Secure Funding Pty Limited v Stark Secure Funding Pty Limited v Conway

Judgment The nature of the applications 1By Notice of Motion filed in proceedings 2012/266739, Mrs Jennifer Stark and Mr John Stark seek an order under Rule 36.16 of the Uniform Civil Procedure Rules 2005 (NSW) that a default judgment granting possession of a property situated at Green Point dated 30 January 2013 be set aside. That rule provides that the Court may set aside or vary a judgment or order if it has been made in the absence of party, whether or not the absent party had notice of the relevant hearing of the application for the judgment or order. 2Mr and Mrs Stark also seek an order under rule 28.5 of the Uniform Civil Procedure Rules that those proceedings be stayed pending the determination of proceedings brought by Staway Pty Limited (recs and mgrs apptd) (in liq) ("Staway") against, inter alia, the Plaintiff, Secure Funding Pty Limited ("Secure") ("Commercial List proceedings"). That rule provides that, if several proceedings are pending in the Court and it appears that they involve a common question, that the rights to relief claimed in them are in respect of, or arise out of, the same transaction or series of transactions, or that for some other reason it is desirable to make an order under the rule, the Court may order that any of the proceedings be stayed until after the determination of the other of them. Alternatively, Mr and Mrs Stark seek an order that any execution of enforcement of the judgment, including the execution of a writ of possession, be stayed pending the determination of those proceedings. Mr and Mrs Stark and Conway also rely on the Court's more general stay powers to grant a stay of proceedings under ss 67 and 135 of the Civil Procedure Act 2005 (NSW). 3In proceedings 2013/62391, Mr Rex Conway seeks broadly corresponding orders in respect of a default judgment dated 2 July 2013 in respect of properties situated at Harrington Park and Nelson Bay. These applications were heard together because they raised common questions in respect of the Commercial List proceedings which Messrs Stark and Conway have been granted leave to bring in the name of Staway. Background facts 4I should first set out several background facts which I understand to be common ground between the parties. 5In October 2010, Mr and Mrs Stark entered a loan agreement with Secure in respect of a borrowing of $750,000 and granted a registered mortgage over the Green Point property to Secure. The claim for possession is based on a failure to pay an amount of $5,716.57 due on 27 April 2012 and, as at 16 January 2013, Mr and Mrs Stark owed Secure in the order of $777,321 under the loan agreement. Also in October 2010, Mr Conway entered a loan agreement with Secure in respect of a borrowing of $422,000 and granted a registered mortgage over the Harrington Park property to Secure. On the same date, Mr Conway entered a loan agreement with Secure in respect of a borrowing of $553,000 and granted a registered mortgage over the Nelson Bay property to Secure in respect of that borrowing. The claim for possession is based on a failure to pay amounts of $35,098.73 in respect of the loan secured over the Harrington park property and $44,965.60 in respect of the Nelson Bay property due in December 2012 and, as at 17 April 2013, Mr Conway owed Secure in the order of $1,047,926 under the two loan agreements. The amounts owed by Mr and Mrs Stark and Mr Conway to Secure arise out of separate personal loan transactions with Secure, not out of the business transactions between Staway and Secure that are in issue in the Commercial List proceedings or any security given in respect of those transactions. 6Staway operated the Dale Ford dealership at Chullora, New South Wales, from May 2007 and entered into financing arrangements with Liberty Financial Pty Limited ("Liberty") and Secure in the period from March 2009, which were directed to financing motor vehicles sold at the dealership. In mid-February 2012, a meeting took place between representatives of Staway and Secure to address issues in those arrangements and, in the Commercial List proceedings, Staway contends that an agreement was formed at that meeting as to ongoing financing arrangements for the business. On 7 March 2012, Liberty served Staway with a default notice and, on that day, Secure appointed receivers and managers to Staway in circumstances that are the subject of the Commercial List proceedings. On 9 March 2012, the receivers terminated the employment of Mr and Mrs Stark and Mr Conway within the Dale Ford business and the receivers thereafter abandoned the business premises and sold certain other assets of that business. Staway was placed in voluntary liquidation on 7 September 2012. 