Ozden v Commonwealth Bank of Australia

SUPREME COURT OF VICTORIA
COURT OF APPEAL

S APCI 2013 0064

OZKAN OZDEN	First Applicant
and
NURAY OZDEN	Second Applicant
v
COMMONWEALTH BANK OF AUSTRALIA	Respondent

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JUDGES	HANSEN JA and ROBSON AJA
WHERE HELD	MELBOURNE
DATE OF HEARING	25 July 2013
DATE OF JUDGMENT	2 August 2013
MEDIUM NEUTRAL CITATION	[2013] VSCA 195
JUDGMENT APPEALED FROM	Commonwealth Bank of Australia v Ozden & Anor [2013] VCC 94 (Judge Ginnane)

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APPLICATION ON SUMMONS

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PRACTICE AND PROCEDURE – Application for stay of execution of judgment pending hearing of appeal – Judgment for mortgagee to recover possession of family home –Stay sought on the basis of special circumstances – Special circumstances alleged to be inadequacy of damages on the basis of sentimental attachment to family home - Sentimental attachment alone insufficient to create special circumstances – Absence of other evidence proving special circumstances – Other factors weighing against grant of stay – Application denied – Landmark Operations Ltd v J Tiver Nominees Pty Ltd [2009] SASC 14 and Johnson v Cressy [2009] VSCA 123 applied – County Court Act1958, s 74(4).

Appearances:	Counsel	Solicitors
For the Applicants	Mr M Clarke	Hui Meng Ong
For the Respondent	Mr B Carew	Gadens Lawyers

HANSEN JA:

I agree with Robson AJA.

ROBSON AJA:

Introduction

The applicants, Ozkan Ozden and Nuray Ozden, have appealed to this Court against a judgment given in the County Court on 3 May 2013.[1] By a summons dated 3 June 2013, the applicants seek an order that, pursuant to s 74(4) of the County Court Act1958, a stay of execution be granted on the judgment until such time as the appellants’ notice of appeal dated 17 May 2013 is determined by the Court of Appeal.
[1]Commonwealth Bank of Australia v Ozden & Anor [2013] VCC 94 (Judge Ginnane) (Reasons).

In the County Court proceeding, the respondent sought possession of a property owned by the applicants at 74 Osborne Street, Williamstown, after the applicants had defaulted under a mortgage arrangement with the respondent.

By way of counterclaim, the applicants admitted that their loan arrangements had fallen into arrears, but they argued that the respondent’s right to enforcement was limited by a duty to cooperate, act reasonably and in good faith. The respondent denied that it owed these duties to the applicants.

The learned trial judge entered judgment for the respondent, ordering that the respondent recover possession of 74 Osborne Street and that the applicants pay the respondent $1,059,083.13. The trial judge upheld a counterclaim by the applicants relating to the alleged wrongful retention by the respondent of a certificate of title of a marina berth belonging to the applicants and awarded the applicants $5,000 in damages.

The judgment below

A fuller description of the material facts may be taken from the judgment below. In February 2005, the respondent made two loan agreements with the applicants, one for $250,000 (the first loan) and one for $194,000 (the second loan). In January 2008, the respondent agreed to provide a further loan for $1,139,018 (the third loan).

The first loan was to refinance the mortgage of $250,000 on the family home at 74 Osborne Street.

The second loan was a standard variable-rate investment loan of $194,000. The applicants used their home at 74 Osborne Street as security for the first and second loans. This mortgage was later extended to cover the applicants’ obligations under the third loan.

The third loan was used to purchase a townhouse at 75 Spinnaker Terrace, Safety Beach, and a berth with the marina which adjoined the townhouse. That property had two titles – one for the townhouse and a second for the berth. A first registered mortgage over the Safety Beach townhouse was taken as security for the third loan. As discussed below, the respondent did not take a mortgage over the berth but retained possession of the certificate of title for some four and half years.

A further property of the applicants at Southbank was used as security for the transaction.

The three loans were cross-collateralised.

In 2009, the applicants fell into arrears on their loans. On 4 May 2011, the respondent sent a Notice of Default and Demand to the applicants requiring them to remedy the defaults on the loans by 11 June 2011. The defaults were not remedied by that date.

