Dogra v Dogra (No 3)

[2024] NSWCA 208

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation:

Dogra v Dogra (No 3) [2024] NSWCA 208

Hearing dates:

19 August 2024

Date of orders:

19 August 2024

Decision date:

19 August 2024

Before:

Griffiths AJA

Decision:

In respect of the appellant’s notice of motion filed 12 August 2024, order that:

1.  Order 4 of the orders made by Lindsay J on 22 December 2023 be stayed until 21 days after the determination of the appeal in these proceedings or until further order.

2.  The judgment/order of the District Court of New South Wales, Sydney Registry, Proceedings No. 2024/00275250 issued on 26 July 2024 be stayed until 21 days after the determination of the appeal in these proceedings or until further order.

3.  Costs of the motion be costs in the appeal.

In respect of the second respondent’s notice of motion dated 14 August 2024, order that:

1.  Upon the giving of an undertaking by the solicitor of the second respondent to bear any costs of filing, the notice of motion dated 14 August 2024 be filed in Court.

2.  Order 4 of the orders made by Lindsay J on 22 December 2023 be stayed until 21 days after the determination of the appeal in these proceedings or until further order.

3.  The judgment/order of the District Court of New South Wales, Sydney Registry, Proceedings No. 2024/00275250 issued on 26 July 2024 be stayed until 21 days after the determination of the appeal in these proceedings or until further order.

4.  Costs of the motion be costs in the appeal.

Catchwords:

APPEALS – procedure – stay pending appeal – where bankruptcy notices issued against appellant and second respondent in respect of costs order made below – whether risk that enforcement of costs order would stultify appeal and cross-appeal

Legislation Cited:

Bankruptcy Act 1966 (Cth), ss 40(1)(g), 41(6A)(a), 60(2)

Cases Cited:

Alexander v Cambridge Credit Corporation Ltd (receivers appointed) (1985) 2 NSWLR 685

City Garden Australia Pty Ltd (subject to deed of company arrangement) as trustee for the Ming Tian City Garden Unit Trust v Gemi 130 Pty Ltd [2024] NSWCA 139

Dogra v Dogra [2024] NSWCA 127

Dogra v Dogra (No 2) [2024] NSWCA 154

Fox v Percy (2003) 214 CLR 118; [2003] HCA 22

Kairouz v Jasper Nominees Ltd [2024] VSCA 68

McBride v Sandland (No 2) (1918) 25 CLR 369; [1918] HCA 59

Michael Hill Jeweller (Australia) Pty Ltd v Gispac Pty Ltd [2024] NSWCA 128

Porges v Adcock Private Equity Pty Ltd [2018] NSWCA 285

Shade Systems Pty Ltd v Probuild Constructions (Aust) Pty Ltd [2016] NSWCA 234

Sharpe v W H Bailey & Sons Pty Ltd [2014] FCA 921

Texts Cited:

Nil

Category:

Procedural rulings

Parties:

Aruna Dogra (Appellant)
Mamta Dogra (First Respondent)
Kapil Dogra (Second Respondent)

Representation:

Counsel:
C D Freeman (Appellant)
D O’Dea (sol) (First Respondent)
L Katsinas (Second Respondent)

Solicitors:
Goodwin & Co Lawyers (Appellant)
O’Dea Lawyers (First Respondent)
J.P. Capsanis & Co Lawyers (Second Respondent)

File Number(s):

2024/8811

Publication restriction:

Nil

 Decision under appeal 

Court or tribunal:

Supreme Court of New South Wales

Jurisdiction:

Equity

Citation:

[2023] NSWSC 1642

Date of Decision:

21 December 2023

Before:

Lindsay J

File Number(s):

2021/151823

JUDGMENT

1. This is the latest chapter in a lengthy saga of litigious disputes involving Ms Aruna Dogra, her daughter-in-law, Mamta Dogra, and her son, Kapil Dogra. I intend no disrespect if I refer to the parties by their first names. Mamta and Kapil were married for many years. They separated some years ago. Aruna and her son Kapil, together with two of Kapil and Mamta’s children, live in the former matrimonial home in Hurstville.

