Osborne v Drive Park Pty Ltd - [2005] SASC 252

SUPREME COURT OF SOUTH AUSTRALIA
(Magistrates Appeals: Civil)
OSBORNE v DRIVE PARK PTY LTD
Judgment of The Honourable Justice Duggan
12 July 2005
APPEAL AND NEW TRIAL - APPEAL - PRACTICE AND PROCEDURE - SOUTH AUSTRALIA - STAY OF PROCEEDINGS
Appeal from magistrate's refusal to grant a stay of execution of judgment pursuant to Enforcement of Judgments Act 1991 s 17 - application for stay of enforcement of Federal Court order that appellant pay costs arising from a creditor's petition - respondent sought enforcement of this order in Magistrates Court - discussion as to exercise of discretion to grant stay - stay not warranted - appeal dismissed.
Enforcement of Judgments Act 1991 s 17; Supreme Court Rules R 96B.02, referred to.
Duke Group Ltd (In Liq) v Pilmer & Ors [1999] SASC 373; State Bank of Victoria v Parry [1989] WAR 242, applied.

OSBORNE v DRIVE PARK PTY LTD
[2005] SASC 252
Magistrates Appeal

DUGGAN J. This is an appeal against the decision of a magistrate refusing to grant a stay of execution of judgment pursuant to s 17 of the Enforcement of Judgments Act 1991 (“the Act”). The magistrate’s order is of an interlocutory kind and if the appeal is to be entertained a certificate from the magistrate or leave of this court is required: SCR 96B.02. This requirement was overlooked in this case. After discussion at the commencement of the hearing before me I decided to treat the notice of appeal as an application for leave to appeal. As will appear later in these reasons I subsequently granted leave to appeal.
The matter has a somewhat complicated history. On 2 August 2001 the respondent commenced proceedings against the appellant who was the sole shareholder of Hahndorf Smallgoods Pty Ltd (“the company”). The respondent supplied meat to the company which subsequently went into liquidation. The respondent was not paid for certain goods supplied to the company and commenced proceedings against the appellant in the Adelaide Magistrates Court. The appellant was sued in his capacity as guarantor for debts incurred by the company.
On 1 November 2001 the respondent obtained a default judgment against the appellant in the action on the guarantee and on 7 November 2001 a bankruptcy notice was issued against the appellant for the amount of the default judgment. On 27 May 2002 a creditor’s petition was issued due to the appellant’s failure to comply with the bankruptcy notice.
Then, on 4 October 2002, the default judgment was set aside. On 24 October 2002 the Federal Court ordered the appellant to pay costs in relation to the creditor’s petition. The costs due to the respondent totalled $3,302. The respondent then commenced an action against the appellant in the Adelaide Magistrates Court to recover the amount of the costs. The amount claimed was $3,645 which included legal costs. Judgment for this amount was entered against the appellant in favour of the respondent on 10 February 2003. The stay which was applied for by the respondent and refused by the magistrate appealed from was in relation to the execution of this judgment.
After the setting aside of the default judgment in the action on the guarantee the matter was reinstated in the trial list. After a contested hearing judgment was entered for the respondent in the sum of $15,458.11 plus costs. The appellant appealed against the decision to a single judge of this court and the appeal was dismissed on 27 August 2004. Leave to appeal against the decision of the single judge was refused by the Full Court on 6 April 2005. An application for special leave to appeal to the High Court against the decision of the Full Court was filed on 4 May 2005. The application has not yet been heard.
There is one other set of proceedings which is relevant to the issues raised on this appeal. On 2 April 2004 the appellant commenced proceedings in the District Court against Barry James West and Lorraine Jacqueline West (“the Wests”). In those proceedings he alleges that the Wests purchased the company and that he is owed $170,000 being the price for certain intellectual property involved in the sale. This action has not yet been heard in the District Court.
I have said that the application for a stay of execution of judgment was made in relation to the judgment debt of $3,645. The application sought a stay –
pending the final determination of my claim against Barry James West and Lorraine Jacqueline West being DCA number 520 of 2004 and any enforcement and recovery proceedings against the Wests in the event that I am successful in my claim; or in the alternative
pending the final determination of all my rights of appeal against the plaintiff’s Principal Claim in relation to MC Action number 1797 of 2001.
The application was heard by the magistrate who presided over the trial in relation to the guarantee. It was dismissed on 21 April 2005.
The grounds of appeal assert that, in considering the exercise of the discretion as to whether a stay should be granted, the magistrate proceeded on an incorrect factual basis in certain respects. Particular complaint is made of comments by the magistrate to the effect that no offer had been made by the appellant for payment of the judgment sums which had been awarded against him.
At the hearing of this appeal the appellant tendered correspondence relating to an offer which he made to the respondent “in full and final settlement and satisfaction of all matters currently in dispute” between the parties. The offer which was set out in a letter dated 10 January 2005 proposed that the appellant pay to the respondent the first $16,000 of any monies received from the Wests in connection with the appellant’s claim against them and that he would discontinue his appeal to the Full Court. The offer was rejected in a facsimile from the respondent’s solicitors to the appellant’s solicitors on 11 January 2005.
When summarising the submissions of the respondent’s counsel in her judgment the magistrate said:
She submitted that the defendant had made no reference in his affidavit to any other debtors or creditors. She also submitted that no information had been provided in relation to the District Court proceedings nor had any undertaking been provided by the defendant permitted by the plaintiff to access any benefit derived from the action in the District Court.
