Zheng v Ianni & Ors

District Court of NSW|2021-11-10|Before: Mr J, Beazley JA

Background

On 30 September 2021, I delivered reasons for judgment in which the plaintiff obtained a monetary judgment in the sum of $317,180 against the third and fourth defendants [1] . On 18 October 2021, I determined that the third and fourth defendants should pay a gross lump sum for costs in the amount of $190,000 [2] .
By a notice of motion dated 28 October 2021, the third and fourth defendants (the applicants) applied for a temporary stay of these orders until 30 December 2021. They have filed a notice of intention to appeal. The purpose of the stay is hold the status quo until the date for filing of a notice of appeal has passed.
The motion was supported by an affidavit of the third defendant, Mr Daoud, who also represented his authority to depose the affidavit on behalf of his wife, the fourth defendant, Mrs Daoud.
As was noted in the Liability Judgment and Costs Judgment, the applicants are pensioners. They were represented pro bono, by Counsel at the trial.
The plaintiff, the respondent on the motion, opposed the application. The respondent relied on two affidavits of his solicitor, Mr Ko, who affirmed an affidavit dated 2 November 2021 and one dated 8 November 2021.
After the Court had received the stay application, I arranged for my Associate to email the legal practitioners for the parties certain directions for the exchange of evidence and submissions and provided a hearing date for oral argument to occur 'remotely'. (Since early November, I have been sitting in the Court's criminal jurisdiction in Penrith). In response to that email communication, it became apparent that the nominated date for argument did not suit the convenience of the applicants, or their representative. No other suitable date was suggested. Given this indication, I arranged for further inquiry to be made of the parties as to whether it was necessary to conduct a hearing (remotely) of the application or whether it would be sufficient to determine the application on the papers, being the written submissions of the parties supplied to the Court in response to the timetable that was set. Senior and Junior Counsel for the respondent to the application argued that it was appropriate for the application to be determined on the papers and the legal representative for the applicants expressed his clients' position not to oppose that course.

Principles

The application is brought pursuant to ss 67 and 135 of the Civil Procedure Act 2005 (NSW) (the 'CP Act'). As with other procedural applications, the power to grant a stay is exercisable with reference to case management principles and the dictates of justice (s 58(1)(a)(ii) of the CP Act).
The principles relating to stay applications were identified in Alexander v Cambridge Credit Corp (1985) 2 NSWLR 685. An applicant's ability to identify reasonably arguable grounds of appeal is highly relevant to the exercise of the discretion, although even then, that factor alone is not necessarily sufficient. Their absence is likely to be a determinative consideration against it: Chen v Lym International Pty Ltd [2009] NSWCA 121 per Beazley JA at [15].
Other relevant circumstances pointing in favour of the grant of a stay in ordinary civil proceedings are where the applicant can demonstrate that refusal of it would render the appeal futile; where money paid to the respondent in whole or partial satisfaction of the judgment may be irrecoverable if the appeal is successful; or whether the refusal of the stay would deprive the appellant of the means of prosecuting the appeal, or perhaps cause one or other of the parties to incur a significant financial burden (Ritchie's Uniform Civil Procedure NSW, [51.44.15]).
It is well-established that a stay may be subject to certain terms. This may include the provision of security for the judgment debt; although it may also involve the respondent giving an undertaking for repayment if the appeal succeeds.
The considerations I have adverted to are especially pertinent when dealing with applications for a stay pending determination of an appeal.
But this application stops short of an application for a stay pending determination of appeal. It is an application for a temporary stay in order for the applicant to decide whether to bring an appeal at all.

The applicants' evidence

Mr Daoud deposed to being "completely shocked" by the decision which, of course, was adverse to his and his wife's interests. He explained that he did not hire the plaintiff to work on the site nor cause him to fall as scaffolding was in place when he was told to leave the site.
He complained that he was not allowed to show that the plaintiff was not seriously injured, or continued to be injured, as a result of the settlement of the plaintiff's claim against the first and second defendants, shortly before the trial; which settlement, he claimed, had not been conveyed to his lawyers.
He expressed his belief that he had a good case to appeal the Court's decision generally or, alternatively, on the assessment of damages and, as earlier indicated, filed a Notice of Intention to Appeal. He deposed to understanding that he would have to file a Notice of Appeal by 30 December 2021, being the end date of the proposed stay.

Mr Ko's affidavit of 2 November 2021

Mr Ko's first affidavit included correspondence sent to the applicants' solicitor on the date that the Liability Judgment was delivered but before the Costs Judgment was delivered. Prior to that, Mr Ko had sent a letter (dated 10 September 2021), before the Liability Judgment was delivered, in which a request was made of the applicants not to dissipate assets; and threatening an application for a freezing order.
After the Liability Judgment was delivered, on 1 October 2021, the applicants provided an undertaking to the respondent not to dispose of their assets, including in particular, their residential property. Then on 5 October 2021 and, still before the Costs Judgment was delivered, the respondent pressed for a caveat to be lodged in relation to their residential property. A proposed deed was attached. That proposed Deed contained provision for the lodgement of the caveat, along with undertakings (by the applicants) not to lodge a lapsing notice against it and to withdraw it once the judgment debt was satisfied. It also contained provision for a further undertaking by the applicants not to dispose of their significant assets, including their residential property.
The day after the Costs Judgment was delivered on 18 October 2021, crystallising a total liability (inclusive of costs) in the applicants of $507,180, the respondent's lawyers inquired of the applicants' solicitor, Mr Khoury, as to how the judgment debt could be satisfied. Mr Khoury indicated that he would obtain instructions and supply advice on 29 October 2021.
Without further response to the respondent's lawyers, the applicants' lawyer filed the present motion at 12:58pm on 28 October 2021. On Friday, 29 October 2021, after the motion came to my attention, I arranged for my Associate to notify the solicitors for the parties of a timetable for the exchange of submissions and some evidence before the hearing. Mr Ko deposes that this was the first time he had learnt of the motion. He also deposed to accessing the Court's Online Portal to access the motion.
After business hours on 29 October 2021 (a Friday, at 5:18pm), Mr Khoury emailed Mr Liew (copying Mr Ko) a sealed copy of the motion with Mr Daoud's supporting affidavit.
In apparent response to the directions the Court made in relation to the subject motion, at 10:36am on 1 November 2021, Mr Khoury emailed Mr Liew and stipulated that the applicants required (and sought the respondents' consent to) a stay for a duration of approximately two months, being 30 December 2021, in order to allow the applicants the opportunity to lodge an appeal, or attempt to borrow in order to meet the judgment debt (including the costs component). If neither option was possible, the applicants might attempt to sell their property or become bankrupt. Mr Khoury stated that "our clients do not have any funds".
At 12:04pm on the same day, Mr Liew requested particulars from Mr Khoury of the applicants' efforts to obtain a loan to pay the judgment sum (and costs) but otherwise indicated that the respondent opposed the stay application.
At 2:30pm on the same day, Mr Khoury emailed Mr Liew back; impliedly suggesting that opposition to the stay, for the period requested, did not assist anyone and it was beneficial for all if they had the opportunity to raise funds in lieu of going bankrupt. Mr Khoury commented that consent to the stay of the duration requested (two months) would not prejudice the respondent given the limited timeframe.

Mr Ko's affidavit of 8 November 2021

In this affidavit, Mr Ko deposed to a conversation on 4 November 2021 with Christina, of the law firm RM Legal, to the effect that the applicants were in the process of selling their property, and wanting more time, being three or four weeks.
In response to that conversation, Mr Ko sent an email, at 5:27pm on the same day, to Mr Khoury, alluding to the conversation and inquiring of Mr Khoury whether he was aware of the firm RM Legal being engaged by the applicants, and citing his understanding that RM Legal was only acting for the applicants on the conveyance whilst Mr Khoury's firm continued to act for the applicants in the litigation. The email invited reply from Mr Khoury, but none was forthcoming at the date the affidavit was affirmed.

The applicants' submissions

The applicants pointed to the short duration of the proposed stay, which would end on the last date that the applicants propose to file a Notice of Appeal.
In their solicitor's written submissions, the applicants frankly say that they are unable to satisfy the judgment debt other than through obtaining assistance from family or from borrowings. They state that they have been unable to locate lawyers to act for them on an appeal on a pro bono basis, as they had at trial. It is not clear to me from this whether the last reference, made to lawyers, is a reference to Counsel alone, or whether it extends to an instructing solicitor. Mr Khoury did not directly say that he was unwilling to act for the applicants in any appeal.
Reference was made to the applicants obtaining an independent view that the prospects of an appeal were good especially since the law on vicarious liability was unsettled.
The applicants are fearful that should the appeal succeed, the respondent would obtain the judgment award and transfer it overseas to his family in China and therefore be unable to effect restitution if the judgment is set aside on appeal.
The applicants argue that, having regard to the short term nature of the stay, the respondent is not seriously prejudiced; notwithstanding the pressure that the respondent's lawyers have exerted to enforce the judgment. In the event that the applicants do not lodge the appeal, they are likely to become bankrupt. They are already taking some preliminary steps through discussions with a real estate agent to ascertain the market for a sale of their home.
On the other hand, rejection of the application may occasion stress in the health of the applicants, two aged pensioners.
The short term stay will not only give the applicants time to finally determine whether to lodge an appeal, but also give them some space to find alternative accommodation. The short term stay would give the applicants time to negotiate with the respondent.

