Trust Co of Australia Ltd (Stockland Property Management Pty Ltd) v Skiwing Pty Ltd trading as Cafe Tiffany's

CITATION: Trust Co of Australia Ltd (Stockland Property Management Pty Ltd) v Skiwing Pty Ltd trading as Cafe Tiffany's (RLD) [2004] NSWADTAP 33 APPELLANT PARTIES: Trust Co of Australia Ltd (Stockland Property Management Pty Ltd) RESPONDENT Skiwing Pty Ltd trading as Cafe Tiffany's FILE NUMBER: 049023 HEARING DATES: 20/07/2004 SUBMISSIONS CLOSED: 07/20/2004 DATE OF DECISION: 07/29/2004

Skiwing Pty Ltd trading as Cafe Tiffany's v Trust Co of Australia Ltd (Stockland Property Management Pty Ltd) (No 3) [2004] NSWADT 94 DECISION UNDER APPEAL: BEFORE: Chesterman M - ADCJ (Deputy President); Molloy GB - Judicial Member; Weule B - Non Judicial Member CATCHWORDS: interim order MATTER FOR DECISION: Preliminary matter FILE NUMBER UNDER APPEAL: 035036, 035053, 035066 DATE OF DECISION UNDER APPEAL: 05/20/2004 LEGISLATION CITED : Administrative Decisions Tribunal Act 1997 Retail Leases Act 1994 Alexander v Cambridge Credit Corporation Ltd (Receivers Appointed) (1985) 2 NSWLR 685 Carr v Finance Corporation of Australia Ltd (No 1) (1980-81) 147 CLR 246 Julia Farr Services Inc v Hayes [2003] NSWCA 142 CASES CITED: Kalifair Pty Ltd v Digi-Tech (Australia) Pty Ltd (2002) 55 NSWLR 737 Park v Brothers [2003] NSWSC 1054 Sotiropoulos v Mattana Coiffure Pty Ltd [2004] NSWADTAP 23 TCN Channel 9 Pty Ltd v Antoniadis (No 2) (1999) 48 NSWLR 381 APPELLANT REPRESENTATION: M Allars, barrister RESPONDENT A I Tonking, barrister ORDERS: 1. Execution of the orders made by the Tribunal on 20 May 2004 is stayed; (a) until the occurrence of each of the following events:-; (i) an agreement with Stockland is signed by Mr Zoran Stojanoski and Ms Brenda Stojanoski, whereby they agree that any order by the Appeal Panel for repayment of moneys obtained from Stockland in execution by Skiwing of the Tribunal's judgment dated 20 May 2004 in these proceedings may be executed against their interests as registered proprietors of the property described as Lot 41 in Deposited Plan 630990 and against the interest of Ms Brenda Stojanoski as the registered proprietor of the property described as Lot 3 in Strata Plan 2906; and ; (ii) a charge, registrable as a deed and creating a caveatable interest, over each of these properties is delivered to Stockland; and; (iii) copies of the agreement specified in (i) and the charge specified in (ii), together with a letter from the solicitors for each party stating that their respective clients accept the terms of the agreement, the charge and the Undertaking specified in (iv), are lodged at the Tribunal; and; (iv) delivery to the Tribunal of a formal Undertaking to the Tribunal, duly executed by Skiwing, Zoran Stojanoski and Brenda Stojanoski, to repay to Stockland all moneys paid to Skiwing by Stockland pursuant to the orders made by the Tribunal on 20 May 2004, if so ordered on the disposition of this appeal; or; (b) until the disposition of this appeal; or; (c) until further order (whichever first occurs); 2. On the occurrence of the events described in Order 1(a) made by this Panel, ; (a) execution is stayed, until the disposition of this appeal or further order, of ; (i) Order 1(a) made by the Tribunal on 20 May 2004, to the extent that it includes an award of $116,000 plus interest for 'loss of value'; and ; (ii) Order 1(b) of the Tribunal; and; (b) the stay of execution imposed by Order 1 of this Panel is lifted with respect to the balance of $206,628 plus interest ordered by the Tribunal on 20 May 2004 to be paid by Stockland to Skiwing; 3. The costs of this application are reserved; 4. Liberty to apply

REASONS FOR DECISION Relevant facts 1 This is an application by the Appellant, Trust Co of Australia Ltd (Stockland Property Management Pty Ltd) (hereafter 'Stockland') for a stay of execution, pending disposition of the appeal, of the orders made in the decision under appeal. 2 In that decision of the Tribunal, delivered on 20 May 2004, Mr B Donald, Judicial Member, made orders upholding claims made by the Respondent to this appeal, Skiwing Pty Ltd trading as Café Tiffany's (hereafter 'Skiwing'), in three applications that it had made to the Tribunal. These claims arose out of a lease of premises known as Café Tiffany in the Imperial Arcade, Sydney from Stockland to Skiwing. The lease falls within the provisions of the Retail Leases Act 1994. 