Mio Amico Pty Ltd v Australian and New Zealand Banking Group
[2013] NSWCA 353
•25 October 2013
Court of Appeal
Supreme Court
New South Wales
Medium Neutral Citation: Mio Amico Pty Ltd v Australian and New Zealand Banking Group [2013] NSWCA 353 Hearing dates: 21 October 2013 Decision date: 25 October 2013 Before: Gleeson JA Decision: 1. The applicants' notice of motion filed 9 September 2013 be dismissed.
2. The applicants pay the respondent's costs of the motion.
[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 - judgments and orders - stay of execution - where primary judge gave reasons for refusing adjournment after hearing the substantive matter - where no House v The King (1936) 55 CLR 499 error alleged - whether apprehended bias revealed by those reasons - whether applicant denied procedural fairness Legislation Cited: Uniform Civil Procedure Rules 2005 Cases Cited: Adeels Palace Pty Ltd v Moubarak [2009] NSWCA 29
Alexander v Cambridge Credit Corporation Ltd (1985) 2 NSWLR 685
Dwyer v Craft Printing Pty Ltd [2009] NSWCA 254
Ebner v Official Trustee in Bankruptcy [2000] HCA 63; 205 CLR 337
House v The King (1936) 55 CLR 499
Kalifair Pty Ltd v Digi-Tech (Australia) Ltd [2002] NSWCA 383; 55 NSWLR 737
Michael Wilson & Partners Limited v Nicholls & Others [2011] HCA 48; 244 CLR 427
Vaughan v Dawson [2008] NSWCA 169Category: Interlocutory applications Parties: Mio Amico Pty Ltd (First applicant)
Ollie Italiano Olivieri (Second applicant)
Australian and New Zealand Banking Group (Respondent)Representation: Counsel:
M Sahade (Applicants)
D L Cook (Respondent)
Solicitors:
Oliveri Lawyers (Applicants)
Norton Rose Fulbright Australia (Respondent)
File Number(s): CA 2013/206925
Judgment
GLEESON JA: By notice of motion filed 9 September 2013, the applicants, Mio Amico Pty Ltd and Ollie Italiano Olivieri, seek an order staying the enforcement of the judgment of Davies J "made on 4 June 2013" until the resolution of this appeal or further order.
The reference in the applicants' motion to the judgment "made on 4 June 2013" is an error. The only decision of Davies J on "4 June 2013" is an interlocutory decision of his Honour on that date refusing the applicants' request for an adjournment of the hearing. When refusing that application, his Honour said he would give his reasons for doing so in the final judgment. Those reasons are contained in the judgment given on 13 June 2013: [2013] NSWSC 716.
His Honour gave judgment for possession of certain land at Goulburn, which was owned by the first applicant; judgment against both applicants in the sum of $3,297,798.67; granted leave to the respondent to issue a writ of possession to enforce the judgment; dismissed the applicants' cross-claim; and ordered the applicants to pay the respondent's costs.
It is appropriate to proceed upon the basis that this is the judgment in respect of which the stay of execution is sought.
For the reasons which follow, the applicants' notice of motion should be dismissed with costs.
Principles for a grant of stay
The power of this Court to order that the decision below or the proceedings under the decision be stayed arises under r 51.44 Uniform Civil Procedure Rules 2005.
The principles to be applied when exercising the Court's power to grant a stay pending an appeal are well known: see Alexander v Cambridge Credit Corporation Ltd (1985) 2 NSWLR 685 at 694; and Kalifair Pty Ltd v Digi-Tech (Australia) Ltd [2002] NSWCA 383; 55 NSWLR 737 at 741 [17]-[20].
A successful party is prima facie entitled to the fruits of his or her judgment. As explained by Campbell JA in Vaughan v Dawson [2008] NSWCA 169 at [16], what that "prima facie entitlement" means, in practical effect, however, is that the onus is on the applicant for a stay to make out a case that it is suitable for the Court to award a stay. Further, it is for the applicant to demonstrate a proper basis for a stay that will be fair as between the respective interests of the parties: see Alexander v Cambridge Credit Corporation Ltd at 694; Adeels Palace Pty Ltd v Moubarak [2009] NSWCA 29.