The respondent sought judgment for possession of the 74 Osborne Street property and claimed loss and damage or a debt for the amount on the three loans. With the respondent’s consent, the applicants sold the Safety Beach property in February 2013. The sale settled on 15 April 2013 and the proceeds of $735,344.22 were used to pay down the third loan.

By their defence in the County Court proceedings, the applicants admitted that arrears had accrued on all three loans by 4 May 2011, but in their defence argued that the respondent’s right to take enforcement action on any of the three loans was limited by a duty to act reasonably and in good faith. The applicants contended that it was a term of each of the three agreements that the respondent owed duties to them to cooperate and act reasonably and in good faith so as to not hamper or prevent the applicants from taking steps to make their repayments and clear any arrears owing to the respondent. The applicants counterclaimed, seeking damages for the alleged breach of each of those terms.

The applicants argued that the respondent’s conduct had caused the problems that had led to the litigation. The applicants said that the respondent had failed to cooperate, act reasonably and in good faith by hampering and preventing them from accessing their own resources to meet their contractual obligations to the Bank.

The trial judge set out the respondent’s dealings with the applicants. These disclosed that although the berth was included as security in the applicants’ application forms for the third loan which were submitted to the respondent, finance was never provided against the berth by the respondent. The applicants purchased the berth with their own funds.

In the middle of 2008, the applicants sought hardship relief because of financial difficulties in Mr Ozden’s new business. The respondent granted hardship relief for August, September and October 2008. In March 2009, the applicants suffered a severe personal and family tragedy.

On 21 March 2009, the applicants placed the Southbank property up for sale to alleviate financial stress while Mrs Ozden was out of work. The applicants sold the Southbank property for $375,000. The sale settled on 7 July 2009 and the net proceeds of sale of $130,000 went to the primary home first loan on 74 Osborne Street.

The respondent agreed to a second hardship relief period between April and June 2009 that involved no repayments toward the home loans. The hardship period was extended for August, September and October 2009.

The applicants took steps to sell the townhouse and berth. Mrs Ozden gave evidence that in August 2009, she received a verbal offer to purchase the berth for a price in the high $100,000s. The respondent refused to release the title, claiming that it was attached to the townhouse. Mrs Ozden disputed that, but the respondent would not release the berth title due to the loans being in arrears.

By that time, Mrs Ozden had been informed by the estate agents, Harcourts, that the offer made for the berth was withdrawn because the applicants were unable to commit to the sale.

The trial judge found that the berth title and a discharge of mortgage were not provided until September 2012, almost three years after the settlement of an Financial Ombudsman Service (FOS) complaint and after the respondent retained the title without authority for more than four and a half years.

The trial judge found that by failing to return the berth title, the respondent breached a duty of cooperation contained in the loan agreements and mortgages at least from September 2009.[2]
[2]Reasons, [150].

The trial judge referred to a third complaint to the FOS that the respondent would not provide Mrs Ozden with clear instructions on how to surrender the keys to the Safety Beach property. His Honour said that Mrs Ozden’s evidence was that she and Mr Ozden decided to surrender the Safety Beach property. However, Mrs Ozden received conflicting advice about whether to return the keys to head office or to a branch.[3]
[3]Reasons, [122].

The trial judge did not treat this as the subject of a claim for damages. The applicants did however contend that the respondent forced them to sell the Safety Beach property below market value. The trial judge held that the applicants made their own decision to sell the Safety Beach property in February 2013 after the trial commenced. The trial judge said that the applicants were under financial pressure to do so, but not illegitimate pressure. His Honour said that the proposal to sell the Safety Beach property had been under consideration as an option since 2010. It was a means of attempting to deal with the arrears on their loans.

The trial judge found that the applicants had not proved that the respondent breached any contractual duty owed to them because of any conduct in connection with the sale of the Safety Beach property.[4]
[4]Reasons, [173].

The trial judge found damages were due on the question of the berth title, but that none of the other matters raised by the applicants established a breach of a contractual duty of good faith or to act reasonably or to cooperate in the performance of the contract.[5]
[5]Reasons, [179].