Later in her reasons the magistrate said:
Furthermore, whilst the affidavit of the defendant refers to the fact that the plaintiff may ultimately benefit from the District Court action by being entitled to share in any settlement proceeds in the event that the action was ultimately successful, I accept the submission of counsel for the plaintiff that no undertaking to that effect is provided. In addition, in the event that a sequestration order should be made against the estate of the defendant, it is open to his trustee in bankruptcy to continue the District Court proceedings.
. . . . . .
On 23 April 2004 the plaintiff issued a bankruptcy notice against the defendant and this notice was served on the defendant on 4 October 2004. No offer has been made by the defendant concerning payment of either judgments outstanding in these actions.
In an affidavit received at the hearing of the appeal the respondent’s solicitor stated that she withdrew the submissions relating to the absence of an offer by the appellant and that the withdrawal was made in the course of the hearing. The fact of the withdrawal of the submissions is not referred to in the magistrate’s reasons for dismissing the application and it would appear that she may have overlooked the concession made by counsel for the respondent.
I have some doubt as to whether the magistrate attached very much significance to this aspect of counsel’s submissions. However, in addition to noting the lack of an offer to settle in her summary of counsel’s submissions the magistrate returned to the topic in that part of her reasons where she set out her conclusions. I cannot say that it was not a factor which was taken into account and, as the relevant submissions were withdrawn, I consider it appropriate to grant leave to appeal and consider the exercise of the discretion afresh.
I should mention that grounds 8 and 10 of the grounds of appeal allege other misstatements of fact in the reasons for judgment, but these complaints lack substance and were not pressed on the hearing of the appeal.
Section 17 of the Act is as follows:
A party against whom a judgment has been given may apply to the court for a stay of execution, and the court may, if satisfied that there is a proper reason for granting the stay, grant the stay on such terms as it considers appropriate.
The section confers a broad discretion to be exercised as the interests of justice require: Duke Group Ltd (In Liq) v Pilmer & Ors [1999] SASC 373. However, the starting point for the consideration of an application to stay the execution of a judgment debt is that the judgment creditor is entitled to proceed to execution without delay: State Bank of Victoria v Parry [1989] WAR 242 at 244. The onus is on the appellant in this case to demonstrate that there is proper reason for granting the stay.
Mr Dart, for the appellant, relied upon three main considerations in support of the argument that there should be a stay of proceedings. He made the point that they should be considered in their cumulative effect.
First, he said that the appellant did not have the financial means to satisfy the judgment debt arising from the order for costs. Second, he said it would be in the interests of both parties if the appellant could pursue the action against the Wests in the District Court. Third, he relied on the application for special leave to the High Court in the action on the guarantee.
Inability to pay the judgment debt may be relevant to a stay of execution in some cases. However it would not ordinarily be a sufficient reason of itself to attract an exercise of jurisdiction under s 17. Furthermore, evidence as to the appellant’s means is somewhat sparse. He claims not to have any assets of value, but he is employed as a butcher on a casual basis earning approximately $310.00 per week. He has not provided details of his liabilities. The amount of the judgement debt is $3,645. In my view the financial position of the appellant does not of itself justify an exercise of the discretion to grant a stay, although it is of some relevance to the other grounds raised by Mr Dart.
Mr Dart placed particular emphasis on the District Court action against the Wests. He relied upon the decision of Malcolm CJ in The State Bank of Victoria v Parry where the execution of an order for summary judgement was stayed pending the determination of third party proceedings. If the third party proceedings were successful in that case the defendant would have been entitled to an indemnity in relation to the claim which was the subject of the order for summary judgment.
The circumstances of the present case are clearly distinguishable. Here there is no connection between the proceedings which led to the judgment which is the subject of the application for stay of execution and the District Court proceedings. Those proceedings are simply an unresolved claim against another party. There is no material before me which would enable an assessment of the merits of that claim. The resolution of the claim may take some considerable time. The appellant and the respondent have not agreed to a settlement based on an undertaking by the appellant that he will pay in full the amount of both judgment debts against him in favour of the respondent.
The third aspect is the respondent’s application for special leave to appeal to the High Court against the refusal of leave to appeal to the Full Court. This application relates to the judgment debt of $15,458.11 arising out of the action on the guarantee, not the judgment debt which is relevant to the present proceedings. The issues in the guarantee matter have been considered by a magistrate, a single judge of this court and by this court on the application for leave to appeal. The appellant cannot claim that a successful application for special leave to appeal to the High Court is likely.
I have considered the combined effect of the matters which have been advanced in support of the argument that there should be a stay of execution. However, the small amount of the judgment debt and the speculative nature of the matters raised do not justify a departure from the norm.
Leave to appeal against the order of the magistrate is granted, but the appeal is dismissed.