2. Aruna has appealed from orders made by Lindsay J on 22 December 2023 (see Dogra v Dogra [2023] NSWSC 1642). There have been two previous interlocutory proceedings in this Court. In the first (Dogra v Dogra [2024] NSWCA 127) Payne JA dismissed Mamta’s application to have the appeal dismissed or, alternatively, to obtain an order for security for costs. It should be noted that at [17], Payne JA said that, to the extent necessary for him to do so, he found that Aruna’s appeal is “brought bona fide and [is] reasonably arguable, albeit that it faces significant hurdles”. Those hurdles primarily relate to the obstacles presented by adverse credit findings made by Lindsay J against inter alia Aruna and Kapil.

3. Payne JA also delivered the second interlocutory judgment (see Dogra v Dogra (No 2) [2024] NSWCA 154). It involved a motion which was heard and determined on 21 June 2024. It resulted in a new hearing date being fixed for the appeal on 16 September 2024. Consequential orders were made for that hearing to occur.

4. A cross-appeal filed by Kapil will also be heard on that day. It raises 52 grounds of cross-appeal. I was informed that Mr Steven Golledge SC and Mr Simon Lipp have been retained to act for Kapil in the proceedings. I was given a copy of their outline of written submissions in the cross-appeal which reduces the grounds of appeal to only two grounds, namely:

1. that the primary judge erred in failing to find that the funds paid by Aruna to Kapil and Mamta actually belonged to Aruna; and

2. that the primary judge erred in failing to find that there was an agreement or understanding between Aruna and the other two parties to the effect that, if she made the financial contribution to purchase the Kogarah property, she would thereby acquire a beneficial interest in it and, subsequently, the Hurstville property.

5. It appears that the appeal is ready to proceed on that day, even though Aruna and Kapil are yet to file their reply submissions. The Court was informed that their delay was partly caused by Mamta’s submissions being filed late.

6. By a motion filed on 16 August 2024, Mamta has also made an application in the appeal to adduce fresh evidence. I understand that motion is returnable before the Registrar next week. None of this “fresh evidence” was before the Court in relation to the two stay applications.

7. It is desirable to say something briefly regarding the primary judgment by Lindsay J. Aruna claimed to have a beneficial interest in the former matrimonial home in Hurstville. She also claimed to have made significant contributions to an earlier matrimonial home in Kogarah. Lindsay J described the history of the deterioration in the parties’ relationship. His Honour observed at [105] that there were “substantial impediments” to Aruna’s claim. Those impediments primarily relate to the adverse credit findings I have referred to above. Lindsay J said at [111] that he accepted Mamta as “a witness of truth and an objective historian”. His Honour was not satisfied that Aruna had discharged her onus of establishing that there was an agreement or understanding between her and the defendants for her to acquire a beneficial interest in either the Hurstville property or the earlier property in Kogarah.

8. Lindsay J made the following orders:

For the reasons published as [2023] NSWSC 1642 and having allowed the parties an opportunity to make submissions about the form of orders and costs, Lindsay J makes the following notations and orders:

(1) DECLARE that the plaintiff has no right, title or interest in the land contained in Certificate of Title folio identifier 16/18644 and known as 14 Rosebank Crescent, Hurstville.

(2) ORDER that caveat number AP793162 be withdrawn forthwith.

(3) RESERVE to the first defendant such, if any, entitlements she may have to make a claim on the plaintiff’s undertaking as to damages recorded in order 1 of the orders made on 31 May 2021.

(4) ORDER that the plaintiff and the second defendant pay the first defendant's costs of these proceedings.

(5) NOTE that no orders are made as to the costs of the plaintiff and the second defendant to the intent that they each pay or bear their own costs.

(6) ORDER that these orders be entered forthwith.

9. A costs assessor assessed Mamta’s costs below in the amount of $163,226.36. On 26 July 2024, Mamta moved promptly to have the costs assessment entered as a judgment in the District Court. To date, the costs have not been paid by either Aruna or Kapil. The costs assessment was registered before the expiry of the period within which Aruna or Kapil could seek a review.

10. Mamta has served bankruptcy notices on both Aruna and Kapil. They are dated 8 August 2024. Aruna says that she has sought an extension of time to comply with the bankruptcy notice in proceedings brought under s 41(6A)(a) of the Bankruptcy Act 1966 (Cth) in the Federal Court. The Court understands that Aruna’s application is returnable in the Federal Court on 22 August 2024. The Court was informed that Kapil proposes to make a similar application this week.