The trial judge found that after November 2009, only four clear payments were made on the third loan, the last being $2,000 on 21 January 2011. This was some four months before the notices of May 2011.

The applicants claimed damages of $957,713.70 arising from the respondent’s failure to return the title to the berth. The trial judge approached the assessment as the loss of a chance to obtain funds from the sale or refinance of the berth title, which the Ozdens would have probably used to make payments on the third loan and thereby reduced the interest on that loan. His Honour found the relevant period in which the Ozdens may have sold the berth or obtained finance on it was between September 2009 (being the date that the Ozdens suggest the title should have been returned) and November 2010 (when the Ozdens leased it). The trial judge found that there was no certainty that they would have been successful in selling the berth or refinancing in that period.

The trial judge found that is was not possible to be precise about the value of the chance that the applicants lost, but it was not so low as to be nebulous. He assessed the damages for loss of a chance to use the berth title to save on interest payments on the third loan at $5,000.[6]
[6]Reasons, [211].

The trial judge considered the other claims for damages making up the $957,713.70 claim, which allegedly arose from the withholding of the berth title, and rejected them. As indicated above, the trial judge found that the applicants had not proved that the respondent breached any contractual duty owed to them because of any conduct in connection with the sale of the Safety Beach property.[7]
[7]Reasons, [173].

Evidence in support of the stay application

The application for a stay on enforcement of the judgment is supported by affidavits of Nuray Ozden, the second applicant, sworn on 3 June 2013 and 12 June 2013.

By her affidavit of 3 June 2013, Mrs Ozden says that she represented herself and her husband, Mr Ozden, at the trial in the County Court of Victoria, which commenced on 30 January 2013 and ended on 21 February 2013, running for a total of 11 days. Mrs Ozden says that the trial judge handed down reasons for judgment on 1 May 2013 and made final orders on 3 May 2013 as follows:

The Court orders:
1.The plaintiff recover possession of the land situate and known as 74 Osborne Street, Williamstown in the state of Victoria … .
2.The defendants pay the plaintiff the sum of $1,059,083.13.
3.The defendants pay the plaintiff 80 per cent of its costs of its proceeding not including any of its costs of the defendants’ counterclaim on a party-party basis to be taxed by the Costs Court in default of agreement.
4.The plaintiff pay the defendants the sum of $5,413.60, inclusive of $413.60 interest.
5.The plaintiff pay the defendants’ legal costs of their counterclaim on a party-party basis while they were legally represented and thereafter pay the reasonable costs of their disbursements. Costs and reasonable disbursements are to be taxed by the Costs Court on the County Court Scale of Costs in default of agreement. The Court otherwise orders for the purposes of O63A. r 24(1) of the County Court Civil Procedure Rules 2008.
6.The operation of this order is stayed until 3 June 2013.
7.Liberty to the parties to apply upon reasonable notice to the other parties.

Mrs Ozden says that the subject matter of the appeal is the property at 74 Osborne Street, Williamstown, which is their family home. Mrs Ozden says that she and her husband have two young children, their daughter is six years old and their son is one year old. Mrs Ozden says that both the children were born at the family home, as she chose to have home births. Mrs Ozden says that their family home is their only substantial asset, and that they have to live there. Mrs Ozden says that she is presently on maternity leave.

Mrs Ozden deposes that:

Our family home is of special significance to my husband and me as, amongst other things, our children were born there and holds immeasurable sentimental value for us and is irreplaceable. No damages will constitute adequate compensation.

Mrs Ozden says that at all material times the respondent was and is aware that their family home is their only substantial asset, as the respondent has full knowledge of their financial position.

Mrs Ozden refers to correspondence between herself and Gadens Lawyers (the respondent’s solicitors), in which Mrs Ozden sought an undertaking from the respondent not to enforce the judgment of 13 May 2013 until the hearing and determination of the appeal.