7On 30 January 2013, Secure obtained a judgment against Mr and Mrs Stark for possession in respect of the Green Point property and an order for the payment of an outstanding balance of $787,645.26 inclusive of costs. On 2 July 2013, Secure obtained a judgment for possession against Mr Conway for possession in respect of the Harrington Park and Nelson Bay property and an order for payment of the amount of $1,074,003.90. Each judgment was obtained by default, in circumstances that the defendants had not filed a defence to the proceedings brought by Secure. 8On 21 June 2013, I delivered judgment ([2013] NSWSC 819) granting leave for Messrs Stark and Conway to commence and continue proceedings in the name of Staway against Liberty and Secure and the Commercial List proceedings have now been commenced. The claims made by Staway include contentions that the appointment of the receivers was invalid and, in particular, breached an agreement between Staway and Liberty in relation to the continued operation of the business or that Liberty and Secure were estopped from taking that course; that the conduct was unconscionable conduct in contravention of s 12CB of the Australian Securities and Investments Commission Act 2001 (Cth) or alternatively ss 21 and 22 of Schedule 2 to the Competition and Consumer Act 2010 (Cth); that Liberty and Secure were knowingly involved in certain breaches by the receivers of their duties; and that Liberty and Secure were "officers" or "controllers" of Staway for the purposes of s 9 of the Corporations Act and breached statutory duties attaching to them in that position. 9Staway's claim in the Commercial List proceedings is quantified as an amount in excess of $14 million. The amounts owing by Staway to Liberty and Secure are in the order of $6,100,000 and Staway contends that, if it were successful in full in the proceedings, it would be entitled to a payment of approximately $8 million. There is evidence of an agreement reached between Staway, by its liquidator, and Messrs Stark and Conway that, if damages are recovered in the Commercial List proceedings, 90% of the net damages will be paid by Staway to Messrs Stark and Conway. Mr and Mrs Stark and Mr Conway point out that, if successful in the Commercial List proceedings, their recovery, even if Secure was successful in its cross-claim against Staway (and against them personally as guarantors) would be in the order of $3.6 million. I held, in my earlier judgment, that the claim sought to be brought by Staway had, within the language of the authorities, "some solid foundation, in that it exhibits a degree of merit such as to be neither vexatious or oppressive and to present reasonable prospects of success" and that Staway had "at least a prospect of recovering damages" in the proceedings. It was not necessary for me to express a view, and I did not express a view, in the earlier judgment as to the amount of damages which would ultimately be recoverable. Evidence in respect of the applications 10Mr and Mrs Stark rely on a portion of Mr Stark's affidavit dated 25 February 2013 filed in the application in which he and Mr Conway successfully sought leave to bring the Commercial List proceedings against Liberty Financial Pty Limited ("Liberty") and Secure in the name of Staway. That evidence relates to steps which have been taken by Mr Stark to obtain other work since he and his wife were dismissed as employees of Dale Ford by receivers appointed to it. Mr Stark's evidence is, in effect, that he has been unable to meet the home loan repayments on the Green Point property owing to the financial circumstances brought about by the end of the Dale Ford dealership, which he in turn contends was the result of Liberty's and Secure's conduct pleaded in the Commercial List proceedings. His evidence is that he and his wife are unable to refinance or pay out the home loan as both are unemployed and he is 62 years of age and has had and is likely to have difficulty in obtaining new employment. 11Mr Stark's affidavit also sets out the basis on which damages are claimed in the Commercial List proceedings, by reason of an alleged breach or repudiation of a "go forward" agreement for which Staway contends in the Commercial List proceedings, by the appointment of receivers and managers and Liberty's subsequent conduct, including an alleged refusal to find a suitable purchaser for the dealership, a loss of stock and loss of value in assets of the business and loss of value of the goodwill of the business. Mr Stark estimates Liberty's total claims against Staway and on the residential mortgage loans of himself and his wife and Mr Conway as $7,839,301.75, including the residential loan for the Green Point property of Mr and Mrs Stark which he quantifies as $734,373.43; the residential loan for the Nelson Bay property of Mr Conway which he quantifies as $571,938.22 and the residential loan for the Harrington Park property of Mr Conway which he quantifies as $437,801.56. These figures broadly correspond to those noted in paragraph 5 above. 