11. By a notice of motion filed 12 August 2024, Aruna seeks that order 4 made by Lindsay J, and the associated costs assessment judgment, be stayed until 21 days after the determination of the appeal. The motion is accompanied by an affidavit of Shenghai Mo dated 12 August 2024 and submissions dated 16 August 2024. Aruna also relies on an affidavit dated 24 April 2024, which was previously read in the security for costs application. The affidavit establishes that Aruna is impecunious. She is 80 years old and has been diagnosed with several medical conditions, which have significantly impacted her mobility. She currently receives a Centrelink fortnightly pension. She deposes, and I accept, that she is unable to meet the costs judgment.

12. Kapil moves on a notice of motion dated 14 August 2024. He was given leave to file the motion in Court on an undertaking by his solicitor to pay any required fees. The notice of motion seeks similar relief to that sought by Aruna.

13. On 17 August 2024, Kapil provided brief written submissions, which largely adopt Aruna’s position, accompanied by an affidavit by him sworn 17 August 2024. That affidavit states that Kapil’s average income is $42,000 gross per annum, based on unspecified contract work. He deposed that he has an amount of slightly less than $1,000 in his bank accounts and that the Hurstville property is his only substantial asset. That property is the subject not only of the equity proceedings, but also of proceedings in the Federal Circuit and Family Court where there is apparently a pending property dispute.

14. Kapil deposed at [12] that he does not have the means to fulfill the costs orders and that if he is unsuccessful in his stay application and is made bankrupt prior to the final determination of the appeal, it will take away his ability to work as a registered migration agent. I accept that evidence.

15. Kapil gave evidence of his financial circumstances generally, including his estimate of payments he has made over the last three years in respect of the Hurstville property and the welfare of his children. He deposed, and I accept, that his savings and funds have been depleted and he has relied on borrowing money from his sister and friends, as well as his work as a migration agent. I also accept his evidence that his sister and his friends are unwilling to lend him the amount of the costs order.

16. Mamta provided a written outline of submissions dated 16 August 2024 opposing the motions. She also relied upon two affidavits by her solicitor, Mr Damien O’Dea. The affidavits are dated 28 March 2024 and 16 August 2024.

17. Most of the evidence was admitted without objection. Part of Mr O’Dea’s evidence was ruled inadmissible and was treated as submission only.

Principles applicable to a stay pending an appeal

18. The relevant principles are well-known and are not in dispute. They are conveniently summarised by Payne JA in Michael Hill Jeweller (Australia) Pty Ltd v Gispac Pty Ltd [2024] NSWCA 128 at [5] (cited by Meagher JA in City Garden Australia Pty Ltd (subject to deed of company arrangement) as trustee for the Ming Tian City Garden Unit Trust v Gemi 130 Pty Ltd [2024] NSWCA 139 at [21]):

The principles governing the grant of a stay pending an appeal are well-settled, as the parties on this application agreed. They are analogous to those which govern the grant of interlocutory relief before trial: Alexander v Cambridge Credit Corp Ltd (1985) 2 NSWLR 685 at 694-5, Kalifair Pty Ltd v Digi-Tech (Australia) Ltd (2002) 55 NSWLR 737; [2002] NSWCA 383 at [18]. A party applying for a stay must show, first, that the appeal raises serious issues for determination by the appellate court; and secondly, that there is a real risk that the appellant will suffer prejudice or damage if the stay is not granted. If an appellant prevails on those two questions, then the Court is to consider the balance of convenience and the competing rights of the parties: Pamplin v Irwin [2024] NSWCA 112 at [11] per Leeming JA.

19. The above summary of the general principles does not preclude the potential relevance of other matters in considering whether or not to grant a stay pending an appeal. Two of those matters are identified in Alexander v Cambridge Credit Corporation Ltd (receivers appointed) (1985) 2 NSWLR 685 at 695. The first is that where there is a risk that the appeal will prove abortive if the appellant succeeds and the stay is not granted, the discretion is normally exercised in favour of granting a stay. Accordingly, where it appears that an appeal will be rendered nugatory unless a stay is granted, this will be “a substantial factor” in favour of granting a stay.

Interaction with bankruptcy notices

20. The relevant bankruptcy notices relate solely to the unpaid costs sum. The time for compliance is fixed as 21 days. Thus both Aruna and Kapil will commit an act of bankruptcy under s 40(1)(g) of the Bankruptcy Act 1966 if they fail to satisfy the claimed debt within 21 days of the date of service, unless an extension of time is obtained or the respective notices are set aside.

21. As noted above, Aruna’s application for time to be extended is returnable before the Federal Court on 22 August 2024.