The correspondence includes a letter dated 13 May 2013 which sets out the grounds for the potential application for a stay of execution of the judgment made on 3 May 2013. These were as follows:

1.Special circumstances would ‘exist where for whatever reason, there is a real risk that it will not be possible for a successful appellant to be restored substantially to his former position if the judgment against him is executed’ (Cellante v G Kallis Industries Pty Ltd [1991] 2 VR 653, per Young CJ). An appeal could be rendered nugatory in that sense in a variety of ways;
2.Special circumstances may be recognised where, for example, although the respondent is solvent, the subject matter of the appeal is (which in this case is our family home), in substance, irreplaceable (Maher v Commonwealth Bank of Australia [2008] VSCA 122 at [24]-[26], per Dodds-Streeton JA);
3.The subject matter of this appeal is our family home. It is our only substantial asset and my husband, infant children and I need to live there (Holloway v Doyle, (BC9906837) Supreme Court of Queensland Court of Appeal, appeal number 4353 of 1999, 7 June 1999; Macri v Westpac Banking Corporation [1993] NSWCA 168);
4.It is irreplaceable as it holds immeasurable sentimental value of special significance for my husband, children and I, such that damages cannot constitute adequate compensation (cf Harmer v Permanent Custodian Ltd [2009] VSCA 164 at [61]-[62]).

Accordingly, we would be deprived of the fruits of the appeal if a stay of execution was not granted and the appeal would be rendered nugatory.

The respondent did not agree to a stay. A letter dated 30 May 2003 from Gadens Lawyers states:

We are aware of the matters which you must demonstrate to obtain a stay of the execution of the judgment and note that:
1.The mere fact that a property is of special significance does not necessarily justify a stay; Johnson v Cressy [2009] VSCA 123, [50]; and
2.The court’s discretion is unfettered and in exercising it, all circumstances of the case should be accounted for: Maher v Commonwealth Bank of Australia [2008] VSCA 122, [23].

Mrs Ozden deposes that in the event a stay of execution is not granted to the applicants, the appeal would be rendered nugatory if the respondent were allowed to take away their family home prior to the hearing and determination of the appeal. Mrs Ozden says that her family would not be able to restore their family home should they succeed in an appeal.

Under the heading of ‘Merits’, Mrs Ozden says that the grounds of appeal deal with three issues broadly:

(a)damages assessed in relation to the wrongful withholding of the title to the berth by the respondent;
(b)surrender and sale of the Safety Beach property; and
(c)the amount owing purportedly pursuant to the Certificate of Indebtedness dated 3 May 2013.

Mrs Ozden deposes that the berth has now been sold for $175,000. She deposes further that had the berth been sold when an offer of $200,000 had been made in the middle of 2009, not only would a loss on the sale of $25,000 have been avoided, but that the interest which could have been saved – had the proceeds been paid to reduce their debt to the respondent – was considerable, and much more than the $5,000 damages awarded by the trial judge.

Mrs Ozden says that the second issue concerns the surrender of the Safety Beach property. Mrs Ozden says a calculation of the loss suffered was presented by her to the Court during the trial. Mrs Ozden says that this property was not sold until February 2013. Mrs Ozden refers to an affidavit of 3 July 2012, which formed part of the evidence at the trial dealing with the delay and gives evidence of the alleged financial loss. Mrs Ozden elaborates on these damages in the applicants’ outline of submissions, with which I will deal later.

Mrs Ozden says that the third issue is the Certificate of Indebtedness which was rejected by the trial judge. Mrs Ozden refers to certain pages of the transcript of the trial dealing with the Certificate of Indebtedness and its use by the trial judge.

In Mrs Ozden’s affidavit of 12 June 2013, she refers to the applicants’ outline of submissions dated 12 June 2013 and exhibits copies of documents which she alleges supports the damages that she says the applicants allegedly suffered through the delayed surrender of the Safety Beach property which was to be sold to assist in repaying the loans.

Evidence in opposition to the stay application

In opposition to the application, the respondent filed an affidavit sworn by Mark Hanrahan of 21 June 2013. Mr Hanrahan deposes that he is an assistant manager employed by the respondent.

Mr Hanrahan deposes that on 8 October 2012, the respondent obtained a valuation of the land at 74 Osborne Street. Mr Hanrahan says that the valuation was obtained from Peter Fitzgerald of LMW Hegney National Property Valuers and Consultants, who valued the property at $840,000 as at 8 October 2012.