12Mr and Mrs Stark also rely on Mr Stark's affidavit of 2 April 2013 which relates to his superannuation entitlements and certain other assets, and on his further affidavit dated 22 July 2013 which provides a current statement of his and his wife's assets and liabilities and income and expenditure between March 2012 and the date of the affidavit. Mr Stark's evidence is that his only available funds for legal costs in the Commercial List proceedings is his superannuation fund, and he sets out an estimate of disbursements in those proceedings (including professional fees agreed to be payable at the conclusion of the proceedings) as approximately $240,000, which exceeds the balance available in his superannuation fund and an amount held on trust by his solicitors. He gives evidence that, if the order is made and executed for possession of the Green Point property, he has doubts that he would be able to pay for suitable rental premises at least for any reasonable length of time including to the conclusion of the Commercial List proceedings. Mr and Mrs Stark also rely on an affidavit of Mr Djevahirdjian dated 22 July 2013 which provides a valuation of certain watches which had been given to Mr Stark in the course of previous employment. Mr and Mrs Stark also rely on an affidavit of Richard Perry dated 8 April 2013, which provides a valuation of, relevantly, Mr and Mrs Stark's property at Green Point. 13Mr Conway also relies on the relevant paragraphs of Mr Stark's affidavit dated 25 February 2013, to which I have referred above. He relies on his affidavit dated 2 April 2013 which relates to his superannuation balance, on Mr Perry's valuation of his property at Nelson Bay and on a valuation by Mr Brook of his property at Harrington Park. Mr Conway also relies on his affidavit dated 22 July 2013 which refers to his difficulties in obtaining employment since he was dismissed by the receivers of Dale Ford and to his health issues. It is plain that Mr Conway has made numerous applications for alternative employment, without success. Mr Conway also refers to dealings with Liberty following the receipt of two notices of default dated 12 April 2012 and gives evidence that he is not able to pay the monies payable under the default judgment against him. 14Mr Conway's evidence is that he has no capacity to pay for rental premises if he is evicted from his home at Harrington Park and that his partner has been paying for food, electricity, gas and council rates on the premises from her earnings from a hairdressing salon and that he has applied to Centrelink for a disability pension and Centrelink is currently processing that application. He gives evidence that the balance of his superannuation fund and the amount held on trust by his solicitors currently totals about $144,278.87 and expresses the view that the expenses and costs of the Commercial List proceedings can only be paid from his superannuation fund and, if orders were made and executed for possession of the Harrington Park and Nelson Bay properties, he would not be able to afford suitable rental accommodation for the period to the conclusion of those proceedings. He also gives evidence that he does not have funds to pay any amount in the nature of rent or licence fees to occupy the premises. It should immediately be noted that evidence carries less weight in respect of the property at Nelson Bay, which appears to be a holiday property, since the sale of that property would not have any obvious impact on Mr Conway's day-to-day accommodation. 15Secure relies on the affidavit of Ms Lynne Jordan dated 8 August 2013, which exhibits a substantial number of documents relating to the business of Staway and Dale Ford including management accounts for the period 2008-2010. Secure relies on these documents to question the reliability of the financial records of Staway and Dale Ford, pointing to an acknowledgement by Dale Ford in a letter to Liberty dated 4 August 2011 that the balance sheet had "mapping issues" since inception and did not correctly reflect Dale Ford's position and to the fact that Dale Ford's accounts were not audited. Secure also contends that Dale Ford was suffering financial difficulty prior to 2011, being the point at which it contends, in the Commercial List proceedings, that it came under pressure as a result of the global financial crisis and delays in the delivery of vehicles as a result of natural disasters affecting offshore production facilities of Ford. Secure also contends that the lack of profits and negative asset position of the Dale Ford business questions any contention that it could be sold as a going concern. 16Secure also relies on the financial statements for Staway as trustee of the Dale Ford Unit Trust for the years ended 30 June 2009 and 30 June 2010, which indicated that Staway had carried forward losses for 2008 and 2009 and a negative assets position in both those years with its current liabilities greater than its current assets; had an increased negative net asset position and increased operating loss in 2010 and its current liabilities remained greater than its current assets; and in each year there were qualifications to the accounts as to whether they should be prepared on a going concern basis. Secure also relies on correspondence from Ford Credit to Staway in November 2009 expressing concerns as to Dale Ford's prior capitalisation and operating performance and a letter dated 18 May 2011 from Ford Motor Company indicated a limited extension of the Dealer Agreement as a result of concerns, inter alia, concerning the working capital position of the dealer. Secure also draws attention to concerns expressed by staff of Liberty as to the accounting for proceeds of cars financed by Liberty and sold by Dale Ford, and to the inability to locate a number of the financed vehicles at the time of audit of the vehicles. 17Mr and Mrs Stark and Mr Conway in turn rely, in reply, on an affidavit of Peter White, dealing, inter alia, with the question whether Staway's business had a material value at the time the receivers were appointed. There are significant qualifications to the views expressed by Mr White, given the limits to the information available to him, and, in particular, he was not able to assess Staway's financial position as at 7 March 2012 when it was placed in receivership. Mr White expressed the view that Staway's business had a material value but was unable to value the goodwill that an independent willing purchaser would have paid in March 2012. 18Secure objected to Mr Stark's evidence as to damages on the basis of relevance. Mr and Mrs Stark and Mr Conway in turn objected to Ms Jordan's affidavit of 8 August 2013 and the attached documents on the basis of relevance and under s 135 of the Evidence Act 1995 (Cth). Secure also objected to the affidavit and expert report of Mr White which Mr and Mrs Stark and Mr Conway read in reply on the basis of relevance and under s 135 of the Evidence Act. The parties, sensibly, recognised that the Court could not in this application determine the quantum of damages likely to be recoverable in the Commercial List proceedings, even on a preliminary basis, where both parties are likely to rely on extensive documentation and expert evidence in those proceedings. The parties agreed that the relevant evidence would be admitted, subject to relevance and subject to their objections, and on the basis that the Court would proceed on the basis of an agreed fact that: "The plaintiff in the Commercial List proceedings claims damages of $14 million as set out in the affidavit of Mr Stark dated 25 February 2013 and Mr Peter White dated 19 August 2013; Secure and Liberty dispute this claim and read the affidavit of Ms L Jordan; both parties agree for the purposes of the stay application it is unnecessary to resolve the quantum of the claim." The parties' contentions and applicable principles 19A person who seeks a stay must satisfy the Court that the requirements of justice demand it: Tringali v Stewardson Stubbs & Collett Pty Ltd [1966] 1 NSWR 354. The circumstances in which the Court may grant a stay of a writ of possession were summarised by Johnson J in GE Personal Finance Pty Ltd v Smith [2006] NSWSC 889. Such a stay may be granted, first, where a defendant indicates that the proceedings are to be defended, and a draft notice of grounds of defence should then be provided and the defendant should be in a position to make submissions concerning the merits of the proposed grounds; second, where the defendant indicates the loan is to be refinanced, proof of steps undertaken to refinance will be required on the application; and, third, where a defendant indicates that the property is to be sold, copies of certain documents should be provided. The applicants do not suggest that this application falls within those categories. In particular, it is not suggested that they have a defence to the claim for possession that could have been raised in the Common Law proceedings. However, as both parties accepted, the circumstances in which this power may be exercised is not limited only to those three categories. 20As I noted above, Mr and Mrs Stark and Mr Conway also rely on the Court's more general stay powers under ss 67 and 135 of the Civil Procedure Act 2005 (NSW). I summarised the principles applicable to that power in my judgment in Re Webuildem Pty Ltd [2012] NSWSC 708 at [13], on which Messrs Stark and Conway rely, as follows: "Section 67 of the Civil Procedure Act 2005 (NSW) provides that, subject to the rules of Court, the Court may at any time, by order, stay any proceedings before it either permanently or until a specified day. Section 135 of the Civil Procedure Act permits the Court to give directions as to enforcement, including an order prohibiting any person from taking any further action, either permanently or until a specified day, to enforce an order of the Court. The Court's power to grant a stay under s 135 of the Civil Procedure Act is exercisable where the interests of justice so demand; the person seeking a stay must satisfy the Court that the requirements of justice require one; and the Court has a wide discretion whether to grant a stay and whether terms should be imposed on the grant of such a stay: Joskovitz v Bonnick [1964] VR 654 at 656; Tringali v Stewardson Stubbs & Collett Pty Ltd [1966] 1 NSWR 354 at 360-361; Victorian Securities Corporation Ltd v Icehot Pty Ltd (recs and mgrs apptd) [2010] NSWSC 1413 at [9]." I note that, in Icehot, an application to stay a summary judgment against a party on the basis that other proceedings would be stultified where he was the only source of funding for them was unsuccessful on its facts. 