The Court will weigh considerations such as the balance of convenience and the competing rights of the parties. Where it is apparent that unless a stay is granted an appeal will be rendered nugatory, this will be a substantial factor in favour of the grant of a stay.
It is appropriate to consider first whether the appeal raises a serious question to be tried and if so, where the balance of convenience lies: see Campbell JA in Vaughan v Dawson at [13]; Kalifair at 741 [18].
Is there a serious question to be tried?
For there to be a serious question to be tried in relation to an appeal, there needs to be a prospect demonstrated to the Court that the appeal may succeed: see Vaughan v Dawson at [18]. In the present case, there is no concession by the respondent that the appeal is an arguable one. Thus it is necessary to look at whether arguable grounds of appeal are demonstrated.
The notice of appeal filed 4 September 2013 identifies two grounds of appeal:
"(1) Upon refusing an application to adjourn the proceedings listed for hearing before Davies J on 4 June 2013; Davies J denied the appellant fairness in that:
(a) the reasons for refusing the adjournment application were reserved and delivered after the hearing of the substantive matter (at the same time as the judgment in the substantive matter) which denied the appellant the opportunity of applying to Davies J to recuse himself from hearing the substantive matter on the grounds of apprehended bias as disclosed in such reasons; and
(b) as disclosed in the reasons for refusal of the adjournment application, a fair-minded lay observer might reasonably apprehend that Davies J might not have brought an impartial mind to the resolution of the questions that he was required to decide.
(2) There is a real possibility that the reasons for judgment of Davies J delivered on 4 June 2013 may lead reasonably to a fair-minded lay observed to apprehend that the trial judge might not have brought an impartial mind to the resolution of the questions that he was required to decide."
It will be observed that the grounds of appeal do not assert any error of the kind referred to in House v The King (1936) 55 CLR 499 at 504-5 in relation to the exercise of discretion by Davies J to refuse the adjournment application. In oral argument, counsel for the applicants confirmed that no such error is alleged.
Rather, the applicants' argument on appeal is that:
(1) the appellants were denied procedural fairness because Davies J only gave his reasons for refusing the adjournment after hearing the substantive matter, and it is asserted, the appellants were denied the opportunity of applying to Davies J to recuse himself for apprehended bias;
(2) the reasons for the refusal of the adjournment gave rise to a real possibility of such an apprehension arising.
The applicants' written submissions highlighted that among the reasons for refusing the adjournment application, Davies J said at [72]:
"I also have some regard to what Mr Koffel informed me he had been told by the Second Defendant, namely, that he alleged to Mr Koffel that his signatures had been forged on the documents. An allegation of forgery made, not in an affidavit, some three years after the proceedings had been commenced and in circumstances where admissions have been made about the documents and their signing and where the money was undoubtedly paid to the First Defendant to enable it to purchase the security property, causes me to have suspicions about the Defendants' motives in seeking the present adjournment."
The applicants' acknowledged that there is no complaint that such a comment was open to be made by Davies J on the question of determining whether to grant an adjournment. The complaint which is made is that the comment was not made by his Honour prior to hearing the substantive proceedings, but was contained in a reserved judgment delivered at the same time as the judgment in the substantive proceedings - that is, after the substantive matter was heard.
The applicants contended that if Davies J had made such a comment at the time of refusing the adjournment application, a fair-minded lay observer might reasonably apprehend that the primary judge had formed a view with respect to the credibility of the principal of the cross-claimant - who was the applicant for the adjournment. The asserted apprehension of such a fair-minded lay observer is that Davies J considered the principal of the cross-claimant to have lied to his solicitor in asserting a forgery which had not been made previously in an affidavit, at a time some three years after the proceedings had been commenced, and when made at the time of the adjournment application, was simply a recent invention.
