Doppstadt Australia Pty Ltd v Lovick and Son Developments Pty Ltd

[2013] NSWCA 133

Court of Appeal

New South Wales

Case Title:

Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd

Medium Neutral Citation:

[2013] NSWCA 133

Hearing Date(s):

17 May 2013

Decision Date:

21 May 2013

Before:

Barrett JA

Decision:

1. Set aside the orders made by me on 9 May 2013.
2. Upon Raymond John Davis and Sue Davis by their solicitor Michael Flaherty giving to the Court the undertaking set out in paragraph 7 of the affidavit of Michael Flaherty sworn 22 April 2013 and filed herein, it is ordered that the stay orders made on 10 May 2013 continue until determination of the appeal or earlier order of the Court.
3. Direct that Raymond John Davis and Sue Davis perform sub-paragraph (b) of the said undertaking within four weeks from the making of these orders.
4. Grant to the respondents liberty to apply in consequence of performance or non-performance of the said sub-paragraph (b).
5. Order that the respondents pay the appellants' costs of the stay application.

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Catchwords:

PROCEDURE - stay of money judgment pending appeal - stay refused - application to re-open granted - evidence not previously taken into account considered - stay granted

Cases Cited:

Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd [2013] NSWCA 106

Category:

Consequential orders

Parties:

Doppstadt Australia Pty Ltd - First Applicant
Raymond John Davis - Second Applicant
Lovick & Son Developments Pty Ltd - First Respondent
Lovick Engineering Pty Ltd - Second Respondent

Representation

- Counsel:

C C Hodgekiss SC/H F Woods - Appellants
S E Gray - Respondents

- Solicitors:

Michael Flaherty Solicitor - Applicants
Whiteley, Ironside & Shillington - Respondents

File Number(s):

2013/87009

JUDGMENT

1. On 9 May 2013, I ordered that an application by the defendants below seeking a stay of a substantial money judgment and other orders against them be dismissed with costs: see Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd [2013] NSWCA 106.

2. Those unsuccessful applicants applied promptly for an order re-opening the judgment on the ground of an apprehension that I had failed to take into account evidence in one of the affidavits read by their counsel on the original application. Because that apprehension was well-founded I allowed re-opening and heard further submissions on Friday last, 17 May 2013, at the same time reinstating until further order a temporary stay that had expired.

3. The decision of 9 May 2013 proceeded on the basis that the Court did not have available to it any material that would enable it to make an assessment of the financial capability of the applicants, present or projected. As a result, I concluded that there was no degree of assurance that, if a stay was ordered and the respondents were precluded from enforcing their judgment, money would be available to meet the judgment debt in the event that the appeal was ultimately unsuccessful.

4. That view failed to take account of evidence in the affidavit of Mr Flaherty, the applicants' solicitor, dated 22 April 2013 which set out details of various properties owned by one of the applicants (Mr Davis) and his wife. Mr Flaherty also deposed, in paragraphs 6 and 7 of the affidavit:

   "6. I am informed by each of Ray and Sue Davis and verily believe that:

   (a) each of the properties are currently mortgaged to the Westpac Banking Corporation and secure, by way of cross collateralisation, various loans including business loans; and

   (b) although they can not say accurately either the current improved market value of each of the properties or the current total amount secured by the properties, they firmly believe there is a substantial amount of equity in the properties.

   7. I am further informed by each of Ray and Sue Davis and v verily believe that they are prepared to undertake to the Court that:

   (a) pending the determination of the Appeal, they will not chare, mortgage, otherwise further encumber, transfer or sell any of the properties without first giving notice to the solicitors for the Respondents of their intention to do so; and

   (b) if required by the Court to do so, within four weeks they will provide to the Respondents:

   (i) a market valuation of the properties identified in Annexure A;

   (ii) the present level of debt to Westpac secured by the properties identified in Annexure A."

5. The annexures to the affidavit show that Mr Davis and Mrs Davis are the registered proprietors, as joint tenants, of six items of real property each of which is mortgaged to a bank; and that the properties had a combined taxable value, for the land tax year 2012, of some $13 million.

6. There is no evidence of the amount of the liabilities of Mr Davis and Mrs Davis (whether secured by the bank mortgage, secured in other ways or unsecured) beyond the hearsay evidence of the solicitor that, according to what he has been told by Mr Davis and Mrs Davis, they "firmly believe" that "there is a substantial amount of equity in the properties" - which I understand to mean that the debt secured on the properties is substantially exceeded by their value. That of course, says nothing about other debt.

7. It was submitted on behalf of the respondents on the re-opened hearing that this evidence did little, if anything, to remedy the deficiency; and that, upon assessment, the information available about the applicants' financial strength was of no better quality, when it comes to assessing financial strength, than that the deficient information concerning the respondents' financial strength discussed in the original judgment.

8. While there is some cogency to that submission, there are important differences.

9. In the first place, there is evidence of the value of the land owned by Mr Davis and Mrs Davis. There was, with one exception, no evidence suggestive of values of third-party owned properties upon which the respondents relied in an attempt to demonstrate financial capability.

10. Second, Mr Davis - one of the joint owners of the several parcels of land - is a party to the litigation. The money judgment stands against both him and Doppstadt Australia Pty Ltd. One of the applicants is thus shown to have substantial assets. In the case of the respondents, such assets as were shown were owned by third parties whose interests would presumably not be served by making them available to meet liability of the respondents.

11. These differences persuade me that, despite the absence of evidence permitting any precise calculation of funds available to the applicants (or, more precisely, Mr Davis), there has been a showing of likely financial capacity on the part of one of the applicants (Mr Davis) which, when considered in the light of the undertakings proffered in paragraph 7 of the affidavit, warrants a continuation of the stay reinstated on 10 May 2013.

12. The effect of the undertakings is that the respondents will have more detailed financial information in a short time. If that information produces in them an apprehension that there is, in truth, insufficient financial substance, having regard to what is owed to them by Mr Davis and Doppstadt Australia Pty Ltd, they will be in a position to seek termination of the stay.

13. Grant of the stay means that the orders made on 9 May 2013 should be set aside and replaced by orders in favour of the applicants.

14. The orders are as follows:

    1. Set aside the orders made by me on 9 May 2013.

    2. Upon Raymond John Davis and Sue Davis by their solicitor Michael Flaherty giving to the Court the undertaking set out in paragraph 7 of the affidavit of Michael Flaherty sworn 22 April 2013 and filed herein, it is ordered that the stay orders made on 10 May 2013 continue until determination of the appeal or earlier order of the Court.

    3. Direct that Raymond John Davis and Sue Davis perform sub-paragraph (b) of the said undertaking within four weeks from the making of these orders.

    4. Grant to the respondents liberty to apply in consequence of performance or non-performance of the said sub-paragraph (b).

    5. Order that the respondents pay the appellants' costs of the stay application.

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