22. It may be anticipated that a relevant consideration in respect of Aruna’s application and Kapil’s foreshadowed application in the Federal Court is whether there is in place a stay in relation to the judgment which underpins the bankruptcy notices (see Sharpe v W H Bailey & Sons Pty Ltd [2014] FCA 921 at [29] per Gleeson J).

23. If Aruna is made bankrupt, her appeal proceeding would be automatically stayed until the trustee in bankruptcy elected to proceed or discontinue the proceeding. The same position applies to Kapil and his cross-appeal. They both contend that this could effectively render their proceedings inutile, particularly if they ultimately succeeded in the appeal and cross-appeal respectively.

24. The starting point is that a successful party is entitled to the fruits of its judgment (McBride v Sandland (No 2) (1918) 25 CLR 369 at 374; [1918] HCA 59). Despite that, courts have often granted stays pending appeals where the appellant is at risk of being made bankrupt if a stay were not granted. The essential reason is that the appeal would be rendered nugatory in the case of the appellant’s bankruptcy; and in that way the appellant would suffer a significant prejudice if a stay were not granted.

25. In Shade Systems Pty Ltd v Probuild Constructions (Aust) Pty Ltd [2016] NSWCA 234, the appellant, Shade, sought to stay the costs order made below. Shade was close to insolvency. Basten JA granted the stay. One reason was that the appeal raised an important issue as to the ability to quash an adjudicator’s determination under security of payments legislation in the absence of jurisdictional error. Moreover (at [11]):

In these circumstances, there is an important issue raised by the appeal as to which the appellant has reasonable prospects of success; it would be unfortunate if the appeal were precluded or delayed because the appellant is presently liable to an immediately enforceable liability to pay the respondent's costs in the Equity Division, which could lead to the appointment of a liquidator. There may be other outstanding amounts which might also lead to the appointment of a liquidator, but regarding which there is insufficient information before the Court to place any weight upon them. Otherwise, the amount the subject of the claim is a significant amount. It would appear, and as will be noted presently, it is part of the respondent's case, that should the appellant succeed on the appeal the amount which will be recoverable pursuant to the adjudication will be sufficient to pay the outstanding liabilities of the company and allow the company to continue to operate.

26. In granting a stay pending appeal in Porges v Adcock Private Equity Pty Ltd [2018] NSWCA 285, Macfarlan JA considered as important the risk that the Federal Court would not extend the time for compliance with the bankruptcy notice if a stay were not granted; the applicant’s likely inability to comply with the bankruptcy notice and the concomitant reputational damage (as the applicant would be unable to continue as a director); the risk that bankruptcy proceedings would be brought promptly and before hearing and determination of the appeal; the fact that the applicant would lose control of his appeal if declared bankrupt; the lack of prejudice to the respondent, given the applicant had no assets which could be used to satisfy the judgment now and which might be unavailable in the future; and the limited duration of the stay.

27. Different principles apply to the granting of a stay pending an appeal in Victoria, where “special or exceptional circumstances” must be shown to exist before a stay will be granted (see, eg, Kairouz v Jasper Nominees Ltd [2024] VSCA 68 at [22]-[23] per Walker JA). In that case her Honour granted the stay for reasons which are set out at [25]:

In the present case, I accept that, unless the Federal Circuit Court sets aside the bankruptcy notice, it is very likely that Mr Kairouz will be made bankrupt. That is, there is not merely an assertion of a risk of bankruptcy — given the issue of the bankruptcy notice, and Mr Kairouz’s financial position, it is likely that bankruptcy will eventuate if a stay is not issued. I also accept that Mr Kairouz’s ability to prosecute his application for leave to appeal would be impeded if he is rendered bankrupt. That is principally a consequence of the fact that upon his bankruptcy, his application for leave to appeal will be automatically stayed until the trustee in bankruptcy makes an election to proceed with or discontinue the proceeding. That is, conduct of the application for leave to appeal will lie with his trustee in bankruptcy.

28. Generally, the Court will not speculate about an appellant’s prospects of success, but usually the Court will make a preliminary assessment about whether the appellant has an arguable case.

29. For the following reasons I consider that Aruna and Kapil should obtain stay orders.

30. On a preliminary assessment, I do not consider either the appeal or cross-appeal to be particularly strong. But nor do I consider either to be frivolous, unreasonable or lacking any merit. Counsel for Aruna added that one of the proposed grounds of appeal raises a separate issue, independently of Fox v Percy constraints (see Fox v Percy (2003) 214 CLR 118; [2003] HCA 22). It relates to whether the primary judge erred in refusing leave to cross-examine Mamta on matters which arose in Local Court proceedings which Aruna claims are adverse to Mamta’s credit. Aruna’s counsel candidly conceded that she may have difficulty overcoming the adverse credit findings made by the primary judge and the principles associated with such findings.

