeves Pty Ltd.[9]
Costs incurred in resisting an attack on a security may fall within cost recovery provisions of this kind, depending upon the ambit of the particular provisions in question: Elders Trustee & Executor Co Ltd v EG Reeves Pty Ltd;[10] Perpetual Trustees Australia Ltd v Barker.[11]

23 What is less clear is the relationship between the operation of contractual provisions of this kind and the Court's discretion as to costs. Neither party addressed submissions to this issue, and the authorities are divided.[12] My view, without having heard argument, is that the analysis of the New South Wales Court of Appeal in Abigroup Ltd v Sandtora Pty Ltd[13] is correct and that the contractual right simply stands independently of the curial power and order. The Reading submission sought to rely on the contractual provisions to recover costs reasonably and properly incurred in protecting its rights as lender and mortgagee on the basis that the Court's discretion should ordinarily be exercised so as to reflect the contractual entitlement. The uncertainty in the authorities to which I have referred has little practical significance if I accept Reading's submission in this respect. I do accept the principle for which Reading contends. I do not accept that the consequences are as Reading contends.

24 In my view, the costs incurred by Reading Australia in litigating the issues pleaded in its statement of claim and in resisting the set-off alleged by Ms Khor, Mr Burr and Burstone Victoria fall within the contractual provisions. The allegations in the statement of claim were substantially admitted. The set-off allegations were controversial both as to the claims upon which they were based (including repudiation of the joint venture agreement and the agreement to lease) and as to any entitlement in the borrowers and guarantor/mortgagor to rely upon those claims themselves. The significant factual issues in the case fell within the first area of controversy. On those issues, the Reading parties substantially failed. In the second area of controversy, they substantially succeeded. Indeed, by final addresses the Burstone parties had virtually abandoned the contention that the borrowers and the guarantor/mortgagor had relevant claims, the entire emphasis being on claims recoverable for WPG.

25 As indicated, in my view, the exercise of my discretion on costs should reflect the contractual entitlement of Reading Australia. In that respect, it should also reflect an entitlement on an indemnity basis as provided for in Rule 63.30.1. That is what the contractual provisions require. This entitlement should, however, be confined to the costs of the claim and the costs of resisting set-off, and should exclude the costs of resisting the successful claims made on behalf of WPG.

26 At paragraphs [14]-[17] of my reasons for judgment, I set out the principal issues in the proceeding as it was litigated before me. The pleadings raised a plethora of issues. Reviewing the history of the pleadings, there appears to have been a process of "ratcheting up" of the complexity of the matter as each party responded to the claims or defences of the other. The Burstone parties did fail to establish a number of the matters pleaded and a number were abandoned.[14] On the principal issues before me, the Burstone parties substantially succeeded. Whilst I accept that there is no absolute rule that costs follow the event, in my view the order here should reflect the fact that the Burstone parties did substantially succeed.

27 As to the submission that as litigants in person Ms Khor and Mr Burr ought not to recover any costs, without accepting that the position here is correctly characterised in that way, in Victoria the position remains that solicitor litigants are an exception to the rule: Brott v Almatrah.[15]

28 On 25 July 2002, Reading Australia and Reading Properties made an offer of compromise. It was in two parts. The first part offered to pay WPG in respect of the town planning costs claim (then in paragraphs 30 to 41 of the Second Further Amended Defence and Counterclaim) the sum of $400,000. On any view, less has been recovered. The Reading parties submit Rule 26.08(3) is "engaged". I agree that the costs order should reflect the position provided for by Rule 26.08(3) on this claim.

29 The second part of the offer of compromise offered to pay the plaintiffs by counterclaim $100,000 to compromise all other claims. Whilst it is true that the plaintiffs by counterclaim, Burstone Victoria, Ms Khor and Mr Burr, have not recovered anything for themselves, the claim advanced by them under the joint venture agreement to which they are all parties, and under the agreement to lease to which WPG is a party, has resulted in a recovery for WPG, the joint venture vehicle, of substantially more than $100,000. The offer is less favourable to the plaintiffs by counterclaim than the judgment. To the extent that that assessment is not accepted, the Court should in the circumstances here exercise the power to "otherwise order" in Rule 26.08(3) in any event.

