Tabet v Commonwealth Bank of Australia Ltd [2008] VSCA 197

1. Execution of the judgment for possession given by Master Daly on 31 March 2008, the appeal against which was dismissed by the Order made by the Honourable Justice Robson on 24 April 2008, be stayed until the hearing and determination of the appeal or until further order.
2. The Respondent (Plaintiff), whether by its servant, agents or otherwise howsoever, be restrained from selling the property situate a and known as 75 New Road, Oak Park in the state of Victoria being the whole of the land more particularly described in Certificate of Title Volume - 10643 Folio-733 ('the Property') or taking any other step to enforce its mortgage registered on the title to the Property until the hearing and determination of the appeal or further order ion condition that the Appellant (Defendant) at the sum of $1,500 per month into Court to abide the result of the appeal.
3. Such further or other order as may be just.

2 The respondent, the Commonwealth Bank of Australia, opposes the application for a stay.

3 The applicant appeals from Robson J's judgment given on 24 April 2008.

4 His Honour there dismissed the applicant's appeal from the order of Master Daly, who, on 31 March 2008, ordered that the respondent have possession of the applicant's property situated at 75 New Road, Oak Park ('the property'). Robson J also extended a stay of the order of the Master until 20 May 2008.

5 The applicant purchased the property in 2001 and obtained a home loan for $264,000 from the respondent in September 2001, secured by a first registered mortgage. The applicant used the property as his domestic residence until he departed from Australia in October 2007, repaying the loan by instalments which were (from December 2006) in the sum of $900 per fortnight. From 15 January 2007, the applicant made only one payment.

6 Following the applicant's default, the respondent issued a writ for possession and sought summary judgment, which was granted by Master Daly on 31 March 2008, subject to a one-month stay until 30 April 2008. The Master also ordered that the applicant pay the respondent the sum of $257,967.

7 Before Robson J, the applicant, who filed no evidence, relied on evidentiary points.

8 He primarily contended that the loan contract, the advance and the amount owing were not proved. He submitted, in that context, that the bank statements, the loan arrears history report and full payout statements were not books kept by a body corporate under a requirement of the Corporations Act 2001 (Cth) ('the Act') admissible as prima facie evidence of the matters therein stated or recorded pursuant to s 1305(1) of the Act.

9 Robson J rejected those arguments. He pointed to the broad definition of 'books' and 'financial records' in s 9 of the Act and concluded that the loan contract was a document of prime entry and a book and financial record required to be kept by the respondent for the purposes of s 1305 pursuant to s 286 of the Act.

10 His Honour concluded that the bank statements were likewise proved and that the amount owing was established by the respondent's certificate under clause 24 of the mortgage, because it was not 'contested' within the meaning of the clause simply because the applicant, without advancing evidence, denied the amount in a pleading.

11 The applicant, by notice of appeal dated 7 May 2008, challenges the findings of Robson J on a number of bases, which essentially replicate the argument advanced on his behalf below.

