Critchley v Conway (No 2)

[2009] NSWCA 217

NEW SOUTH WALES COURT OF APPEAL

CITATION:
Critchley & Ors v Conway & Anor (No 2) [2009] NSWCA 217

FILE NUMBER(S):
40181/09

HEARING DATE(S):
13 July 2009

JUDGMENT DATE:
27 July 2009

PARTIES:
Stephen Critchley (First Appellant)
Mudgee Wines Pty Limited (Second Appellant)
Eurunderee Wines Pty Limited (Third Appellant)
William James Whalley (Fourth Appellant)
Jane Margaret McLean (Fifth Appellant)
David Conway (First Respondent)
Mark Norman Thompson (Second Respondent)

JUDGMENT OF:
Beazley JA     

LOWER COURT JURISDICTION:
Supreme Court - Equity Division

LOWER COURT FILE NUMBER(S):
SC 6429/2008

LOWER COURT JUDICIAL OFFICER:
Debelle AJ

LOWER COURT DATE OF DECISION:
5 June 2009

LOWER COURT MEDIUM NEUTRAL CITATION:
Conway v Critchley & Ors [2009] NSWSC 499

COUNSEL:
G Sirtes SC (Appellants)
T Hall (Solicitor) (Respondents)

SOLICITORS:
Leonard Legal (Appellants)
Hall Partners (Respondents)

CATCHWORDS:
PRACTICE AND PROCEDURE – application for stay of judgment pending determination of appeal – application granted upon conditions

LEGISLATION CITED:

CASES CITED:
Alexander v Cambridge Credit Corp Ltd (1987) 9 NSWLR 310; (1987) 12 ACLR 202
General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125

TEXTS CITED:

DECISION:
Upon condition that the appellants pay to the Bank of Queensland on or before the due date, the monthly rental sum of $5,416.67 payable under the rental agreement between the Bank and the first respondent and his wife:
1. Order that the order made by Debelle AJ on 5 June 2009, that the appellants deliver up to the first respondent the items referred to in item (n) of the Schedule to those orders, be stayed until the disposition of the concurrent hearing for leave to appeal and the appeal or until further order;
2. Direct the appellants to advise the first respondent’s solicitor of the making of each such payment within 24 hours of the payment being made;
3. The appellants are to pay to the first respondent one half of the costs of preparation for the hearing of the notice of motion, together with the costs of the hearing on 29 June 2009.  The balance of the costs of the preparation for the hearing of the notice of motion and the costs of 13 July 2009 are costs of the appeal;
4. Grant liberty to apply within 24 hours in respect of the formulation of these orders or in respect of any further directions in respect of the implementation of the stay.

JUDGMENT:

- 5 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40181/09

BEAZLEY JA

27 July 2009

Stephen Critchley & Ors v David Conway & Anor (No 2)

Judgment

1. HER HONOUR:  On 29 June 2009, I gave judgment in this matter in which I refused to order a stay of orders made by Debelle AJ insofar as those orders related to certain barrels of wine and farming equipment.  I stood over the question as to whether a stay should be granted in respect of 33 storage tanks the first respondent contended were located on “Eurunderee”, a property in Mudgee at which the second appellant carries on a winery business.  

2. The first respondent contended on the summary judgment application that the 33 storage tanks are owned by the Bank of Queensland, but are the subject of a rental agreement between the Bank and himself and his wife.  The rental agreement provides that ownership of the tanks will pass to the first respondent and his wife upon payment of an amount of $80,000, which is payable by monthly instalments of $5,416.67.  The first respondent and his wife are entitled to use the tanks pursuant to the rental agreement. 

3. The first respondent contended that the storage tanks have been used by the second appellant since it took over the business of a company which went into liquidation.  The trial judge referred to this company as “Old Mudgee”. The second appellant, in effect, continued the business of Old Mudgee.  The first, third and fourth appellants were all associated with that business, as was the first respondent.  Their association continued with the second appellant, except that the first respondent, who was the winemaker with both Old Mudgee and the second appellant, had a falling out earlier this year and left the business.  The details of those associations, which are not relevant to the stay, are explained by the primary judge. 

4. The storage tanks had initially been leased by Old Mudgee from the Bank of Queensland.  The first respondent and his wife were guarantors of the leasing obligation.  Old Mudgee defaulted on its obligations under the leasing agreement and the Bank of Queensland took legal proceedings against Old Mudgee and the first respondent and his wife on the guarantee.  The first respondent and his wife entered into the rental arrangement with the Bank by way of a settlement of those proceedings.  The primary judge held, relevantly, that the first respondent had the right to immediate possession of the tanks. 