3 Substituting 'Stockland' for 'the Respondent' and 'Skiwing' for 'the Applicant', the terms of the Tribunal's orders were as follows:- 1.Relocation or Disturbance of Trading Claim … a) Stockland to pay Skiwing $269 628 plus interest from 23 June 2003 at the rate applicable under the District Court Rules. b) On a sale by Skiwing of its business during the term of the Lease, Skiwing to pay to Stockland any amount of the purchase price properly attributable to goodwill up to the amount of $116 000. 2. Balcony Claim … Stockland to pay Skiwing $53 000 plus interest from 23 June 2003 at the rate applicable under the District Court Rules. 3. Costs reserved. Written submission by the parties to be filed within 30 days as to whether there are special circumstances within s. 88 of the Administrative Decisions Tribunal Act 1997. 4 It will be seen that the immediate effect of Orders 1 and 2 was to order the payment of sums totalling $322,628 plus interest by Stockland to Skiwing. 5 Order 1(b) expressed the qualification, however, that if at some future time during the currency of the present lease Skiwing were to sell its business at Café Tiffany, any amount within the purchase price that was properly attributable to goodwill, not exceeding $116,000, should be paid by Skiwing to Stockland. The lease expires on a date in May 2007. 6 The basis of the award of damages in Order 1 was the Tribunal's decision that Skiwing was entitled to compensation for disruption of its business caused by various measures adopted by Stockland to relocate this business. The Tribunal held that Stockland in so acting had been in breach of the lease agreement. 7 The Tribunal, at [153], accepted the opinion of a real estate valuer that (a) if Skiwing's business had not been disrupted, its value at the material time, November 2003, would have been $140,000, but that (b) its value at this time was in fact only $24,000, representing the depreciated value of its equipment. At [173], the Tribunal held that the difference between these amounts, $116,000, should be a component, described as 'loss of value', in its quantification of damages in Skiwing's 'Relocation or Disturbance of Trading Claim'. The remaining components were $149,710 for lost profits and $3,918 for legal expenses. 8 At [159], it set out the reasoning underlying Order 1(b) as follows:- 159 In my view Skiwing is entitled to be compensated for that loss [the 'loss of value']. However that assumes no goodwill component at all remains in the business. While Mr Stojanoski [the managing director of Skiwing] gave evidence that he had been unable to sell the business at an acceptable price and that a business broker had advised it was not saleable, if he were to sell in the future and realise a value for goodwill, it would not be just, as between the parties, if having compensated Skiwing for that loss, Stockland could not recover any goodwill on sale as a condition of consenting to the assignment of the lease. Accordingly, any award will be subject to such a qualification. 9 On a date in June 2004 (the precise date is illegible), the Registrar issued a certificate under s 82 of the Administrative Decisions Tribunal Act 1997 with respect to the amount ordered to be paid under the Tribunal's decision. The certificate contained the full text of the Tribunal's orders. 10 On 17 June 2004, Stockland filed its Notice of Appeal in the Tribunal. It alleged that the Tribunal had erred in law, setting out eight grounds, and also sought leave under s 113(2)(b) of the Administrative Decisions Tribunal Act for the appeal to extend to the merits. 11 On 1 July 2004, on the application of Skiwing, the Registrar of the District Court issued a Certificate of Judgment, stating that Skiwing, described as Judgment Creditor, had recovered judgment against Trust Company of Australia Limited, described as Judgment Debtor, in the sum of $438,628. 12 It is agreed between the parties that this amount is incorrect. It represents the aggregate of $116,000, a figure mentioned in Order 1(b) of the Tribunal, and the amounts of $269,628 and $53,000 required to be paid by Stockland to Skiwing under Orders 1(a) and 2 respectively. The express intent of Order 1(b) is however that an amount not exceeding $116,000 should travel in the opposite direction - that is, from Skiwing to Stockland - if at some future time the events stipulated in the Order occur. 13 On 8 July 2004, Skiwing filed a 'Notice of Contention' in the Tribunal, in which it claimed that the Tribunal's decision should be affirmed on grounds other than those on which the Tribunal relied and set out eight alleged errors in the Tribunal's decision. 14 On 16 July 2004, Stockland filed in the Tribunal the present application for an urgent interlocutory order staying execution of the Tribunal's orders made on 20 May 2004 until the disposition of the appeal. 