The counterclaim has substantially succeeded on the principal issues.
Reading Australia should recover its costs on an indemnity basis on its claim, and in resisting the set-off claims, but excluding the costs of the principal issues raised on the counterclaim upon which it has failed.
Notwithstanding success on the principal issues, there are a number of issues which the plaintiffs to the counterclaim abandoned and a number upon which they failed. The costs order should recognise that position.
Reading Properties only became a party in March 2001. It is not entitled to any contractual costs recovery. The counterclaim against it succeeded on almost all issues.
Reading Australia should have the benefit of the operation of Rule 26.08(3) in relation to the town planning costs claim as a result of the offer of 25 July 2002.

31 In paragraph 14 of their written submission the Reading parties submit:

"Recognising that there are practical difficulties in awarding costs on an issue by issue basis in cases where neither party is wholly successful, the better approach is to apportion costs between the parties. The effect of these considerations is that any costs that would follow the apparent result of the counterclaim in favour of WPG are cancelled out by the liability of Burstone, Khor and Burr for costs as the unsuccessful parties and by their liability for costs on unsuccessful issues."

32 I agree that apportionment is a more practical and satisfactory approach than the approach of making separate orders. Further, it seems to me that I ought to endeavour to give full effect to Reading Australia's contractual entitlement to indemnity costs in the order which I make so that that issue ought not to have to be re-litigated in any other forum, if it be correct that the contractual entitlement stands entirely outside the costs discretion.

33 As the Burstone parties were substantially successful on the principal issues litigated, and as all of them, including Ms Khor and Mr Burr, were parties to the central agreement, being the joint venture agreement, it seems to me that the starting point ought to be an order for costs on a party-party basis in their favour.

34 Reading Australia is entitled to its costs on an indemnity basis for its recovery proceeding, being the claim made in the Writ itself, and for its costs in resisting the set-off claims, to the extent that those costs are not related to litigation of the issues upon which the Reading parties failed. The costs to which Reading Australia is so entitled, are a modest proportion of the total costs. The allegations made in the Writ were, save for the issues raised by the counterclaim, admitted. When one excludes costs related to the issues upon which the Reading parties have failed, it seems to me that a reduction in the costs order in favour of the Burstone parties of 20% represents an appropriate allowance for Reading Australia's contractual costs entitlement.

35 A further reduction ought to be made for the issues raised by the plaintiffs to the counterclaim which they abandoned or upon which they failed, and allowance also needs to be made for costs related to the town planning issue incurred after 25 July 2002. A reduction of 20% of the Burstone parties' costs seems to me to be an appropriate reduction to reflect those considerations. To the extent that such an approach requires me to "otherwise order" under Rule 26.08(3) I should be taken to be doing so.

36 Reading Australia and Reading Properties are related companies. It seems to me that a single costs order against both entities is simplest and reduces the possibility of further dispute. This appears to me to be appropriate, notwithstanding that Reading Properties only became a party in March 2001, because the costs incurred prior to that date as a proportion of the total costs would be low, and because by making a single order Reading Properties is effectively sharing the benefit of Reading Australia's contractual entitlement to costs recovery. Further, as previously indicated, it can fairly be said that Reading Properties succeeded on very few issues on the counterclaim against it.

37 Taking all of these matters into account, the order I will make is that Reading Australia and Reading Properties pay 60% of the party-party costs of Burstone Victoria, Ms Khor and Mr Burr of the proceeding.

38 On 30 March 2005 I heard argument as to the further disposition of the two related proceedings. I indicated then that I would resume the trial of those proceedings on a date to be fixed. The date fixed is 20 June 2005.

39 An application was made on behalf of the Burstone parties for an order that WPG indemnify Burstone for the costs of the proceeding. No authority was cited in support of this application and no submission was made in relation to it other than that that would be a fair outcome. In all the circumstances, I consider that the costs orders I propose to make are the appropriate outcome and I am not prepared to make any order in relation to WPG.

40 The Reading parties sought a declaration as to their power of sale in respect of the securities held in relation to the loan. No such declaration is sought in the writ and I am not prepared to make the declaration sought in circumstances where the matter has not been raised in any pleading and was not the subject of any submission at trial. The orders sought by the Reading parties at the hearing on 30 March 2005 were judgment for recovery of the loan amount and a declaration in relation to the power of sale. I will give judgment for recovery of the loan amount. I will not make the declaration sought. The Writ claims orders for possession. The terms of those orders were not initially addressed by the parties and, at least in respect of the "Borrowers' Securities", the Writ does not identify the property in question with precision. I accordingly heard counsel further on the orders for possession on 6 May 2005. There was no substantial dispute on the appropriate form of those orders, and I will make them in the form in which they were presented by the Reading parties that day, with some minor amendments suggested by counsel for the Burstone parties.