Mr Hanrahan deals with another property owned by the applicants. Mr Hanrahan produces a register search statement for a property at Unit 4, 34 Macaulay Street, Williamstown North, Victoria, which shows that the first applicant is a tenant in common as to one of two equal undivided shares and that Murat Ozden is a tenant as to one of two equal undivided shares.

Mr Hanrahan also exhibits a search of the certificate of title of the berth. Mr Hanrahan says the register shows that the appellants are the joint registered proprietors of that berth. I note at this point that Mrs Ozden deposes that since the filing of the notice of appeal, the berth has been sold for $175,000.

Mr Hanrahan deposes as to the background of the matter. Mr Hanrahan says that by the County Court proceeding, the respondent:

(a)sought to recover amounts owing on three loan facilities which it made available to the applicants:
(i)a ‘fixed rate investment home loan’ (first loan), the original principal of which was $250,000;
(ii)a ‘standard variable rate investment home loan’ (second loan), the original principal of which was $194,000;
(iii)a ‘no documentation standard verbal rate investment home loan’ (third loan), the original principal of which was $1,139,018; and

(b)also sought to recover possession of the [74 Osborne Street,] Williamstown property, which had been given as security for the repayment of the three loans by way of a mortgage.

Mr Hanrahan says that, with the exception of the repayment made on 15 April 2013 on the third loan in the amount of $735,344.22 (being the sale proceeds from the sale of 75 Spinnaker Terrace, Safety Beach), the applicants have not made a repayment on the third loan since 1 July 2011.

Mr Hanrahan deposes that the amount of $1,059,083.13 ordered to be paid by the applicants is comprised as follows:

(a)$223,756.46 being the outstanding balance for the first loan;
(b)$74,274.60 being the outstanding balance for the second loan; and
(c)$761,052.07 being the outstanding balance for the third loan.

Evidence in reply

In response to Mr Hanrahan’s affidavit, Mr Ozkan Ozden has sworn and filed an affidavit of 24 July 2013. Mr Ozden says that Unit 4, 34 Macaulay Street, Williamstown North (the property referred to by Mr Hanrahan) was purchased in 2011 by his brother, Murat Ozden, and himself for $270,000 plus GST for the substantial purpose of using it as a warehouse located in an industrial estate for the business conducted by his brother and himself through a company known as Mount Rose Investments Pty Ltd. Mr Ozden says that his family cannot reside at the property as it is a warehouse.

Mrs Ozden has also sworn and filed a further affidavit dated 24 July 2013. Mrs Ozden says that she now realises that she should have referred in her affidavit to the warehouse property owned by her husband and his brother. Mrs Ozden also reproduces extracts from an exhibit in her earlier affidavit that deals with the confusion over the handing over of the keys to the townhouse at Safety Beach.

Written submissions

The applicants filed an outline of submissions signed by Mr Clarke of counsel dated 12 June 2013.

Under the heading ‘Special Circumstances’, the applicants say that the property constitutes the applicants’ family home and is their only substantial asset. The submission says that there is a real risk that the applicants will not be restored substantially to their former family home if the judgment is executed and the appeal succeeds.

The submission refers to the judgment of Young CJ in Cellante v G Kallis Industries Pty Ltd,[8] where the Chief Justice said (at p 657, Brooking J concurring):

Finally, I should refer to the judgment of Dawson J sitting as a single judge in Federal Commissioner of Taxation v Myer Emporium Ltd (No 1) (1986) 160 CLR 220. His Honour had to consider an application by the Commissioner of Taxation to stay the operation of an order that he issue an amended assessment reducing the respondent’s taxable income by over $45 million. Referring to the High Court Rules which were amended in 1985 to be similar to the rules in other jurisdictions, Dawson J said, at pp.222-3:
”It is well established by authority that the discretion which it confers to order a stay of proceedings is only to be exercised where special circumstances exist which justify departure from the ordinary rule that a successful litigant is entitled to the fruits of his litigation pending the determination of any appeal: see, e.g. The Annot Lyle (1886) 11 PD 114, at p.116; Scarborough v Lew’s Junction Stores Pty Ltd [1963] VR 129, at p.130. Special circumstances justifying a stay will exist where it is necessary to prevent the appeal, if successful, from being nugatory: see Wilson v Church (No 2) (1879) 12 Ch D 454, at p.458; Klinker Knitting Mills Pty Ltd v L’Union Fire Accident and General Insurance Co Ltd [1937] VLR 142. Generally that will occur when, because of the respondent’s financial state, there is no reasonable prospect of recovering moneys paid pursuant to the judgment at first instance. However, special circumstances are not limited to that situation and will, I think, exist where for whatever reason, there is a real risk that it will not be possible for a successful appellant to be restored substantially to his former position if the judgment against him is executed: see McBride v Sandland (No 2) (1918) 25 CLR 369, at p.375.”