The applicants submitted that the comment of Davies J at [72] was a "finding", which may be seen to impact directly upon the very reasons given by his Honour for dismissal of the cross-claim. In this regard, the applicants referred to [126] of the judgment where Davies J said:
"There are other diary notes made by officers of the Plaintiff detailing meetings and discussions with the Second Defendant including one of 10 September 2009 where, in addition to blaming his tenants for the problems the Second Defendant said that he intended refinancing the debt. In none of these is there a complaint or assertion of other promised moneys as now forms the basis of the Defence and Cross-Claim. These meetings and discussions, where the Plaintiff was pressing for the affairs of the Defendants to be brought into order, were where such complaints or assertions would be expected. That they were not made enables an inference to be drawn that the assertions in the Defence and Cross-Claim are a recent invention."
The applicants contended that the test in Ebner v Official Trustee in Bankruptcy [2000] HCA 63; 205 CLR 337 at [6] per Gleeson CJ, McHugh, Gummow and Hayne JJ of whether Davies J "might be perceived to have not brought an impartial mind to the question", being one of possibilities (real and not remote) not probabilities, was satisfied in the present case.
The respondent submitted that there was nothing in the reasons of Davies J for the refusal of the adjournment that could properly be said might cause a fair-minded lay observer to reasonably apprehend that Davies J might not have brought an impartial mind to the proceeding before his Honour. In this regard, the respondent pointed to the transcript of 3 and 4 June 2013 when the adjournment application was made by Mr Koffel, the then solicitor for the applicants in the proceedings before Davies J.
The transcript of 3 June 2012 records that one of the reasons given for the adjournment application was that the matter had not been properly prepared for hearing. Mr Koffel said that he was not sure that all the evidence "is there" and was not sure whether "there should be additional evidence". He explained to Davies J that:
"The client has made allegations that his signature has been forged which I understand is something he has never raised at any time during these proceedings which have been on for three years.
I am not aware of the details, but I only say that because that is the allegation that he made on Friday night. I have not been given all the documents and I am not in a position to say anything because it is a serious allegation."
As recorded in the judgment at [13], Davies J was not satisfied on 3 June 2013 with the evidence put forward by the applicants for the adjournment. He informed their solicitor that he would be prepared to adjourn the matter to 10.00am the following day to enable the applicants to provide better evidence to justify an adjournment. This was particularly directed to the medical evidence concerning the second applicant's medical condition.
At [14], Davies J recorded that on 4 June 2013, the applicants' solicitor read a further affidavit which annexed a further medical report. However, his Honour considered that the further evidence was not sufficient to justify an adjournment and refused it. His Honour indicated that he would give his reasons for doing so in the final judgment. Those reasons, including the procedural history of the matter, appear at [15] to [74] of his Honour's judgment.
At [53], Davies J referred to the forgery allegation which the second applicant had made to Mr Koffel on the Friday before the hearing date. After observing that Mr Koffel was correct in his understanding that this was something which had never been raised in the proceedings previously, and indeed it was completely inconsistent with what appeared in the defence and cross-claim where the applicants admitted entering into the loan agreement, signing the mortgage and signing the guarantee, his Honour correctly observed that:
"... further, and most significantly, there was nothing contained in Mr Olivieri's affidavit suggesting that he wished to assert that his signature had been forged on any documents."
The reference to Mr Olivieri's affidavit was a reference to an affidavit of the second applicant sworn 31 May 2012 in support of the adjournment application. The relevant parts of that affidavit are set out at [49]-[50] of the judgment and the relevant passages from the annexed medical reports are to be found at [26], [29], [42] and [52].
Relevant legal principles - apprehended bias
As explained by the High Court, the test to be applied in determining whether a judge is disqualified by reason of the appearance of bias (in this case, in the form of prejudgment) is whether a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial and unprejudiced mind to the resolution of the question the judge is required to decide: Michael Wilson & Partners Limited v Nicholls & Others [2011] HCA 48; 244 CLR 427 at 437 [31] and the earlier authorities of the High Court referred to in footnote 27.