41 Counsel for the Burstone parties submitted that I should not pronounce any orders until determination of the related proceedings. I do not think that is an appropriate course. The issues have been determined in this proceeding and judgment should be given. As part of that submission, the Burstone parties also contended for a stay of the orders, suggesting that eventually there should be some form of final reconciliation of all claims.

42 Counsel for the Reading parties resisted any stay. The Reading parties contended that any stay grants to Ms Khor and Mr Burr the practical advantages of the set-off for which they had unsuccessfully contended in the proceeding.

43 The starting point must be that a party entitled to a judgment ought ordinarily to be entitled immediately to enforce that judgment. This is so notwithstanding the wide power to grant a stay provided for in Rule 66.16.[16]

44 The circumstances which are relevant here seem to me to be the following:

Reading Australia's judgment against Ms Khor, Mr Burr and Burstone Victoria is for a loan of a fixed sum of money, plus interest, due pursuant to a written loan agreement. Repayment is well overdue.
The judgment the Burstone parties have succeeded in obtaining for WPG's benefit will, if paid now, fall under the control of one of the Reading parties, USIPF, which remains in control of WPG as controller. The USIPF proceeding concerns USIPF's conduct as controller. Contraventions of statutory obligations by USIPF are alleged. Certain of them are admitted. USIPF's continued entitlement to remain as controller is itself controversial and, as a result of submissions I have already heard, that controversy has real substance.
The trial of the three proceedings was ordered to be heard together, with evidence in one being evidence in all. On the joint application of all parties during the joint trial I adjourned the two related proceedings and continued on and determined this proceeding. The trial of the two related proceedings will resume on 20 June 2005.
1. Ms Khor, Mr Burr and Burstone Victoria have a costs order in their favour against Reading Australia. Whilst the amount due on taxation is likely to be significant, it is unlikely that it would approach the amount due to Reading Australia on the loan.[17]
2. The company WPG now serves little purpose and at some point it seems probable that it, and the trust of which it is trustee, will be wound up. That process ought to result in the benefit of the proceeds of the judgment in WPG's favour, moving to the unit holders, after payment of WPG's debts.
3. No issue has been raised as to any party's financial position, either by reference to the consequence for a liable party of requiring immediate payment, or as to concern about subsequent recovery of any amount paid now.[18] No issue has been raised concerning a stay pending any appeal.

45 On the judgment for recovery of the loan there are countervailing claims; one between the same parties, being my costs order in this proceeding; and one between related parties, being the USIPF proceeding.[19] While those factors are relevant, and do weigh in the balance in favour of a stay in this case, they would not on their own justify a stay. The costs order can be separately addressed and, on the present material, my assessment is that the relative size of any compensation likely to be ordered against USIPF compared to the amount due on the loan, militates against a stay.[20]

46 On the judgment for damages in favour of WPG, the fact that the damages might be paid into the control of USIPF is also a factor in favour of a stay, but, if that were the only issue, that could be addressed, by USIPF's removal, WPG's liquidation, or by other orders including restraints upon disposition or payment into court.[21] The Reading parties did submit that WPG's immediate winding up was appropriate, but that submission did not address the difficult problems which would then arise as a result of WPG's position as a trustee.[22] That is one of the matters to be dealt with on the resumption of the trial on 20 June 2005.

47 In my view, there should be a stay here until determination of the related proceedings. I have reached this view for the following reasons.

48 First, all three proceedings are, in the words of Cotton LJ in Automatic Weighing Machine Co v Combined Weighing and Advertising Machine Co,[23] cited with approval by the Full Court in Eastman v Wilson,[24] "intimately connected", and are being tried partly together and partly, in effect, immediately after each other. Both Cotton LJ and the Full Court seem to me to envisage that in such circumstances a stay of an order in the first action would be "highly probable". Here, the parties proceeded until a point late in the trial on the basis that all matters would be determined together. With the knowledge of the matters which I now have, it seems to me that the parties took a proper course in conducting the three proceedings together. The separation which has now occurred came late. Whilst judgment has been given in the main proceeding, I am in the middle of the trial in the related proceedings. The trial will resume in June. Execution at this point, with the related proceedings still unresolved, is not consistent with the manner in which the litigation has been conducted.