5. There was no evidence before the primary judge to contradict this evidence. However, the appellants contended before the primary judge that the first respondent had not established that the storage tanks located on Eurunderee and being used by the second appellant, are the same tanks as are subject to the rental agreement: see judgment at [32]. His Honour rejected this argument, which he considered to be without merit. However, his Honour did not identify the tanks subject of the rental agreement with the tanks that are on Eurunderee. Rather, he said, at [32]:

   “… Most of the tanks are substantial stainless steel tanks ranging in capacity from one 2500 litre tank to two tanks each of 50,000 litres. Fifteen of the tanks each have a capacity of between 5000 litres and 10,000 litres. A further fifteen tanks each have a capacity of 10,000 litres or more. Most of these tanks are not readily transportable save perhaps for the two small fibreglass tanks. The receiver left the tanks on the winery land. The Conways have not moved them. There is evidence from three persons, two of whom were employed by Old Mudgee, that the tanks have remained at the premises at Henry Lawson Drive. There is no evidence that any other person has moved them. The defendants do not say that they have moved them. In addition to all of that evidence, recital G of the deed of settlement between [the Bank of Queensland] and the Conways states that the tanks are situated on the winery land. The owner of the tanks would know where they are located. The evidence is overwhelming and very clear. I unhesitatingly find that all 33 tanks remain at the winery at Henry Lawson Drive and that they are the 33 tanks listed in Annexure B. Although [the Bank of Queensland] continues to own the tanks, it rents them to the Conways and the Conways are entitled as renters to have possession of them.”

6. The appellants contended that in circumstances where there is a genuine dispute as to whether the tanks on Eurunderee are the same tanks subject to the rental agreement, that issue should have been reserved for a final determination.  It followed that that question was not an appropriate matter to be determined by way of summary judgment:  General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125.

7. The first respondent submitted that in accordance with principle he was entitled to the fruits of the judgment.  He gave evidence that he wishes to use the tanks in a new business venture.  That business has not yet commenced although it is in the planning stages.

8. Summary judgment is a radical remedy.  For the purposes of the stay application, the appellants have raised sufficient evidence to demonstrate that there is an arguable appeal, notwithstanding the strong terms of the primary judgment.  I make no comment as to whether the case is one in which leave to appeal ought to be granted.  Nor do I make any comment as to whether the first respondent had established that each of the appellants had possession of the tanks, so as to render them liable to an order for delivery up.  

9. An arguable case is not necessarily sufficient for the court to order a stay:  see Alexander v Cambridge Credit Corp Ltd (1987) 9 NSWLR 310; (1987) 12 ACLR 202. However, given that the tanks which are on Eurunderee are currently being used by the second appellant in its business; that such tanks have been so used at least for 12 months; that the first respondent does not have an immediate need for the tanks; and that a concurrent hearing of the summons for leave to appeal and the appeal has been expedited, I consider that the balance of convenience dictates that a stay should be granted.

10. Such stay should be on conditions.  I raised the question of conditions with the parties on the first occasion that the matter was before me.  Both parties adduced evidence as what an appropriate rental figure would be should the second appellant have to rent replacement tanks.  None of the evidence was wholly satisfactory and ranged from $1,500 per month, on the evidence of the first appellant, and approximately $12,000 per month. 

11. It seems to me that the preferable approach is to require the appellants to pay the monthly payments to the Bank of Queensland.  That represents the actual cost to the first respondent relating to the tanks.  I will make the order until the determination of the appeal or until further order.  This will be to allow the parties, and the first respondent in particular, the opportunity to return to the Court to discharge the stay should unforeseen circumstances arise, or should there be any undue delay in the disposition of the matter in this Court.

12. A question of costs also arises.  The appellants have had only partial success on their application for a stay.  The matter has been in Court on two separate days and has been the subject of a significant volume of evidence and submissions, both written and oral.  I am of the opinion that the first respondent should have one half of the costs associated with the preparation for the stay application, including the preparation of affidavits.  He should also have the costs of the first day of hearing as he were successful in that part of the motion resolved on that day.  The balance of the costs of preparation of the second day of the hearing should be costs of the appeal. 

13. Accordingly, I make the following orders and direction:

    Upon condition that the appellants pay to the Bank of Queensland on or before the due date, the monthly rental sum of $5,416.67 payable under the rental agreement between the Bank and the first respondent and his wife:

    1.Order that the order made by Debelle AJ on 5 June 2009, that the appellants deliver up to the first respondent the items referred to in item (n) of the Schedule to those orders, be stayed until the disposition of the concurrent hearing for leave to appeal and the appeal or until further order;

    2.Direct the appellants to advise the first respondent’s solicitor of the making of each such payment within 24 hours of the payment being made;

    3.The appellants are to pay to the first respondent one half of the costs of preparation for the hearing of the notice of motion, together with the costs of the hearing on 29 June 2009.  The balance of the costs of the preparation for the hearing of the notice of motion and the costs of 13 July 2009 are costs of the appeal;

    4.Grant liberty to apply within 24 hours in respect of the formulation of these orders or any further directions in respect of the implementation of the stay.

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LAST UPDATED:
28 July 2009