The test of apprehension of bias is objective. It does not require an assessment of the state of mind of the judge in question, as is necessary on an inquiry about actual bias: Michael Wilson & Partners at [33].
The application of the apprehension of bias principle requires two steps. The first is the identification of what it is said might lead the judge to decide a case other than on its legal and factual merits. The second is that there must be an articulation of the logical connection between that matter and the feared deviation from the course of deciding the case on its merits: Ebner v Official Trustee in Bankruptcy at 345 [8]; Michael Wilson & Partners at 445 [63].
Accordingly, an allegation of apprehended bias requires an objective assessment of the connection between the facts and circumstances said to give rise to the apprehension and the asserted conclusion that the judge might not bring an impartial mind to bear upon the issues that are to be decided. The question is not whether the judge had in fact prejudged an issue: Michael Wilson & Partners at 446 [67].
It is for this reason that it is wrong to take into account the reasons for judgment of the trial judge published after the trial, in deciding whether there was a reasonable apprehension of bias at an earlier time when dealing with an interlocutory application: Michael Wilson & Partners at 447 [68]. The central and determinative question is whether might what was done in connection with the unsuccessful adjournment application reasonably cause a fair-minded lay observer to apprehend that the judge might not bring an impartial mind to the resolution of a question for decision at the hearing: Michael Wilson & Partners at 447 [68].
Consideration
A preliminary issue for consideration is the applicants' contention that the Court may take into account on the appeal the reasons given for the trial judge for refusing the adjournment application, even though those reasons were not given until a later time. The respondent contended that this course is impermissible and referred to Michael Wilson & Partners at 446 [68].
It is unnecessary and inappropriate to attempt to resolve this contested legal issue on the present application. The matter should be approached on the basis that this aspect of the applicants' contentions is fairly arguable. Accordingly, for the purposes of assessing the prospects of the applicants' grounds of appeal, I will proceed upon the basis, which is favourable to the applicants, that consideration may be given to the reasons for refusing the adjournment as appearing at [12]-[74].
Approaching the matter on this basis, the following observations may be made in relation to the adjournment application determined by Davies J.
First, in refusing the application, it was not necessary for Davies J to make any finding about the reliability of any party or witness, and he did not make such a finding.
Secondly, in refusing the application, Davies J was not required to make any choice between competing versions of events relevant to the defence and cross-claim. All that was required of his Honour and all that was determined, was that there were insufficient grounds justifying an adjournment of the hearing.
Thirdly, the making of an interlocutory order inter partes does not, of itself, preclude the judge from sitting on the trial in the same matter: Michael Wilson & Partners at 447 [68].
Fourthly, the interlocutory decision in the present case did not require Davies J to determine any matter on a final basis. It involved a discretionary decision relating to a matter of case management.
In these circumstances, the hearing and disposition of the adjournment application could not, in my view, found a reasonable apprehension of prejudgment of the credit of Mr Olivieri. Although he did give evidence in support of the application, his affidavit was read without objection and he was not cross-examined. His credit was not challenged on that application and no decision had to be made about his credit.
It is of some significance that it is not asserted that his Honour allowed extraneous or irrelevant matters to guide him in the exercise of his discretion, such as his comment at [72]. Nor is it asserted that the comment at [72] indicates that his Honour failed to take into account a relevant consideration. The language used by Davies J at [72] does not suggest the kind of departure from neutrality that is relevant to the test of reasonable apprehension of bias.
In my view, the comment of Davies J at [72] could not found a reasonable apprehension of prejudgment of the credit of the second applicant in respect of the issues which his Honour was required to decide in the proceedings. There is simply no relevant connection between the comment at [72] when giving reasons at a later time for refusing the adjournment, and the matters requiring decision at the hearing.
Hence, there is no sufficient basis to conclude that there was a reasonable apprehension that Davies J might have, prejudged the applicants' defence and cross-claim. The grounds of appeal do not disclose an arguable case. Indeed, in my view, the appeal is manifestly hopeless.