49 Secondly, given the security held by Reading Australia, and given USIPF's position as controller of WPG, execution at this point seems to me to be likely to result in a new round of disputes and litigation. It is desirable to complete the determination of these parties' existing disputes before they embark upon another series of potentially complex disagreements.

50 Finally, the stay will not be of long duration as the related proceedings are fixed for resumption of the hearing on 20 June 2005. The submission the Reading parties made about not producing a position practically indistinguishable from set-off is a valid one. Subject to hearing further submissions at the conclusion of all the proceedings, I do not think any stay should continue beyond the determination of the related proceedings.

51 In the circumstances I will stay my orders until the hearing and determination of the related proceedings or until further order and I will reserve liberty to apply.

52 There are a number of other matters which may arise as a consequence of the position I have reached concerning the stay. First, the parties may wish to apply to extend the time for appeal from my judgment in this proceeding. Secondly, given the interest which will otherwise run on the judgments,[25] a party liable may wish to pay the amount due into court. I will reserve liberty to the parties to apply on these matters.

53 Finally, I observe that it is most important that the related proceedings be heard and determined expeditiously. If it becomes apparent that that will not occur, the stay might need to be reconsidered. Further, there is now an opportunity to quantify the costs order in favour of the Burstone parties thereby eliminating that potential uncertainly.

(1) two shares in respect of which Burstone Victoria Pty Ltd is recorded in the register of members of Whitehorse Property Group Pty Ltd as the proprietor; and

(2) 2,239,000 issued units in the Whitehorse Property Group Unit Trust, constituted by a deed of trust dated 21 May 1996, as amended by a deed of amendment dated 21 November 1997, in respect of which Burstone Victoria Pty Ltd is recorded in the register of unit holders as the proprietor,

B. Copies of the certificates referred to in A. are in evidence, comprising:

(1) share certificates numbered 9 and 10 of share numbers 3 and 4, dated 21 November 1997; and

(2) unit certificates numbered 1,4,5,6,7 and 8, dated 21 November 1997,

as attachments to a letter dated 6 February 1998 from Khor & Burr to Phillips Fox, being exhibit R86.

C. The said shares and units comprise the Mortgagor's Securities under the Deed of Securities Mortgage dated 20 November 1997 between Reading Entertainment Australia Pty Ltd, as mortgagee, and Burstone Victoria Pty Ltd, May Khor and David Burr as mortgagees.

Judgment for the plaintiff against the defendants in the sum of $2,200,000 together with interest of $1,949,717.50.
Judgment for the second defendant by counterclaim against the first and third defendants by counterclaim in the sum of $3,000,000 together with damages in the nature of interest of

Judgment for the second defendant by counterclaim against the first defendant by counterclaim in the sum of $100,000 together with interest of $49,023.28.
Judgment in favour of the plaintiff for possession of:

(a) the shares in Whitehorse Property Group Pty Ltd in respect of which Burstone Victoria Pty Ltd is recorded in the register of members of Whitehorse Property Group Pty Ltd as the proprietor;

(b) the units in the Whitehorse Property Group Unit Trust in respect of which Burstone Victoria Pty Ltd is recorded in the register of members of Whitehorse Property Group Unit Trust as the proprietor;

(c) the share in Burstone Victoria Pty Ltd in respect of which May Khor is recorded in the register of members of Burstone Victoria Pty Ltd as the registered proprietor;

(d) the share in Burstone Victoria Pty Ltd in respect of which David Burr is recorded in the register of members of Burstone Victoria Pty Ltd as the registered proprietor.

Order that Burstone Victoria Pty Ltd execute and deliver up to Reading Entertainment Australia Pty Ltd, care of its solicitors, Middletons (reference Andrew Chambers):

(a) a transfer in writing in registrable form of two issued shares in Whitehorse Property Group Pty Ltd;

(b) a transfer in writing in registrable form of 2,239,000 issued units in the Whitehorse Property Group Unit Trust.