1. The learned trial judge erred in holding that the Respondent (Plaintiff) had verified its claims.
2. The learned trial judge erred in holding that the Consumer Credit Contract Schedule dated 20th October 2001 ("the Contract") was admissible in evidence under s. 1305 of the Corporations Act.
3. The learned trial judge erred in law in failing to find or hold that the Contract was not admissible as it was not a document purporting to be a book kept by a body corporate as required by s.1305(2) of the Corporations Act.
4. The learned trial judge erred in law in failing to find or hold that due execution of the Contract had not been proved by admissible evidence.
5. The learned trial judge erred in law in failing to find or hold that the failure to adduce evidence from the purported witness to the borrower's signature as to the execution of the Contract ought to give rise to an inference against the Respondent (Plaintiff) in accordance with the Rule in Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298.
6. The learned trial judge erred in law in failing to find or hold that none of the Bank statements comprising Exhibit CP-13 to the affidavit of Colin Lyle Pocock sworn 13th March 2008 nor exhibits CP-14, CP-15, CP-16 or CP-17 were admissible under the Corporations Act as:
   • none of those documents purport to be a book kept by a body corporate;
   • none of those documents are of a nature that there is a requirement of the corporations legislation for such a document to be kept by a body corporate;
   • none of the documents purport to reproduce matters recorded or stored by means of a mechanical, electronic or other device so as to satisfy the requirements of s. 1306(6) of the Corporations Act;
   • in the event that any such document were otherwise admissible they ceased to be admissible as any presumption created by s. 1305(2) of the Corporations Act was rebutted.
7. The learned Judge erred in law in holding that a context between the parties on the pleadings did not constitute a contest in the proceeding within the meaning of clause 24 of the mortgage.
8. The learned Judge erred in law in failing to find or hold that there was no admissible evidence of any particular sum due from the Appellant (Defendant) to the Respondent (Plaintiff).
9. The learned Judge erred in law in failing to find or hold that there is a question that ought to be tried as to whether the late payment fees and enforcements costs claimed by the Respondent (Plaintiff) are void as penalties.

Except so far as the Court of Appeal or a Judge 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.

13 The principles governing a stay of execution of judgment pending appeal pursuant to the Rules are uncontroversial. They were recently set out in Maher & Anor v Commonwealth Bank of Australia & Anor[1] as follows:

Prima facie, a successful party is entitled to the benefit of the judgment obtained below and the presumption that the judgment is correct. The applicant for a stay therefore bears the onus of demonstrating that a stay is justified.

In Cellante and Ors v G Kallis Industries Pty Ltd [1991] VicRp 99; [1991] 2 VR 653 ('Cellante'), Young CJ (with whom Brooking J agreed), cited with approval [at 655] the observation of Mahoney JA (with whom Moffit P and Glass JA agreed) in Re Middle Harbour Investments Ltd (in liq) (Unreported, New South Wales Court of Appeal, Mahoney JA, 15 December 1976) that:

... where an applicant for a stay has not demonstrated an appropriate case but has left the situation in the state of speculation or of mere argument, weight must be given to the fact that the judgment below has been in favour of the other party.

Young CJ concluded that an applicant for a stay under Rule 66.16 must show special or exceptional circumstances to take the case out of the general rule that an appeal does not operate as a stay.

The Court has a wide discretion, which is not circumscribed by rigid rules. It should take into account all the circumstances of the case.

In Scarborough's v Lew's Junction Stores Pty Ltd [1963] VicRp 20; [1963] VR 129 (approved in Cellante), Adam J recognized that special circumstances might exist where a successful appellant would be deprived of the fruits of the appeal if a stay of execution were not granted. In such a case, the appeal might be rendered nugatory.

In Cellante, Young CJ stated that special circumstances would 'exist where for whatever reason, there is a real risk that it will not be possible for a successful appellant to be restored substantially to his former position if the judgment against him is executed' [citing Cellante and Ors v G Kallis Industries Pty Ltd [1991] VicRp 99; [1991] 2 VR 653, 657 (Young CJ)].

An appeal could be rendered nugatory in that sense in a variety of ways. The test could be satisfied where a defendant appeals and there is a real risk that the plaintiff would remove the proceeds of the judgment from the jurisdiction. Similarly, special circumstances may be recognised where, for example, although the respondent is solvent, the subject matter of the appeal is, in substance, irreplaceable.

The prospect that the appeal may be rendered nugatory must be balanced against the principle that the successful party is entitled to the fruits of the judgment. A stay should not be granted unless there is at least an arguable ground of appeal, although otherwise speculation as to the ultimate prospects of success is usually inappropriate.

14 In this case, the applicant relies on the affidavit of Rachel Andrich, a solicitor employed by Lennon Mazzeo Lawyers, sworn 25 August 2008.