31. Counsel for Kapil emphasised how the cross-appeal was now narrowed by the outline of written submissions. He said that the cross-appeal will also rely upon Aruna’s claim that the primary judge wrongly narrowed the ambit of Mamta’s cross-examination on credit.

32. Turning to the issue of the relevant risk of prejudice and other discretionary considerations pertaining to the balance of convenience, the appeal and cross-appeal are now scheduled to be heard in four weeks’ time, which is imminent. There was no claim that either Aruna or Kapil has been dilatory in the preparation of those proceedings. On the contrary, it appears that Mamta has caused some delay in the late filing of her written submissions.

28. I am particularly concerned that there is a risk that if the costs orders are not stayed, sequestration orders could be made against either or both Aruna and Kapil before this Court has an opportunity to publish reasons for judgment. This could have the effect of rendering those proceedings inutile. Depending on the timing of any such order, both Aruna and Kapil could lose control of the respective proceedings if the official trustee in bankruptcy becomes involved on the making of any sequestration order.

29. Based on the material before me, I reject Mamta’s challenges regarding the financial circumstances of either Mamta or Kapil. Neither was required for cross-examination. There is no reason to doubt Aruna’s evidence as to her age, medical issues or dependency on her Centrelink pension. I also accept her evidence that she no longer has the opportunity to borrow money from family or friends to pay the costs. The Court has no evidence before it as to the arrangements or cost agreement Aruna has with her legal representatives which have enabled her to prepare the appeal to date.

30. I turn to Kapil’s financial circumstances. No reason has been advanced for doubting his evidence regarding his financial circumstances. Mr O’Dea, who appeared for Mamta, invited the Court, based on ASIC records, to find that Kapil, and not his sister, controlled the company which provided migration agency services by various personnel, including Kapil. I would not make any such finding in circumstances where Kapil was not required to attend for cross-examination and was given no opportunity to respond to such a serious allegation.

31. Mr O’Dea also challenged Kapil’s evidence relating to his estimated income as a migration agent and his estimates of the money he has spent on mortgage repayments, education and the children’s welfare. I do not accept those contentions in circumstances where Kapil was not required to attend for cross-examination.

32. As to Mr O’Dea’s submission that Kapil’s expenditure far outweighed his income as a migration agent, with the consequence that the Court should find that he has access to other available sources of income, this overlooks [11] of Kapil’s affidavit. He acknowledged there that apart from using his own savings and funds for the various cases in which he has been involved, he has also borrowed money from his sister and friends. None of those persons is now willing to lend him the amount of the costs order. I have no reason to doubt that evidence.

33. I appreciate that Mamta is prima facie entitled to enjoy the fruits of her victory and that she also has incurred significant legal costs over many years in relation to the present and other proceedings. I consider, however, that the balance of convenience weighs more heavily in favour of Aruna and Kapil than it does for Mamta.

Conclusion

39. For all these reasons, I will grant the relief sought in both motions. The costs of those motions should be costs in the appeal. I therefore make the following orders:

In respect of the appellant’s notice of motion filed 12 August 2024, order that:

(1)   Order 4 of the orders made by Lindsay J on 22 December 2023 be stayed until 21 days after the determination of the appeal in these proceedings or until further order.

(2)   The judgment/order of the District Court of New South Wales, Sydney Registry, Proceedings No. 2024/00275250 issued on 26 July 2024 be stayed until 21 days after the determination of the appeal in these proceedings or until further order.

(3)   Costs of the motion be costs in the appeal.

In respect of the second respondent’s notice of motion dated 14 August 2024, order that:

(1)   Upon the giving of an undertaking by the solicitor of the second respondent to bear any costs of filing, the notice of motion dated 14 August 2024 be filed in Court.

(2)   Order 4 of the orders made by Lindsay J on 22 December 2023 be stayed until 21 days after the determination of the appeal in these proceedings or until further order.

(3)   The judgment/order of the District Court of New South Wales, Sydney Registry, Proceedings No. 2024/00275250 issued on 26 July 2024 be stayed until 21 days after the determination of the appeal in these proceedings or until further order.

(4)   Costs of the motion be costs in the appeal.

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Decision last updated: 19 August 2024