In view of the above conclusion, it is strictly unnecessary to consider the balance of convenience or balance of hardship. However, I will briefly indicate my views.
Balance of convenience
The applicants relied upon an affidavit of the second applicant who deposed that he is currently unemployed and on a pension and has no assets aside from personal property such as furniture, clothes and a motor vehicle valued at approximately $5000. The second applicant has been served with a creditors petition based on an act of bankruptcy constituted by his failure to comply with a bankruptcy notice served on him by the respondent on 7 July 2013, in respect of the judgment debt in the proceedings below.
Where the second applicant has no assets, the respondent will not suffer any relevant prejudice if a stay is granted. The loss of its right to proceed to bankrupt the second applicant to prevent his appeal being heard on its merits will not constitute relevant prejudice for present purposes: Kalifair at 742 [25].
It may also be accepted, that if a stay is not granted, and the respondent pursues the bankruptcy proceedings against the second applicant, then this may stifle his appeal. I say "may", because it is not apparent as to the extent to which the second applicant may be able to call upon others, such as the first applicant, to assist him. Nonetheless, it is unlikely that he would be able to pursue the appeal, from his own resources, unless a stay is granted.
On the other hand, the evidence does not enable the Court to reach a similar conclusion in relation to the first applicant. No evidence was given relating to the financial means of the first applicant. As this Court explained in Alexander v Cambridge Credit Corp Ltd at 697, a person "seeking the benefit of a stay and, if they are entitled to it, having shown a reason or demonstrated an appropriate case, they must still provide the Court with material upon the basis of which the Court can fix the terms of the stay that will be just to both parties".
All that is known in relation to the first applicant, is that it has failed to pay the judgment debt and its application to set aside a statutory demand issued by the respondent was dismissed on 28 August 2013: In the matter of Mio Amico Pty Ltd [2013] NSWSC 1292.
As to the value of the security property at Goulburn, the evidence before Davies J, when he refused the adjournment application on 4 June 2013, was that the property is valued between $595,000 and $670,000 depending on whether there is a forced sale or a sale in the ordinary course: at [73]. Thus it appears virtually certain that the sale of the security property will leave the respondent with a significant shortfall. The grant of a stay would therefore cause that shortfall to increase, as interest continues to accrue on the judgment debt, and would be the source of further loss to the respondent.
The first applicant has failed to provide relevant material as to its assets and liabilities so that, if necessary, it could be tested by cross-examination. In my view, in respect of the first applicant the balance of convenience favours the respondent.
The position in relation to the second applicant is different. He has disclosed his financial position, at least in a rudimentary way. There has been no challenge by way of cross-examination to the adequacy of that disclosure. It is apparent that the judgment against the second applicant is already worthless.
In these circumstances, if the second applicant was otherwise entitled to an order for a stay of execution, it would have been appropriate to do so without imposing any conditions requiring security, or that the judgment debt in whole or in part, be paid into court or otherwise preserved in a fund: Kalifair at 743 [28]; Dwyer v Craft Printing Pty Ltd [2009] NSWCA 254 at [8], [11] per Beazley JA (as her Honour then was). However, this issue does not arise, in view of my conclusion, that the appeal is not arguable.
Conclusion
I am not satisfied that the applicants have demonstrated an arguable case for appeal, and this is a sufficient basis for rejecting the application for a stay.
Further, and although it is unnecessary for my decision having regard to the conclusion in [51] above, in the case of the first applicant the balance of convenience favours the respondent in circumstances where delay in enforcement of the judgment for possession so as to facilitate the sale of the security property would be a source of loss to the respondent. Nor has the first applicant made out a case of hardship in relation to payment of the judgment debt, or that a stay would stifle the appeal by the first applicant.
Orders
The orders I make are as follows:
(1) The applicants' notice of motion filed 9 September 2013 be dismissed.
(2) The applicants pay the respondent's costs of the motion.
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Decision last updated: 25 October 2013
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