(a) May Khor execute and deliver up to Reading Entertainment Australia Pty Ltd, care of its solicitors, Middletons (reference Andrew Chambers), a transfer in writing in registrable form of one issued share in Burstone Victoria Pty Ltd;

(b) David Burr execute and deliver up to Reading Entertainment Australia Pty Ltd, care of its solicitors, Middletons (reference Andrew Chambers), a transfer in writing in registrable form of one issued share in Burstone Victoria Pty Ltd; and

(c) Burstone Victoria Pty Ltd and May Khor and David Burr deliver up to Reading Entertainment Australia Pty Ltd, care of its solicitors, Middletons (reference Andrew Chambers), all share certificates relating to the shares held in Burstone Victoria Pty Ltd by each of May Khor and David Burr.

Order that the plaintiff/first defendant by counterclaim and the third defendant by counterclaim pay 60% of the costs of the defendants/plaintiffs by counterclaim, including reserved costs, of this proceeding
Execution of these orders is stayed until the hearing and determination of proceedings 7844 of 2000 and 4949 of 2003, or further order.
Liberty to apply is reserved.

[1] [2004] VSC 546.
[2] Expressions used in this judgment have the meanings ascribed to them in [2004] VSC 546.
[3] [1991] VicRp 77; [1991] 2 VR 367 at 381.
[4] Paragraph [463].
[5] Clause 2.2.
[6] Clause 14.
[7] Clause 1(1).
[8] Clause 1.9 and see also Clause 19.
[9] (1988) 20 FCR 164 at 173-174.
[10] (1988) 20 FCR 164 at 174.
[11] [2004] SASC 58 at [32]- [33].
[12] Compare Elders with Perpetual Trustees.
[13] [2002] NSWCA 45.
[14] A list of these matters is set out in Attachment 4 to Reading's written submission of 18 March 2005.
[15] [1998] 2 VR 83 at 86-87.
[16] See State Bank of Victoria v Parry [1989] WAR 240 at 244; cf In the matter of UTSA; In the matter of an application by McCann (Unreported, Supreme Court of Victoria, Chernov J, 26 June 1998) at p4; see also Joskovitz v Bonnick [1964] VicRp 83; [1964] VR 654 at 656. The Rules of Court of some jurisdictions expressly require 'special circumstances' to be shown, by reason of which it is inexpedient to enforce the judgment or order, to justify a stay. Northern Territory authority has held 'special circumstances' to be necessary even when applying provisions identical to that found in Victoria (see Hansen v Northern Land Council (Unreported, Supreme Court of the Northern Territory, Angel J, 17 December 1998).
[17] Compare the situation in Bendigo Bank v Geller (Unreported, Supreme Court of Victoria, Beach J, 10 September 1996) and in In the matter of UTSA; In the matter of an application by McCann, (Unreported Supreme Court of Victoria, Chernov J, 26 June 1998).
[18] Impecuniosity may be relevant to the granting of a stay - see Eastman v Wilson [1938] VicLawRp 18; [1938] VLR 83; Joskovitz v Bonnick [1938] VicLawRp 18; [1938] VLR 83.
[19] A 'countervailing' claim, by which I mean a counterclaim, cross-claim or claim of set-off, is a relevant factor in considering whether a stay is appropriate. Even where the parties to a countervailing claim are not the same as the parties to the claim the execution of which is sought to be stayed, a stay may be appropriate: see eg Burnet v Francis Industries plc [1987] I WLR 802; Canada Enterprises Corporation Ltd v McNab Distilleries Ltd [1987] I WLR 813 (in relation to countervailing claims between related parties) and State Bank of Victoria v Parry [1987] WAR 240 (in relation to countervailing claims against a third party).
[20] State Bank of Victoria v Parry [1987] WAR 240 at 246.
[21] As suggested by Herring CJ in Joskovitz v Bonnick [1964] VicRp 83; [1964] VR 654.
[22] An illustration of the type of problems possible when a liquidator is appointed to a company in the position of trustee of a trust is seen in Irvine v Australia Sharetrading and Underwriting Ltd (1996) 22 ACSR 765.
[23] [1839] 61 LT 536 at 537.
[24] [1938] VicLawRp 18; [1938] VLR 83 at 85-86.
[25] See P Aker Flowerbulbs Pty Ltd v Coulter (2004) 212 ALR 606; [2004] FCA 1486.

At a glance

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Judgment (87 paragraphs)

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Cases Cited (2)