15 On 19 July 2004, Stockland applied to the District Court by Notice of Motion for an order setting aside the Certificate of Judgment. After the hearing of the present application, that Motion was granted. Grounds of the stay application 16 Ms Allars, counsel for Stockland, argued that the application for a stay of execution satisfied the two requirements outlined by the Court of Appeal in Kalifair Pty Ltd v Digi-Tech (Australia) Pty Ltd (2002) 55 NSWLR 737 at 741:- Thus the relevant principles are analogous to those which govern the grant of interlocutory relief before trial to protect the status quo. The appellant must show that the appeal raises serious issues for the determination of the appellate court, and that there is a real risk that he will suffer prejudice or damage, if a stay is not granted, which will not be redressed by a successful appeal. 17 In the passage immediately preceding, the Court of Appeal quoted a more lengthy statement of principle from its judgment in Alexander v Cambridge Credit Corporation Ltd (Receivers Appointed) (1985) 2 NSWLR 685 at 693-695. In that case, as the Court itself said and as Campbell J observed in Park v Brothers [2003] NSWSC 1054 at [7], the Court laid down 'a somewhat more liberal approach' than had been taken previously. It held that it should no longer be necessary that an applicant for a stay should establish that 'special' or 'exceptional' circumstances exist. It confirmed, however, that the applicant still bore the onus of demonstrating 'a proper basis for a stay that will be fair to all parties' ((1985) 2 NSWLR 685 at 694). And it did not deny the proposition, recently reaffirmed by Santow JA in Julia Farr Services Inc v Hayes [2003] NSWCA 142 at [24], that a party appealing has 'no automatic right to a stay of proceedings', because 'prima facie the judgment appealed from is correct and the Court should not deprive a party of the fruits of victory'. 18 In our opinion, Stockland has satisfied the first requirement, namely, that its appeal raises serious issues for determination. Mr Tonking, counsel for Skiwing, briefly disputed this proposition, claiming that only the first of the eight grounds of appeal alleged an error of law and that all the remaining grounds alleged errors of fact. While it may well be the case that not all of the errors alleged fall within the category of error of law, we have no hesitation in concluding that, on a preliminary assessment, the appellant does have an arguable case. It cannot be said that the appeal has been lodged 'without any real prospect of success and simply in the hope of gaining a respite against immediate execution upon the judgment' (Alexander v Cambridge Credit Corporation Ltd (Receivers Appointed) (1985) 2 NSWLR 685 at 695). 19 In relation to the second requirement, that there is a 'real risk' that Stockland will 'suffer prejudice or damage, if a stay is not granted, which will not be redressed by a successful appeal', Ms Allars relied principally on two contentions. 20 The first was that if Stockland was compelled through execution of the judgment to pay to Skiwing all or a substantial proportion of the amount awarded by the Tribunal, but was then successful in having the award overturned on appeal, there was a real risk that it would be unable to retrieve from Skiwing the money that it had paid. This was apparent because the Tribunal, relying on evidence that Skiwing itself had tendered, had assessed the value of its business at only $24,000 (see [7] above), whereas the total sum awarded, leaving aside the 'qualification' expressed in Order 1 (b), was $322,628 plus interest. 21 Ms Allars relied in this connection on the following statement by the Court of Appeal in TCN Channel 9 Pty Ltd v Antoniadis (No 2) (1999) 48 NSWLR 381 at 385:- This Court regularly stays execution on judgments pending an appeal where there is a risk that the plaintiff will be unable to repay the money without difficulty or delay if the appeal were to succeed. 22 Ms Allars sought to strengthen her case on this matter by tendering evidence suggesting that Skiwing was presently in arrears of rent under the lease. This allegation was, however, successfully rebutted by evidence from Skiwing showing that the alleged arrears were in payments of outgoings due under the lease, not in rent, and that in separate Tribunal proceedings between the parties Stockland had undertaken on 1 July 2004 not to take any enforcement action in relation to outgoings until the proceedings were determined. 