21Mr and Mrs Stark and Mr Conway contend that their inability to repay the loans on the relevant properties directly resulted from the conduct which is the subject of the Commercial List proceedings. They submit that it would be unjust if their homes were to be sold, where the amount owing could be repaid out of damages awarded against Liberty and Secure, and that they should be permitted to pursue the Commercial List proceedings to repay the amounts owing on their respective home loans and on the loan on Mr Conway's second property. Mr and Mrs Stark and Mr Conway also contend that this is not a case where they have sought to raise a speculative claim in order to stave off an order for repossession. There was a dispute, which I do not consider it necessary to resolve, as to whether the claim that Staway brings had been foreshadowed before Secure brought the claims which resulted in orders for possession. I accept that Staway's claim is not merely speculative; that is the necessary consequence of my earlier judgment granting leave to bring it. Messrs Stark and Conway also submit that any stay should not be conditioned upon the payment of any licence fee, because their only available liquid assets would be needed to fund the Commercial List proceedings. 22Mr and Mrs Stark and Mr Conway contend that the consequence of an order for possession of the properties will be the stultification of the Commercial List proceedings, and refer to evidence that neither Mr Stark or Mr Conway can afford to pay rent, while concurrently funding the Commercial List proceedings, which is a term of the Court's leave to them to bring those proceedings in Staway's name. They contend that their respective superannuation funds are the only sources of payment of the legal costs required for the purposes of the proceedings. That proposition requires significant quantification, since, on the evidence of Mr Perry, the equity presently available to Mr and Mrs Stark in respect of the Green Point property, after the amount of the judgment in favour of Secure, is in excess of $860,000 without any forced sale discount. It appears from the valuations of Mr Perry and Mr Brook that the amount of equity available to Mr Conway, in respect of the Harrington Park and Nelson Bay properties, after satisfaction of the judgment in favour of Secure, is in the order of about $200,000 without any forced sale discount. A voluntary sale of those properties would, prima facie, provide an alternative means of both repaying Secure and funding the Commercial List proceedings. 23It should be noted that there was also a dispute as to the value of other assets owned by Mr and Mrs Stark. In a schedule to his affidavit dated 22 July 2013, Mr Stark had set out, inter alia, a substantial sum as the insured value of furniture and fine art which he and his wife own and referred to a motor vehicle with an insurance valuation of $50,000. Mr Stark gave oral evidence that qualified those estimates, including that the insured value of the furniture was a self-assessed replacement value, the value of the paintings was his own estimate and he did not know the amount for which they could be realised on a used market; and there was no equity in the motor vehicle which was also financed by Liberty. I see considerable force in those qualifications; however, it is not necessary for me to express a final view a final view as to those matters, given the extent of the equity of Mr and Mrs Stark in the Green Point property. 24Mr and Mrs Stark and Mr Conway point to a Cross-claim filed by Secure in the Commercial List proceedings as prejudicing their access to equity available in the properties if they are sold; however, if this proposition were correct, it would also undermine the value of any undertaking as to damages which they are prepared to provide as a condition of a stay. 25Mr and Mrs Stark and Mr Conway also submit that there is no evidence of prejudice to Secure arising out of the grant of a stay, pending the determination of the Commercial List proceedings. I cannot accept that submission. Each of Mr and Mrs Stark and Mr Conway offer an undertaking as to damages in respect of the stay that is sought. However, the evidence as to their financial position leaves open only two possibilities. The first is that, after a sale of the properties and other assets, monies would be available to them by reason of the extent to which their