Thomas v Driat Pty Limited

Judgment 1HER HONOUR: The applicant, Ms Carey Thomas, by notice of motion filed on 6 July 2012, seeks orders 1 and 2 in the notice of motion filed on that date. The orders sought were: "1 The execution of the writ of possession issued on 29 June 2012 be stayed until the determination of the anticipated appeal before the NSW Supreme Court of Appeal or until further order of this Honourable Court. 2 The operation and enforcement of the judgment of Windeyer AJ handed down 22 June 2012 be stayed until the determination of the anticipated appeal before the NSW Supreme Court of Appeal or until further order of this Honourable Court. 3 The claim for possession of property *** **** **** Point Piper be stood over until the determination of the anticipated appeal before the NSW Supreme Court of Appeal or until further order of this Honourable Court. 4 Such further order as the Court thinks necessary. 5 Costs." 2The second order sought will need to be amended, for the reasons which I will explain shortly. 3The factual background to the matter can be explained briefly. Ms Thomas borrowed money from the respondent, Driat Pty Limited (Driat), under two loan agreements. The first loan was for a sum of $800,000 pursuant to a loan agreement dated 22 July 2010. That loan was for a term of one year. The loan was secured over property owned by Ms Thomas at Wildes Meadow. 4The second loan was for a sum of $590,000. Ms Thomas borrowed those moneys, together with a Mr Allison, with whom she was then in a de facto relationship. The loan in the sum of $590,000 was made on 16 May 2011 and was secured by way of a second mortgage over property at Point Piper. That property was subject to a first mortgage security to the ANZ Bank. The ANZ Bank has obtained an order for possession of that property. 5For the purposes of establishing that she had an arguable case on the appeal, being a relevant consideration for determining whether to grant a stay, Ms Thomas relied in particular upon ground 4 of the amended notice of appeal: "4 His Honour erred in finding that the Lender was told by both Mr Woodworth and by Mr Allison that Ms Thomas had an interest in the Pentridge Project (judgment at [29]) as there was no evidence which his Honour could rely upon in making this finding." 6In support of that ground, Ms Thomas' solicitor, Mr Levitt, referred me to the trial judge's finding at [29], which is challenged, and to a portion of the transcript where it appeared to have been conceded by counsel appearing for Driat in the proceedings before the trial judge that there was no evidence that Ms Thomas had an interest in the project called the Pentridge Project, the intended beneficiary of the moneys that had been borrowed. When I say that there appears to have been no evidence of that matter, as I understand the concession, it was that there was no evidence, other than statutory declarations that had been made by Ms Thomas at the time of the borrowing. 7Ms Thomas also submitted that she had an arguable case on the appeal: see ground 3, which pleaded: "3 His Honour erred in finding that: a. the certificate of independent financial advice signed by Mr Allison was not sufficient to put the solicitor for the Lender on 'notice of anything untoward' (judgment at [27]) by failing to take into consideration that the Lender knew Mr Allison was Ms Thomas' de facto spouse, that Mr Allison was materially interested in the Pentridge Project and that Ms Thomas had no interest in the Pentridge Project; b. there was insufficient evidence concerning the quality and independence of the financial advice provided to Ms Thomas (judgment at [26])." 8In response to ground 3, Driat submitted that it could not be responsible for or affected by the content of the independent legal advice which was given at the time of the lending. 9The case is one where Ms Thomas has a right of appeal. There is an argument that a concession was made at trial in relation to the 'no evidence' point. However, without having a greater knowledge of the matter and a greater understanding of the evidence, it is not possible for me to determine how strong the 'no evidence' point is, given the qualified concession that I consider was made by Driat. 10Counsel for Driat submitted that the appeal had very low prospects of success, particularly having regard to the principles to which the trial judge referred at [29] of his judgment. In particular, unless there was some reason to put the lender on notice that the stated purpose for the loan was not in effect true, his Honour did not consider that there was a relevant duty on the lender, particularly in circumstances where the borrower or borrowers had separate legal representation in respect of the loan. 11In circumstances again where I have been provided with only the bare bones of the background of the matter, I am prepared to proceed on the basis that there are at least arguable prospects of success in the sense that the appeal could not at this stage be considered to be utterly hopeless. That would appear to be so in particular in respect of ground 4. I do not intend by that observation to be taken to say that there are no prospects of success on the other grounds of appeal. I am just not in a position to make that assessment. 12The essential point sought to be made on behalf of Ms Thomas was that unless a stay was granted the appeal would be rendered nugatory. There was some difficulty on both sides with this proposition as each party successfully objected to market appraisal evidence, so all that I know is that there is a debt of $1.7 million. There is evidence that there is likely to be a surplus on any sale of the Point Piper property, probably in the order of $500,000, and that the total debt owing to Driat is in excess of $1.7 million. I assume that interest is continuing to mount at a significant amount, having regard to the interest rate which was charged on the second loan in particular. Accordingly, I am not in a position to say that the appeal would be rendered nugatory but there does appear to be some likelihood that that would be so. 13There is another matter, which is related to the last consideration. Ms Thomas is 71 years of age and the Wildes Meadow property is her residence. Her asset position will shortly be eroded significantly when the Point Piper property is sold. 14Ms Thomas' solicitor, Mr Levitt, referred me to the decision of Campbell JA in Serobian v Commonwealth Bank of Australia [2009] NSWCA 309, in particular at [25] where his Honour considered that relevant hardship is a matter that needs to be taken into account on an application for a stay. 15In this case, there are two factors that would indicate relevant hardship. The first is Ms Thomas' age and the likelihood that unless a stay is ordered, she will be required to leave her home. The second is Ms Thomas' financial circumstances. Although there is no precise evidence as to her financial circumstances, and the legal representatives for both parties were keen to make statements from the bar table as to Ms Thomas' impecuniosity or otherwise, when each realised the evidence was slight on these matters, there was sufficient evidence for me to conclude that her financial circumstances are, at least, average. Accordingly, given that I have found an arguable case on one ground of appeal and the likelihood of relevant hardship should a stay not be granted, I propose to order a stay of execution of the writ of possession. 16The orders I make are as follows: