Bechara & Anor v Perpetual Trustees & Ors No. Scgrg-94-1917 Judgment No. S6793

[1998] SASC 6793

JOSEPH BECHARA AND ANOR v

PERPETUAL TRUSTEES AUSTRALIA LTD AND ORS

[1998] SASC S6793

Civil

Debelle J

This is an application for a stay of the execution of a judgment. 

On 19 November 1997 Duggan J published reasons for judgment.  He did not then make any orders.  He said that he would not do so until he heard further submissions in the light of the findings he had made.  On 16 April 1998, after hearing submissions, he published further reasons.  It seems that thereafter he heard further submissions and it was not until 3 July 1998 that he made orders giving effect to his reasons for judgment.  On 13 July 1998 he made further orders varying the orders he had made on 3 July 1998. 

As might be imagined from this short history of the matter, the issues involved in these proceedings are complex.  There were four individual plaintiffs and five separate defendants.  It should be noted, however, that the interests of the third, fourth and fifth defendants are common in that they are partners in a firm of solicitors which had been sued.  The hearing of the action occupied a considerable period of time.  I am informed that there are some 7,000 pages of transcript and some 20 lever arch files of documents. 

The orders impose obligations on all of the parties.  Some of those obligations are contingent on certain events.  Others are not.  However, it is fair to observe that the judge appears to have intended that certain events should occur in a sequence.  

Para 1 requires the first defendant to discharge a mortgage and extensions of that mortgage granted by the plaintiffs upon payment of a sum of money called “the amount of the benefit” before 28 August 1998.  The obligation to pay the amount of the benefit is provided in para 2 of the order. 

Para 3 of the order stands independently of other orders.  It entitles the plaintiffs to recover from the second defendant the amount of the benefit plus costs and interest.  It is interesting that the order does not require the second defendant to pay those moneys within a specified period of time.  Thus, if the plaintiffs are to have the benefit of para 1 of the order, they must pay the amount of the benefit without necessarily having recovered it from the second defendant. 

Before dealing with other issues, it is convenient to refer to para 4 of the order.  Para 4 is intended to deal with the position if the plaintiffs do not pay the amount of the benefit to the first defendant before 28 August 1998.  In that event the second, third, fourth and fifth defendants are required by the order to pay to the plaintiffs the difference between the amount owing by the plaintiffs on the mortgage and the amount of the benefit.  It is common ground that the difference is an amount in excess of $1 million. 

All of the defendants have appealed against the decision.  The plaintiffs have instituted a cross-appeal.  The second defendant seeks a stay.  The third, fourth and fifth defendants also seek a stay of execution of the judgment.  The plaintiffs neither consent to nor oppose the stay.  The stay is opposed by the first defendant. 

It is necessary of course for those seeking a stay of execution to show cause why the stay should be granted.  The mere fact of an appeal does not act as a stay and, therefore, standing alone does not constitute sufficient ground upon which to order a stay. 

It is necessary to note some other matters.  I have already referred to the fact that there is no time limit prescribed by the order within which the second defendant must discharge his obligations under the order.  There is some debate as to assets which he has available to satisfy the judgment.  He has sworn an affidavit in which he lists his assets.  The plaintiffs are seeking further information.  But, if the position is truthfully stated in his affidavit, the assets of the second defendant are not sufficient to discharge the judgment debt.  His major asset is a one-half interest in the house in which he lives with his wife.  There is no current valuation of the value of that house.  His other major asset is the debtors of his accounting practice.  If that is the correct position, it is reasonable to infer that satisfaction of the judgment debt will ruin the second defendant.   That is a relevant factor: see Linotype-Hell Finance Ltd v Baker [1992] 4 All ER 887 at 888. In any event and more significantly, it will be some time before the plaintiffs are in a position to recover the assets. They have already put in train steps to ascertain what his assets are.

The plaintiffs themselves are invalid pensioners and they are not in a position to pay the amount of the benefit unless they recover it from the second defendant.  It is quite apparent that they will not be able to execute the judgment and recover the amount of the benefit from the second defendant pursuant to para 3 of the order before 28 August. 

It is curious to note that the third, fourth and fifth defendants could avoid the operation of para 4 of the order by agreeing with the plaintiffs to pay on their behalf the amount of the benefit being subrogated to the rights of the plaintiffs under the order and so recover the payment from the second defendant.  I refer to that fact not because it is a course that I suggest that they should necessarily adopt but because it does illustrate one curious quirk of the operation of this order.  There are good reasons why the third, fourth and fifth defendants who are in a position to adopt that course have not pursued it.  It lies in an uncertainty as to their ability to recover the amount of the benefit should they succeed in their appeal or some other contingency arise. 

Finally, it is to be noted that there are findings by the trial judge which suggest some unconscionability on the part of the second defendant.  

As I have said, the issues in this trial were complex.  That is apparent from a quick scanning of the reasons for judgment.  It is reflected also in the length of the trial and in the fact that the judgment is in excess of 100 pages.  It is reflected also in the fact that it has taken some eight months in which to work out the orders which are to give effect to the reasons for judgment. 

All of the parties have appealed and cross-appealed.  This is quite unlike the ordinary case where there is but a single plaintiff and a single defendant and the successful party wishes to have the benefit of his judgment.  Here, there are a series of orders some of which operate upon certain contingencies occurring.  Those orders involve all of the parties in one way or another.  In other words, the circumstances of this order, and in particular the interlinking nature of these orders, are quite unusual. 

The issues raised in the appeals are arguable and there is nothing on the face of any of the appeals which points to a case which clearly has no prospect of success. 

Finally it appears that the second defendant will be financially ruined if he has to meet this judgment.  If the third, fourth and fifth defendants are required to discharge the obligation arising by reason of para 4 of the order they will obviously be very much affected by that order.  It is impossible in all the circumstances to say to what extent because there is no evidence as to their financial capacity or whether they are protected by any policy of insurance in relation to their obligation.  It is sufficient to note that satisfaction of a judgment in excess of $1 million is in all the circumstances likely to have a very substantial financial impact upon them. 

I repeat the circumstances are quite unusual.  They are, in my view, sufficiently exceptional to justify a grant of a stay of the orders until the hearing and determination of the appeals. 

The plaintiffs have not applied for a stay of the orders but I think that for the reasons I have already expressed it is appropriate there be a stay of all of the orders made by Duggan J.  That is plainly necessary in order to protect the third, fourth and fifth defendants from any default by the plaintiffs in complying with para 2 of the order. 

There will therefore be orders:

1. Staying the operation of all of the orders made by Duggan J on 3 July 1998 as varied by the orders made on 13 July 1998. 

2. The first defendant will pay the costs of the hearings on 17 July, 30 July and 5 August associated with the stay but no other costs.

3. Fit for counsel.

4. Question of costs of the plaintiffs' application reserved.