equity in the properties exceeds the amount of the relevant loans. If that is the case, it undermines their evidence as to the prejudice that they will suffer by reason of sale of the relevant properties, because it suggests that they would have funds to either purchase alternative accommodation or at least to rent such accommodation during the period in which the Commercial List proceedings are continuing. The second possibility is that such monies are not available; however, if that were now the case, there is no reason to think it would not also be the case when the properties were ultimately sold if they were unsuccessful in the Commercial List proceedings and the stay was ultimately lifted. In that situation, the undertaking as to damages would be of no practical value to Secure, which would be left in a position that it had been required to leave the loans in place to Mr and Mrs Stark and Mr Conway over a period of, very likely, 12-18 months, without being paid any licence fee for occupancy of the properties, any interest on its loans, or being compensated for that loss when the stay was ultimately lifted. This seems to me to be a substantial prejudice to Secure. 26There also seems to me to be a second prejudice to Secure by way of the continuance of the stays, in that it is exposed to the risk of adverse fluctuations in the property market which might erode the extent of any equity which is presently available in the respective properties and because that delay would place the "risk of a change in the value of the mortgaged property ... with the mortgagee and not with the mortgagor, which is where it should lie": CMG Equity Investments Pty Ltd v Australia and New Zealand Banking Group Ltd [2008] FCA 455; (2008) 65 ACSR 650 at [38]. 27Mr and Mrs Stark and Mr Conway also rely, by analogy, on the Courts' reluctance, in security for costs applications, to permit proceedings to be stultified where a plaintiff's impecuniosity has been caused by the defendant's conduct that is the subject of the claim: Jazabas Pty Ltd v Haddad (2007) 65 ACSR 276. It seems to me that the position here differs from that in respect of security for costs applications, first, because Secure has the benefit of judgments against Mr and Mrs Stark and Mr Conway, and the question of a stay needs to be considered in that context. Second, Mr and Mrs Stark and Mr Conway are not themselves the plaintiff in the proceedings commenced by Staway in the Commercial List, although they are funding them and any inability to do so would no doubt, in practical terms, potentially affect the continuance of the proceedings. Third, the application of that principle in order to stay orders for possession would potentially be inconsistent with the reasoning of the High Court in Inglis v Commonwealth Trading Bank of Australia (1972) 126 CLR 161, to which I will refer below. It is not necessary to reach a final view as to that question in this application, because I am not satisfied that the Commercial List proceedings would in fact be stultified by declining the stay, given the equity of Mr and Mrs Stark and (to a lesser extent) Mr Conway in their respective properties; and the fact that, if that equity cannot be realised on a forced sale, then the prejudice to Secure of a stay, which would not be compensated by an effective undertaking as to damages, is such that it should not be granted. 28Next, Mr and Mrs Stark and Mr Conway point, in reply, to principles of equitable set-off. Staway's claim against Secure and Liberty does not impeach Secure's claim against them, as it is implicitly recognised by their failure to raise it by way of defence in the proceedings. The proposition that a cross-claim or set-off is not a defence to a claim for possession of land has been frequently recognised in the case law: Westpac Banking Corporation v Corry [2011] NSWSC 1014 at [34]; Commonwealth Bank of Australia v Susan Hannaford Pty Ltd [2012] NSWSC 1094 at [29]. Mr and Mrs Stark and Mr Conway accepted in oral submissions that they relied, not directly on set-off principles, but instead on the discretionary matters to which I have referred above in support of the stay. 29Mr and Mrs Stark and Mr Conway also contend that Secure's reliance on the judgment for possession in its favour would allow it to take advantage of its own wrong. This proposition has the difficulty that it has not presently been established that there was a wrong on the part of Secure, which is a matter which will ultimately be determined in the Commercial List proceedings. Second, it is by no means clear that this principle is applicable where Secure's rights on a failure by Mr and Mrs Stark or Mr Conway to repay the loans secured over the relevant properties do not arise from any conduct of Secure in respect of the Dale Ford business but instead from distinct borrowings made by Mr and Mrs Stark and Mr Conway. The position here is not one where Secure seeks to rely on rights against Mr and Mrs Stark or Mr Conway arising in respect of the financing facilities in relation to the Dale Ford business. Even if Secure's conduct in respect of the Dale Ford business is ultimately found to be wrongful, it is not the foundation of its legal rights against Mr and Mrs Stark and Mr Conway in respect of the loans secured by the relevant properties, but at its highest a matter which has contributed to the present position: compare Re London Celluloid Company (1888) 39 Ch D 190; Ruthol Pty Ltd v Tricon (Australia) Pty Ltd [2005] NSWCA 443; (2005) 12 BPR 23,923. 