[8][1991] 2 VR 653 (Cellante).

The applicants submit that special circumstances exist in this case that justifies the Court in exercising its discretion to depart from the general rule and grant a stay pending determination of the appeal as otherwise the appeal would be rendered nugatory.

The applicants refer to Maher v Commonwealth Bank of Australia,[9] where Dodds-Streeton J said (at [26], Redlich JA concurring):

An appeal could be rendered nugatory in that sense in a variety of ways. The test could be satisfied where a defendant appeals and there is a real risk that the plaintiff would remove the proceeds of the judgment from the jurisdiction. Similarly, special circumstances may be recognised where, for example, although the respondent is solvent, the subject matter of the appeal is, in substance, irreplaceable.

[9][2008] VSCA 122.

The applicants submit that the property is irreplaceable as it holds immeasurable sentimental value of significance, particularly as both the applicants’ children were born at home. The applicants say that, accordingly, no damages would constitute adequate compensation for their family home.

The applicants refer to Holloway v Doyle,[10] a judgment of de Jersey CJ (with whom McMurdo P and Demack J agreed). In that case, his Honour said:

I consider that the appellant does have an arguable case on appeal, although I concede I stopped Mr Laurie when he sought to demonstrate that there was no arguable case. But, more importantly than that, to satisfy the judgment now, the appellant would have to sell his interest in his only substantial asset, the family home. He is not a well man and needs to live there.
On the other hand, the respondent is well off financially and could not be thought to ‘need’ this money. It is an appropriate case, in my view, for a stay pending the determination of the appeal.
The order I would make is that on the appellant undertaking by his counsel pending the final determination of the appeal not to sell or otherwise deal with his interest in the property at 5 Nellings Place, Aspley Grove, and expeditiously to proceed with his appeal, stay pending the final determination of the appeal all proceedings on the judgment of the District Court given in this matter on 19 April 1999.

[10](Unreported, Court of Appeal of the Supreme Court of Queensland, de Jersey CJ, McMurdo P, Demack J, 7 June 1999, delivered ex tempore) (available online at type="1">

The applicants also refer to Macri v Westpac Banking Corporation.[11] That case involved a judgment in favour of Westpac owing some $455,000. In granting a stay, Mahoney JA said:

The only substantial asset of the defendants, the present claimants, is a house which is the place of residence of themselves and their infant children. If the enforcement of the judgment is not stayed they say, and it is not denied, that the residence will be sold.

[11][1993] NSWCA 168.

The submissions deal with the merits of the appeal. The submissions concede that the Court will not generally speculate about the prospects of the success of the appeal, but will need to make some preliminary assessment about whether there is an arguable ground of appeal. The applicants rely on Alexander v Cambridge Credit Corp Ltd.[12]
[12](1985) 2 NSWLR 685, 695.

The applicants submit that there are arguable grounds in this appeal relating broadly to three issues, namely, that the trial judge:

(a)erred in the assessment of damages in favour of the applicants in relation to the wrongful withholding by the respondent of the certificate of title to the berth;
(b)erred in failing to properly consider the claim for damages arising out of the surrender and sale of the property at Safety Beach; and
(c)erred in the calculation of the amount owing, having rejected the Certificate of Indebtedness dated 3 May 2013.

The applicants say in their submissions that the berth has been sold for $175,000 and, had it been sold for $200,000 in the middle of 2009, then $25,000 more would have been recovered, plus interest. The applicants calculate the sum lost as at $43,268.32. The applicants compare this to the $5,000 awarded by the trial judge.