The respondent's submissions

The respondent alludes to the well-established principle (reflected also in r 50.7 of the Uniform Civil Procedure Rules 2005 (NSW)) that merely filing an appeal does not discharge an applicant for a stay's onus. He pointed to the absence of any clearly identified or articulated arguable grounds of appeal. The applicants have not been diligent in prosecuting an appeal to secure a stay.
The respondent notes that no terms of a stay have been proposed, which would provide some protection for the respondent's rights. There is also a risk of disposal of the applicants' assets if the stay is granted.
The respondent argues that the applicants' request for time to facilitate a 'negotiation' with the respondent and the steps they have apparently set in train to sell their home suggests that an appeal is not being seriously contemplated. Granting a stay would be contrary to the parties' recent mutual endeavours to satisfy the judgment debt.

CONSIDERATION

The respondent's submissions regarding a lack of articulation about arguable grounds of appeal and delay since the principal judgment was delivered have force.
Nevertheless, it is to be recalled that the application for stay is limited in its scope or duration, being the last date upon which a notice of appeal could be filed.
It is also to be observed that it was evident at the trial that the applicants, aged pensioners who it is said (without challenge) have a single substantial asset, the family home, were represented by Counsel acting for them pro bono. The recent activity of the applicants suggests that the only means they have to satisfy the judgment will be by the sale of the family home; and it is not clear the extent to which that will satisfy the judgment debt and the costs order. At any rate, the sale of the family home is likely to give rise to problems for the applicants down the line in terms of their capacity to obtain accommodation; where neither are working. For all intents and purposes, it appears that if they decide to appeal, they will again have to rely upon Counsel to act for them on a pro bono basis, should they choose to seek representation by Counsel.
Although the applicants may not have shown a great deal of alacrity in ascertaining legal advice about arguable grounds for appeal, I take into account their plausible evidence that since the judgment was delivered on 30 September 2021 it may not have been easy for them to readily obtain Counsel to appear for them pro bono on appeal, as they did at trial (part of that time coinciding with the last stages of the lockdown in the Greater Metropolitan Sydney region). Although Mr Daoud's subjective belief in the strength of his case at trial is immaterial in terms of any preliminary assessment of the prospect of a successful appeal, it may also help explain some disorientation since the main judgment was published and accordingly, partly explain the delay. I also take into account that the application of the legal principles at trial was far from straightforward. An indication of that was the respondent's representation at trial by an experienced Senior Counsel.
Subject to one matter, the considerations strongly weigh in favour of the application.
My reservation is the absence of any offer of terms by the applicant as the price for a stay, even for the limited duration sought here.
Having regard to current activity regarding the sale of the property, it seems to me that it would be an appropriate term that the applicants undertake to the Court not to dispose of any proceeds obtained from the sale of their home pending the duration of the stay. Although an undertaking was given by the applicants to the respondent on 1 October 2021, it did not appear to be renewed when the respondents offered it on 5 October 2021. An undertaking to the Court is of a qualitatively different order than an inter partes undertaking.
Following the respondent's submissions, which alluded to the absence of any offering by them of a term for the stay, the applicants were invited to make a further submission as to terms. Following that invitation, the applicants' solicitor indicated that the applicants were willing to provide an undertaking to the Court in the following terms: "the applicants hereby undertake to the court not to dispose of the proceeds of sale of their resident property (other than the mortgage debt, legal and agent's fees) and to place the net proceeds in their Solicitor's trust account if their application for the stay is granted."
I consider that an undertaking in those terms, for the duration of the limited stay, is sufficient to protect the respondent's interests.

ORDER

Upon the applicants' undertaking to the Court not to dispose of the proceeds of sale of their resident property (other than the mortgage debt, legal and agent's fees) and to place the net proceeds in their Solicitor's trust account, the order (made on 30 September 2021) that the applicants pay the respondent the judgment sum of $317,180 and the order (made on 18 October 2021) for the applicants' to pay the respondent's costs of the proceeding in the sum of $190,000 are stayed until 30 December 2021 or until any earlier order.
The costs of the motion are: 1. in the event that a notice of appeal is filed, costs in the cause; or 2. in the event that no notice of appeal is filed, borne by the parties.

Endnotes

Zheng v Ianni & Ors (No.3) [2021] NSWDC 521 (the 'Liability Judgment')
Zheng v Ianni & Ors (No.4) [2021] NSWDC 559 (the 'Costs Judgment') DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 10 November 2021

Civil Procedure Act 2005(NSW)ss 58, 67, 135

At a glance

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Judgment (10 paragraphs)

Parties

Legislation Cited (2)

Cases Cited (4)