23 In responding to this part of Stockland's case, Mr Tonking pointed out that, according to the Tribunal's judgment, it was Stockland's wrongful conduct that caused the value of Skiwing's business to decline to a figure as low as $24,000. In such circumstances, Stockland, which was itself a large and prosperous enterprise, could not fairly rely on a risk of prejudice allegedly arising from a possible lack of capacity in Skiwing to repay moneys obtained through execution of the judgment. Mr Tonking also submitted that the valuer's estimate of $24,000 was made in November 2003 and was therefore out of date. 24 We do not think that this response is sufficient to dispose of Ms Allars' contention that there is a real risk that the assets of Skiwing's business, taken alone, would prove insufficient to support repayment of the amount awarded to it, in the event that Stockland succeeds in this appeal. 25 At the hearing of this application Mr Tonking obtained evidence, however, from Mr Zoran Stojanoski, the principal director of Skiwing, that he and his wife, Ms Brenda Stojanoski, were willing to offer their interests in two freehold properties as security, if required, for any such repayment. Mr Tonking tendered copies of title searches of these two properties, situated at Carlton, and of a letter dated 19 July 2004 from the Commonwealth Bank of Australia to Ms Stojanoski. It appeared from these documents and from Mr Stojanoski's testimony that currently each property is subject to a mortgage to the Commonwealth Bank and that the amounts owing on these mortgages are in the vicinity of $16,600 and $53,500 respectively. 26 In our judgment, this evidence, which was not significantly challenged, indicates that the security being offered by Mr and Ms Stojanoski would be sufficient to dispel any risk of Stockland being unable to obtain repayment of the amount of the judgment against it if its appeal succeeded. To quote from a recent decision of the Appeal Panel rejecting an application for a stay of execution of a judgment, there are, when this offer is taken into account, 'sufficient resources available to the respondent to meet any likely outcome of the appeal as it stands' (Sotiropoulos v Mattana Coiffure Pty Ltd [2004] NSWADTAP 23 at [29]). 27 The second matter put forward by Ms Allars concerned the terms of Order 1 in the Tribunal's decision. Drawing our attention to the evident error of the Registrar of the District Court (see [11 - 12] above) in certifying the amount awarded as $438,628, she argued that the Court's certificate was invalid. She submitted further that the 'qualification' to Order 1(a) that Order 1(b) contains was not within the range of orders that the Tribunal may make with respect to a retail tenancy claim under s 72(1) of the Retail Leases Act 1994 and indeed that no claim for payment of the amount contemplated in Order 1(b) had been made in the proceedings by Stockland against Skiwing. For these reasons, she said, Order 1(b) was defective. Since Order 1(a) was not severable from Order 1(b), the Order as a whole should be held ultra vires the Tribunal and/or defective for lack of finality. This of itself gave grounds for granting a stay of execution, at least in relation to Order 1. 28 In response, Mr Tonking submitted that the 'legal effect' of Order 1 was sufficiently clear to provide finality and that, as stated by Gibbs CJ in Carr v Finance Corporation of Australia Ltd (No 1) (1980-81) 147 CLR 246 at 248, the court should 'have regard to the legal rather than the practical effect' of a judgment when considering this issue. It did not matter, he said, that to determine any amount that might in the future be payable by Skiwing to Stockland under Order 1(b), a further hearing might be required. 29 In our judgment, the fact that an award of damages might be open to challenge on appeal on the basis that the Tribunal acted ultra vires in making it does not of itself provide grounds for a stay of execution. It is instead just a matter for argument and determination when the appeal is heard. But we agree with Ms Allars that uncertainty as to the amount for which execution should be levied under a judgment, or with respect to some head of damages within a judgment, is a matter of relevance in deciding whether a stay should be granted. 