The applicants also deal with the second issue, being the surrender of the Safety Beach property. The applicants say that the details of the loss suffered (presented by the applicants to the Court during the trial) is an estimated loss of $314,437.50. The applicants say the property was not sold until February 2013. As discussed by the trial judge and explored above, this claim is based on an allegation that the respondent was in breach of an obligation of cooperation.

The applicants include in their submissions an extract from the reasons for judgment of Nettle JA (with whom Batt and Vincent JJA agreed) in Hunter v Transport Accident Commission[13] which addresses the obligation on a Court to provide proper reasons for its decision. The applicants contend that the trial judge failed to consider an affidavit relied on by the applicants during the trial and failed to give adequate reasons for the decision on the issue concerning the surrender of the Safety Beach property and (in particular) the delivery of the keys.
[13][2005] VSCA 1.

The third issue concerns the Certificate of Indebtedness produced by the respondent at the trial. The applicants say that the certificate was rejected by the trial judge, but was admitted into evidence as a partial business record of the respondent relating to the recalculation of the loan under the mortgage pursuant to s 69 of the Evidence Act 2008, without regard to s 69(3) and it being a self-serving document.

The respondent’s submission

The respondent’s outline of submissions refer to the general proposition that, generally, special circumstances must be shown before a stay is granted, referring to Cellante.

The respondent refers to Landmark Operations Ltd v J Tiver Nominees Pty Ltd,[14] where Sulan J said (at [32]):

There may be instances in which a particular property may have a special significance to the mortgagor. In the usual case, that alone does not justify an order that a mortgagee be prevented from exercising its powers of possession or sale.

[14][2009] SASC 14 (Landmark Operations).

This observation was approved by this Court in Johnson v Cressy.[15]
[15][2009] VSCA 123, [50] ( Warren CJ and Coghlan AJA) (Johnson v Cressy).

Noting the applicants’ claim that the family home is their only substantial asset, the respondent contends that there is no evidence of the general asset position of the appellants put forward to substantiate that claim.

The respondent refers to the evidence of Mr Hanrahan that the applicants own two properties in addition to the Williamstown property, one being the berth. We now know that the berth has been sold. As discussed below, the proceeds have not been used to reduce the debt owed by the applicants to the respondent.

The respondent addresses the alleged loss of opportunity to sell the berth by the respondent not releasing the Certificate of Title. The respondent says that the damages assessed were a question of fact for the trial judge. The damages claimed are some $45,000. The respondent contends that even if the appeal succeeds in respect of the claimed loss and damage relating to the berth, the amount due on the judgment debt, allowing for offsetting, remains a figure of over $1,000,000. The respondent says that, on that basis, regardless of the merits of that appeal ground, it is not of such importance on the question of a stay.

On the issue of the surrender of the Safety Beach townhouse, the respondent submits that the allegations are barely tenable. The respondent referred to the evidence of the demands and cross-demands. The respondent makes the point that there was no real obstacle preventing the applicants in delivering the keys to the Safety Beach property to the respondent if they had wished (and, by inference, that any delay in the sale was thus due to their own actions).

The respondent also addresses the allegation that the applicants lost the opportunity to sell the Safety Beach property in 2009. The respondent points to evidence given at the trial about attempts to sell the property, which involved the applicants appointing seven agents in a three year period; the agents were unable to sell the property. The respondent submits that the evidence of any loss of opportunity to sell the townhouse was far from persuasive.

The hearing of the application

At the hearing for the stay, the applicants were represented by counsel. The Court raised several issues with counsel. The Court suggested to counsel that the material put forward by the applicants did not seek to explain their current financial position. In particular, there was no information before the Court as to whether or not the applicants were solvent or insolvent. Counsel for the applicants was unable to assist with any further information.

The Court was informed that the applicants had received the proceeds from the sale of the berth (some $175,000), but the applicants had not used these proceeds to reduce their indebtedness to the respondent. The Court was informed from the bar table that the applicants were in discussions with the respondent about the application of those funds.

The Court was informed that payments were being made in relation to the first loan, but that payments were not being made in respect of the third loan. No explanation was provided why these ceased in July 2011.

Counsel for the applicants confirmed that the applicants do not dispute the valuation of 74 Osborne Street deposed to by Mr Hanrahan. There was a vague suggestion that the value could be more or less.