30Secure submits that the grant of a stay in this situation would be contrary to authority and draws attention to Inglis v Commonwealth Trading Bank of Australia above. In that case, the plaintiffs sought an interlocutory injunction to restrain the bank from exercising a power of sale in relation to a property where the existence of the relevant mortgage, the fact of the debt and the facts that it had not been paid off and the mortgage had not been discharged were undisputed. The plaintiffs identified a claim for damages against the bank which they contended exceeded the amount to which the bank was entitled. Walsh J rejected a claim for a stay on that basis, observing that it would undermine commercial utility of secured lending and also observed (at 165) that: "The benefit of having a security for a debt would be greatly diminished if the fact that a debtor has raised claims for damages against the mortgagee were allowed to prevent any enforcement of the security until after the litigation of those claims had been completed. In my opinion the fact that such claims have been brought provides no valid reason for the granting of an injunction to restrain, until they have been determined, the exercise by a mortgagee of the remedies given to him by the mortgage". The refusal of Walsh J to grant interlocutory relief was upheld by three judges of the High Court on appeal. In the present case, the basis of the application by Mr and Mrs Stark is one step removed from that considered by the High Court, in that they are, in effect, the funders of the proceedings brought by Staway and stand to benefit if those proceedings are successful. However, the diminution in the benefit to a lender of having a security over property is no less diminished, if a debtor may rely on its funding of claims for damages brought by an associated party against the lender rather than on its own claims for damages in order to prevent the enforcement of the security. 31Mr and Mrs Stark and Mr Conway seek to distinguish the High Court's decision in Inglis on the basis that it concerned an application for an interlocutory injunction to restrain the bank from exercising a power of sale and to distinguish Corry and Susan Hannaford as applications for summary judgment. It does not seem to me that the reasoning in Inglis can be distinguished on that basis, where it is directed, inter alia, to a wider recognition that restraining the exercise of a secured creditor's rights would have on the efficacy of secured lending. Mr and Mrs Stark and Mr Conway also seek to distinguish the decisions on the basis that none of them involved circumstances in which the defendant's inability to repay the debt was wholly attributable to the (allegedly) unlawful conduct the subject of the cross-claim. I also do not consider that I can accept that distinction, first, because Corry did involve a claim that the plaintiffs found themselves in their then position by reason of the bank's misleading conduct and, second and possibly more fundamentally, because the factual proposition that there was unlawful conduct, so as to give rise to the causal chain on which Mr and Mrs Stark and Mr Conway rely, will ultimately only be established in a final hearing of the Commercial List proceedings. 32Secure also points out that Mr and Mrs Stark and Mr Conway have not offered to pay the amount of the debts into Court. On appeal in Inglis v Commonwealth Trading Bank of Australia above at 169, Barwick CJ (with whom Menzies and Gibbs JJ agreed) referred to a general rule that a mortgagee should not be restrained from exercising its rights under the mortgage, failing payment into Court of the amount sworn by the mortgagee to be due and owing under the mortgage. On the other hand, there are cases where a mortgagee has not been required to pay money into Court where it claims it can redeem the mortgage within a fairly short time by carrying out a refinancing proposal that is reasonable on its face, or has a demonstrable capacity to secure or refinance the mortgage debt: Parist Holdings Pty Ltd v Perpetual Nominees Ltd [2006] NSWSC 599 at [16]-[21]. The correctness of that approach was left open in Bayblu Holdings Pty Ltd v Capital Finance Australia Ltd [2011] NSWCA 39; (2011) 279 ALR 166 at [54]-[71] at [58]. Even if the approach adopted in Parist Holdings Pty Ltd v Perpetual Nominees Ltd were applicable in these circumstances, there is no suggestion that a recovery by Staway