30 In the present case, the task of giving effect to Order 1 as a whole is far from straightforward. The amount awarded in Order 1(a) is expressed to be subject to some entitlement in Stockland (though it was not formally claimed by Stockland in the proceedings) to partial repayment at an unspecified future time (potentially as far ahead as 2007) up to a maximum of $116,000. As the proceedings already taken in the District Court have illustrated, it is not at all clear how the effect of Order 1 should be reflected in any certificate issued in the Court for the purposes of enforcement. 31 For these reasons we can envisage substantial conflict on this matter between the parties, in the Court and/or in the Tribunal, if Skiwing is left free to seek enforcement of Order 1 as it stands. This is potentially to the detriment of both of them, given that if the appeal were successful the issue in contest might become irrelevant. 32 We do not, however, accept Ms Allars's argument that the whole of Order 1 is defective. The uncertainty only affects the component of Order 1(a) that represents 'loss of value'. As indicated above at [7 - 8], the amount awarded under this head was $116,000. The repayment, up to a maximum of $116,000, that Order 1(b) contemplates is linked with this component only, not with the other components of Order 1(a). These two components - $149,710 for lost profits and $3,918 for legal expenses - are unaffected by the uncertainty created by the terms of Order 1(b). 33 Our conclusion on this rather difficult issue is therefore that, in relation to the amount of damages ($116,000 plus interest) awarded for 'loss of value' in Order 1(a), Stockland has established 'a proper basis for a stay that will be fair to all parties' (Alexander v Cambridge Credit Corporation Ltd (Receivers Appointed) (1985) 2 NSWLR 685 at 694). It is clear from the authorities - see, for instance, Julia Farr Services Inc v Hayes [2003] NSWCA 142 at [6] - that a stay of execution of some part of a judgment ordering the payment of money may be made. That stay should subsist until the disposition of this appeal, or until further order. 34 For the reasons set out earlier at [18 - 26], Stockland has established also that, unless and until the security offered by Mr and Mrs Stojanoski is forthcoming, it should have a stay of the whole of the judgment. But once that security is available in terms sufficient to preserve Stockland's legitimate interests, the stay should operate only as regards the amount specified in the preceding paragraph. The Tribunal's order for payment of the balance awarded - $206,628 plus interest - should be open to enforcement by Skiwing. The orders made 35 We make orders as follows:- 1. Execution of the orders made by the Tribunal on 20 May 2004 is stayed (a) until the occurrence of each of the following events:- (i) an agreement with Stockland is signed by Mr Zoran Stojanoski and Ms Brenda Stojanoski, whereby they agree that any order by the Appeal Panel for repayment of moneys obtained from Stockland in execution by Skiwing of the Tribunal's judgment dated 20 May 2004 in these proceedings may be executed against their interests as registered proprietors of the property described as Lot 41 in Deposited Plan 630990 and against the interest of Ms Brenda Stojanoski as the registered proprietor of the property described as Lot 3 in Strata Plan 2906; and (ii) a charge, registrable as a deed and creating a caveatable interest, over each of these properties is delivered to Stockland; and (iii) copies of the agreement specified in (i) and the charge specified in (ii), together with a letter from the solicitors for each party stating that their respective clients accept the terms of the agreement, the charge and the Undertaking specified in (iv), are lodged at the Tribunal; and (iv) delivery to the Tribunal of a formal Undertaking to the Tribunal, duly executed by Skiwing, Zoran Stojanoski and Brenda Stojanoski, to repay to Stockland all moneys paid to Skiwing by Stockland pursuant to the orders made by the Tribunal on 20 May 2004, if so ordered on the disposition of this appeal; or (b) until the disposition of this appeal; or (c) until further order (whichever first occurs). 2. On the occurrence of the events described in Order 1(a) made by this Panel, (a) execution is stayed, until the disposition of this appeal or further order, of (i) Order 1(a) made by the Tribunal on 20 May 2004, to the extent that it includes an award of $116,000 plus interest for 'loss of value'; and (ii) Order 1(b) of the Tribunal; and (b) the stay of execution imposed by Order 1 of this Panel is lifted with respect to the balance of $206,628 plus interest ordered by the Tribunal on 20 May 2004 to be paid by Stockland to Skiwing. 3. The costs of this application are reserved. 4. Liberty to apply.

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