Counsel for the applicants was asked whether the counterclaim in the proceeding sought damages arising from the alleged contradictory instructions over the handing over of the keys to the townhouse at Safety Beach. The Court was informed that the counterclaim did not specifically refer to the complaint about the keys but did allege that the respondent breached its duty of cooperation in relation to the sale of the townhouse at Safety Beach.

Counsel for the respondent said that the warehouse of which Mr Ozden is a half-owner of was acquired in 2011. This is the fifth property that has been acquired by the applicants. The respondent contended that it has shown considerable indulgence to the applicants, but has been met with a lack of cooperation that includes a lack of frankness in their dealings with the respondent.

The respondent submits that even if the applicants succeed in their appeal concerning the damages for the delay in returning the title to the berth, the amount sought is $43,268.32,[16] which would reduce the judgment debt from $1,059,083.13 to $1,015,814.81. Further, on the Certificate of Indebtedness ground, the applicants admitted that they owed $708,860 rather than $761,052.07 claimed by the respondent (relying in part on the certificate) a difference of $52,197.07. The respondent submits that if this was also deducted from the balance due (allowing the berth claim) the balance would be $963,617.74, which is still in excess of the value of 74 Osborne Street at $840,000.
[16]Ozkan Ozden and Nuray Ozden, ‘Notice of Appeal’ in Ozden & Anor v Commonwealth Bank of Australia, S APCI 2013 0064, 17 May 2013, [1].

Consideration of the application

In my opinion, the applicants have not identified special circumstances sufficient to justify a stay on execution of the County Court judgment.

As the authorities indicate, special circumstances justifying a stay will exist where it is necessary to prevent the appeal, if successful, from being rendered nugatory, or there is a real risk that it will not be possible for a successful appellant to be restored substantially to his or her former position if the judgment against him or her is executed.

The applicants do not point to any material or physical aspects of their home that they use or enjoy that would be lost if the home was sold and they were obliged to buy or rent another dwelling. Nor do they claim that they will be rendered homeless if the house were sold, nor that they would be unable to find housing elsewhere.

As mentioned above, the applicants have not informed the Court of their financial position, nor have they informed the Court as to why no payments have been made to the respondent on the third loan since 1 July 2011.

Mrs Ozden deposed that 74 Osborne Street is the applicants only substantial asset and that the respondent has full knowledge of their financial position. As events transpired, it turned out the Mr Ozden owns a half-share in a warehouse and also has an interest in a company called Mount Rose Investments Pty Ltd. Mrs Ozden says that these matters were not referred to by oversight.

In circumstances where the Court is being asked to exercise its discretion to give a stay, the Court should have been fully informed of all relevant matters.

Another relevant consideration is that even if the applicants succeed on their appeal on the berth issue and the proof of debt issue, the moneys owed to the respondent still will exceed the value of 74 Osborne Street. It is also relevant that the appeal based on the respondent’s alleged failure to cooperate in giving instructions about the key to the Safety Beach property so that it could be sold does not – on the material before me – have a reasonable prospect of success.

As mentioned above, the applicants say:

Our family home is of special significance to my husband and me as, amongst other things, our children were born there and hold immeasurable sentimental value for us and is irreplaceable. No damages will constitute adequate compensation.

In the Landmark Operations case referred to above, Sulan J said:

There may be instances in which a particular property may have a special significance to the mortgagor. In the usual case, that alone does not justify an order that a mortgagee be prevented from exercising its powers of possession or sale.

As indicated earlier, that proposition was approved by this Court in Johnson v Cressy.

I am not satisfied that the alleged sentimental attachment to the family home in which the applicants’ children were born, considered in the light of the lack of information about the financial circumstances of the applicants and the other matters that I have referred to, is sufficient to justify a stay of execution pending appeal.

Without in any way seeking to detract from the sentimental attachment that the applicants have to their home (where their children were born in home births), it will be the case that most home owners will have some sentimental attachment to their existing homes. In my view, special circumstances require some added feature, above sentimental attachment, which, (as discussed above) is not present in this case. For these reasons, I would dismiss the application.

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[2013] VSCA 195

2 August 2013