He v Kong

[2018] NSWCA 278

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation:	He v Kong [2018] NSWCA 278
Hearing dates:	19 November 2018
Date of orders:	19 November 2018
Decision date:	19 November 2018
Before:	Macfarlan JA
Decision:	(1)   Order that the stay provided for in Order 2 made by McDougall J on 25 October 2018 be continued until the determination of the appeal. (2)   Order that, whilst the stay remains in place, none of the parties to the present application take any step to obtain payment of any part of the deposit of $1,150,000 held in the trust account of Ronayne Owens Lawyers. (3)   Order that the costs of this application be costs in the appeal.
Catchwords:	APPEAL – stay application allowed – absence of stay might render appeal nugatory – no issue of principle
Legislation Cited:	Conveyancing Act 1919 (NSW), s 55(2A) Uniform Civil Procedure Rules 2005 (NSW), r 51.44
Cases Cited:	Alexander v Cambridge Credit Corporation Ltd (1985) 2 NSWLR 685
Category:	Procedural and other rulings
Parties:	Xin He (Appellant) Xia Kong (First Respondent) Bruce Gleeson, in his capacity as the Trustee of the Bankrupt Estate of Jerry Ren (Second Respondent)
Representation:	Counsel: Ms S K Hill (Appellant) Mr R Bellamy (First Respondent) Mr D Rogers (Solicitor) (Second Respondent) Solicitors: Link Lawyers (Appellant) Adelsteins Solicitors (First Respondent) Ashurst Australia (Second Respondent)
File Number(s):	CA 2018/335248
Decision under appeal	Court or tribunal: Supreme Court Jurisdiction: Equity Citation: [2018] NSWSC 1568 Date of Decision: 25 October 2018 Before: McDougall J File Number(s): 2017/109259

Judgment

1. HIS HONOUR: This is an application by the appellant, Mr Xin He, for a stay of orders that McDougall J made on 25 October 2018. The orders gave effect to his Honour’s findings in a judgment dated 18 October 2018 (see CPPIB Credit Investments v Ren [2018] NSWSC 1568).

2. The proceedings before his Honour relevantly involved a claim by Mr He for recovery of a deposit of $1,150,000 that he paid to Ms Xia Kong, the present first respondent, pursuant to a contract between Ms Kong as vendor and Mr He as purchaser for the sale of a residential property at Warrawee in Sydney. At the date of the contract both parties were aware that Ms Kong was not the sole registered proprietor of the property but was a joint registered proprietor with her former husband, Mr Jerry Ren. Following dealings between the parties concerning completion of the contract, Mr He purported to terminate the contract on the basis that there was an incurable defect in Ms Kong’s title. McDougall J found that that purported termination was ineffective and, in addition, refused to exercise in favour of Mr He the discretion given to the Court by s 55(2A) of the Conveyancing Act 1919 (NSW) to order return of Mr He’s deposit, which was held by a stakeholder.

3. His Honour made an appropriate declaration and directed that the deposit be paid to Ms Kong, or as she may direct. His Honour granted a temporary stay to allow time for Mr He to approach this Court for a stay until the appeal is determined.

4. In support of Mr He’s application to this Court, his solicitor swore an affidavit expressing concern that his client may have difficulty in recovering the deposit if no stay is granted and he succeeds on the appeal. He referred to a Deed of Settlement between Ms Kong and her former husband’s trustee in bankruptcy (the second respondent on the present application) providing for a division of the deposit between Ms Kong and Mr Ren’s bankrupt estate.

5. For her part, Ms Kong relied upon an affidavit that she swore annexing a copy of the Deed of Settlement. This indicated that she is to receive 65% of the deposit and that the second respondent is to receive 35%.

6. The Court has a discretion under r 51.44 of the Uniform Civil Procedure Rules 2005 (NSW) to grant a stay. It is not necessary for special or exceptional circumstances to be established (Alexander v Cambridge Credit Corporation Ltd (1985) 2 NSWLR 685 at 694) but the onus remains on the applicant to demonstrate a reason why the Court should grant a stay.

7. For the following reasons, I consider that a stay should be granted in the present case.

8. First, the Court has been able to offer the parties an early date for the hearing of the appeal. It is fixed for hearing on 21 February 2019.

9. Secondly, whilst Ms Kong swore an affidavit as to other matters, she gave no indication as to what she proposed to do with her share of the deposit if she received it prior to determination of the appeal. Whilst I appreciate that Mr He did not seek to demonstrate what Ms Kong’s financial position is, I consider it as relevant that Ms Kong had an opportunity to provide some reassurance that her share of the deposit would not be dissipated but did not take it.

10. Thirdly, it is relevant that a share of the deposit is to be paid to a trustee in bankruptcy. Whilst the second respondent’s solicitor submitted to the Court that it should be assumed that the second respondent would act prudently, no indication was proffered as to what the second respondent would do with Mr Ren’s estate’s share of the deposit if it was paid to the second respondent prior to determination of the appeal. Further, the second respondent opposed the grant of a stay but did not explain why he needed to do that when the appeal would be heard very soon.

11. Fourthly, having read the judgment below and the Notice of Appeal, I have not formed the view that the appeal is obviously hopeless and the respondents did not so describe it. Certainly, counsel for Ms Kong submitted that the Notice of Appeal was framed in such general terms that it was not possible to discern any arguable basis for the appeal, but as the time for Mr He to lodge written submissions has not yet arrived, I do not consider that it can be concluded that the appeal is not an arguable one.

12. In summary, I consider that a stay should be granted because first, it cannot, at least at this stage, be concluded that the appeal is not arguable and, secondly, there is a basis for concern that the appeal will be rendered nugatory by an inability of Mr He to recover his deposit if he succeeds on appeal.

13. For these reasons I make the following orders:

1. Order that the stay provided for in Order 2 made by McDougall J on 25 October 2018 be continued until the determination of the appeal.

2. Order that, whilst the stay remains in place, none of the parties to the present application take any step to obtain payment of any part of the deposit of $1,150,000 held in the trust account of Ronayne Owens Lawyers.

3. Order that the costs of this application be costs in the appeal.

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Decision last updated: 20 November 2018