(a) she was informed by the applicant that the property was his residence until his departure from Australia and he intends to resume residence there on his return;

(b) the solicitors for the parties corresponded in relation to extending by consent the stay granted by Robson J;

(c) the respondent rejected the applicant's offer to pay a sum equivalent to current market rental, in return for the respondent's undertaking not to sell the property until the determination of the appeal and instead insisted on the unconditional payment of the 'notional arrears' under the home loan, as well as monthly payments of interest under the judgment debt;

(d) on 26 June 2008, the respondent wrote to the applicant informing him of its intention to store the goods remaining at the property; and

(e) on 26 June 2008, the respondent wrote to the applicant informing him of its intention to store the goods remaining at the property; and

(f) it is inferred that the respondent intends to sell the property under its power of sale.

16 Ms Andrich exhibits a council rates certificate showing the site value of the property as $545,000 and the capital improved value as $595,000.

17 The applicant submits that there are special circumstances in this case because, if the residential property is sold by the respondent mortgagee, the appeal would be rendered nugatory. The purchaser would obtain an indefeasible title and the applicant would, if successful on appeal, be irreversibly deprived of the property and could not be restored to his former position.

18 Counsel for the applicant argued that the property was a home and damages would not be an adequate compensation. Further, as the property was worth approximately twice the amount of the debt and the payment of rental into court was offered, the respondent's position would not be imperilled. Counsel also submitted that the appeal had merit and the Court should infer that the respondent had failed to tender admissible evidence in relation to the loan. It was submitted that any prejudice occasioned to the respondent by the stay would be outweighed by that suffered by the applicant were the stay to be denied, provided that the stay is conditional upon the payment of the market rental.

19 The respondent, in opposing the stay, relies on the affidavit of Grant Dewar sworn 2 September 2008 (who exhibits affidavits sworn by Colin Pocock on 6 December 2007 ('first affidavit') and 13 March 2008 ('second affidavit')) and the affidavit of Colin Pocock sworn 2 September 2008 ('third affidavit').

20 In his first affidavit, Mr Pocock (a collections manager with the respondent) deposes to the background to the home loan, the mortgage payments by instalment, default, demand for payment of arrears, the notice under s 76(1) of the Transfer of Land Act 1958, the applicant's failure to pay or deliver up possession of the property and to his belief that the applicant had no defence to the respondent's claim.

21 In his second affidavit, Mr Pocock deposed to his examination of the respondent's books of accounts and his familiarity with the relevant documents, including the contract of loan signed by the applicant and to the interest rates for particular periods. He referred to certain errors in the interest rate applied or stated in the statement of account which was amended accordingly.

22 In his third affidavit, Mr Pocock exhibited an updated statement he had prepared as an authorised officer of the respondent, which indicated that the applicant had made no payments since 1 March 2007, and (had the respondent not called up the loan and commenced enforcement proceedings) that the arrears on the loan as at 2 September 2008 would have been $36,089, with monthly repayments of $2,100. Further, as at 2 September 2008, the amount owing was $269,165.31, with interest accruing at $52.65 per day.

23 The grounds of appeal indicate that they depend in large part on the attribution of an extremely narrow scope to terms such as a 'book kept by a body corporate' and 'financial records' of a corporation required to be kept pursuant to s 286 of the Act, which appears at odds with the broad legislative definitions and construction in relevant authorities. The submission that the appeal had merit or significant prospects of success was not, in my opinion, compelling. Although the subject matter of the appeal is real property where the applicant resided prior to his departure, it is not his current residence. There is no evidence that the property has any special, particular or unique value to the applicant, or that he intends to return to Australia at any future date.

24 The respondent has obtained judgment and interest is accumulating. The applicant has filed no affidavit or other material disputing his liability to the respondent for the amount owing on the loan or the validity of the mortgage, but relies on mere evidentiary points. The stay would place the respondent in the position of an unwilling landlord for an indefinite period for a market rental of $1,500 per month paid into court, which falls short of the monthly repayments calculated of $2,100 notionally due on the loan.