in the Commercial List proceedings would occur within a relatively short time to permit repayment of Secure by Mr and Mrs Stark and Mr Conway. Mr and Mrs Stark and Mr Conway accept that a failure by them to tender payment or offer to submit to a condition of payment is at least a weighty discretionary consideration against a stay of a judgment for possession: Serobian v Commonwealth Bank [2009] NSWCA 350 at [27]. Conclusion 33Having regard to the applicable principles and the evidence that I have set out above, I have concluded that the Court could not properly stay the orders for possession in the present case, either under rules 28.5 or 36.16 of the Uniform Civil Procedure Rules or under the wider principles under ss 67 and 135 of the Civil Procedure Act. 34This is not a case in which one of the circumstances in which the Court typically grants stays of a writ of possession is satisfied. So far as wider discretionary factors are concerned, I proceed on the basis, identified in my earlier judgment, that Staway has at least a solid foundation for its claim, and I also proceed on the basis of the parties' agreement that the claim is substantial and, if successful, that it is likely to be sufficient to repay both the amounts due by Staway and the amounts due by Mr and Mrs Stark and Mr Conway. However, a case that has some solid foundation is by no means certain to succeed, particularly where the evidentiary basis for the substantial claim for damages is not fully established at this stage, and something less than full success is unlikely to be sufficient, on the evidence before me, to repay the borrowings by Staway and Mr and Mrs Stark and Mr Conway from Secure. 35I am conscious that the sales of Mr and Mrs Stark's home and Mr Conway's primary residence, and to a lesser extent the loss of his Nelson Bay property, is a deeply unfortunate outcome and may impose considerable hardship upon them given their age and financial circumstances. I am also conscious that there is at least a possibility that the sale of those properties, in a forced sale situation, will make it more difficult for them to fund the Commercial List proceedings, although that concern needs to be qualified by the equity of both Mr and Mrs Stark and (to a lesser extent) Mr Conway in the respective properties and the fact that a forced sale situation might well have been (and may still possibly be) avoided by taking steps to bring about a prompt sale of the property under their own control. The regrettable consequences of a sale of the properties are a characteristic feature of applications for possession and do not in themselves provide a basis for the Court to deprive a secured lender of the rights which were conferred on it as the basis of making the relevant loans. For example, in GE Personal Finance Pty Ltd v Smith above, Johnson J observed that a defendant who was otherwise not able to demonstrate a reasonable foundation for a stay on one of the recognised bases would have no reasonable expectation of an extended stay only on hardship grounds. 36Several matters tend strongly against the grant of the relief sought by Mr and Mrs Stark and Mr Conway. First, Secure's prima facie entitlement to the benefit of its judgments, which do not depend on the matters in issue in the Commercial List proceedings and where Mr and Mrs Stark and Mr Conway did not advance any defence to them in the relevant proceedings. Second, the reasoning adopted by Walsh J at first instance in Inglis v Commonwealth Trading Bank of Australia above emphasises the extent to which depriving Secure of its rights would impact upon the utility of security arrangements more generally, and the reasoning adopted on appeal in that case emphasises the fact that such a course should not generally be taken where the amount due to the mortgagee is not paid into Court. Even if the more generous approach adopted in cases such as Parist Holdings were correct, any recovery by Mr and Mrs Stark and Mr Conway arising from Staway's possible success in the Commercial List proceedings is not likely to be secured within a sufficiently short time to fall within that approach. Third, it seems to me that there would be real prejudice to Secure in the grant of a stay, since it would be required to continue funding the substantial borrowings secured on the properties over a period that is not short, without any compensation by way of interest or licence fee, and would be exposed to any adverse movement in the value of the properties. In the circumstances in which it is required, namely a loss of the Commercial List proceedings, the undertaking as to damages by Mr and Mrs Stark and Mr Conway would only be of value if the equity in their property is realised, and that is also not assured in a forced sale situation. 37For all these reasons, I consider that I must dismiss the application by Mr and Mrs Stark and by Mr Conway for a stay of the orders for possession. In the ordinary course, costs will follow the event.