25 The respondent is prima facie entitled immediately to the fruits of the judgment it has obtained, and, in my opinion, on balance, the applicant has failed to establish special circumstances justifying the exercise of the discretion in his favour. In my opinion, the application should be dismissed.

26 The applicant, also, as an independent basis of relief, sought an injunction restraining the respondent from selling the property. The arguments advanced in support of the injunction largely overlapped with those advanced in support of the stay. Counsel for the applicant argued that, unless the injunction were granted, irretrievable prejudice would result to the applicant, as the subject matter was real property and the applicant's loss of the same would, by definition, be irremediable. He reiterated that the respondent's reliance on the Corporations Act 2001 (Cth) evidentiary provisions was an unusual course.

27 Counsel for the respondent submitted that the applicant was not currently using the property as a residence, was overseas for an indefinite period and that there was no evidence that his return was imminent. The respondent was, he said, entitled to rely on the evidentiary provisions of the Act, and the applicant had not put in evidence or raised any substantive defence in the matter. The respondent was, moreover, able to satisfy any judgment which may be made against it. Counsel contended that the application for the grant of an injunction was, in effect, an application for the stay in another guise, the grant of which would effectively defeat the denial of the stay.

28 The test in relation to both mandatory and prohibitory injunctions preferred by the Court of Appeal (Maxwell P and Charles JA) in Tymbook Pty Ltd v State of Victoria; Bradto Pty Ltd v State of Victoria[2] invites consideration of weighing the prejudice suffered by the applicant if denied the injunction against the prejudice to be suffered by the respondent if it were granted. The Court of Appeal stated:[3]

... whether the relief sought is prohibitory or mandatory, the court should take whichever course appears to carry the lower risk of injustice if it should turn out to have been "wrong", in the sense of granting an injunction to a party who fails to establish his right at the trial, or in failing to grant an injunction to a party who succeeds at trial, or in failing to grant an injunction to a party who succeeds at trial.

29 The Court of Appeal further stated that: [4]

... it must be relevant on every application for an interlocutory injunction to consider the likelihood of the plaintiff succeeding at trial. Not only is such consideration a necessary part of deciding whether there is a serious question to be tried, but the plaintiff's prospects of success will almost always be a factor in the evaluation of the balance of convenience. See, for example, Castlemaine Tooheys Ltd v South Australia [1986] HCA 58; (1986) 161 CLR 148 at 154 per Mason ACJ.

Obviously enough, a consideration of the plaintiff's prospects of success must be part of the analysis of where the least risk of injustice lies.

30 In the present case, I am unable to discern a serious question to be tried or a good or reasonably arguable case in relation to the issues on appeal. Further, in the circumstances where:

(a) the applicant is resident overseas for an indefinite period;

(b) does not use the property as a home;

(c) has not put in any evidence or substantive defence; and

(d) offers only a payment into court falling short of the monthly amount calculated to be due under the loan, rather than tender of an amount sufficient to meet the mortgagee's claim;[5] and

(e) the respondent is able to satisfy any judgment which may be made against it;

the balance of convenience does not favour the grant of an injunction. Like considerations were, in substance, considered in relation to the stay, the Court's refusal of which would be effectively circumvented by the grant of an injunction.

31 In all the circumstances, the application for an injunction should be refused.

1. That the application made by summons dated 8 August 2008 be dismissed.

2. The applicant pay the respondent's costs of the application.

[1] [2008] VSCA 122 (26 June 2008), [20]-[27].

[2] [2006] VSCA 89; (2006) 15 VR 65.

[5] While failure to tender such payment is not an absolute bar to a stay of a judgment for possession, it is '... a very weighty consideration militating against the grant of such relief...'. See Rahme v Commonwealth Bank of Australia [1993] HCA 62; (1993) 117 ALR 618, 619 per Deane J and Inglis v Commonwealth Trading Bank of Australia [1972] HCA 74; (1972) 126 CLR 161, 164.