Pain v Pain

[2006] QCA 509

SUPREME COURT OF QUEENSLAND

CITATION:

Pain v Pain & Ors [2006] QCA 509

PARTIES:

MALCOLM DOUGLAS PAIN
(plaintiff/respondent)
v
WILLIAM DOUGLAS PAIN
(defendant/applicant)
DELMA MARY PAIN
(defendant/applicant)
TAITLANDS PTY LTD
ACN 010 486 727
(defendant/applicant)

FILE NO/S:

Appeal No 10298 of 2006
SC No 5078 of 2006

DIVISION:

Court of Appeal

PROCEEDING:

Application for Stay of Execution

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED EX TEMPORE ON:

1 December 2006

DELIVERED AT:

Brisbane

HEARING DATE:

1 December 2006

JUDGE:

Holmes JA

ORDER:

1.   Enforcement of the judgment of Justice Lyons dated 8 November 2006 is stayed;

2.   The proceeds of the sale of Shillingford, together with interest thereon, is to be held in the trust account of the respondent’s solicitor, subject to the drawing of funds necessary to his defence of the appeal and this application;

3.   The applicants are to prosecute the appeal expeditiously;

4.   The applicants are not to encumber or dispose of the property situated at Bagnalls Road, Cooroy, or any assets under the control of the third defendant;

5.   The applicants are not to draw further against the security constituted by the  mortgage over the property at Bagnalls Road, Cooroy;

6.   The stay is conditional on the applicant’s undertaking to give their consent to the lodgement of a caveat by the respondent, based on the order restraining them from dealing with the property at Bagnalls Road, Cooroy;

7.   The costs are reserved.

CATCHWORDS:

APPEAL AND NEW TRIAL – APPEAL - PRACTICE AND PROCEDURE – QUEENSLAND – STAY OF PROCEEDINGS – WHEN GRANTED – arguable grounds of appeal – existence of constructive trust and quantum of respondent’s compensation – balance of convenience between the parties – satisfaction of judgment by sale of applicant’s home – potential for dissipation of assets – whether stay of execution should be granted

COUNSEL:

S L Doyle SC, with D K Grigg, for the applicants
D B Fraser QC for the respondent

SOLICITORS:

Damien Bourke & Associates for the applicants
Connolly Suthers Lawyers for the respondent

HER HONOUR:  The three applicants seek an order staying the execution of a judgment requiring them to pay to the respondent an amount of $732,000, together with interest from 16th July 2003 and costs, and further ordering that an amount of $384,092 currently held on trust from the proceeds of the sale of a property, Shillingford, be paid to the respondent in partial satisfaction of the judgment.  The respondent, the plaintiff at first instance, is the son of the first and second applicants.  The third applicant is a company under their control. 

The respondent had contended successfully for the declaration of a constructive trust in respect of four properties that the family operated.  The sum of $732,000 represents the proceeds of sale of one of those properties.  The applicants propose to appeal, arguing that the Judge erred in a finding that the first and second applicants represented to the respondent that one day the four properties would be his, or that he had relied on such representations. 

Obviously, there is room for contention back and forth about the effect of the evidence on this topic, but there does seem to me room for argument based on what is identified, in so much of the transcript as I have seen, as variable evidence as to the representations made.  The argument of the applicant is that the learned Judge could not have found the common endeavour that she did in fact find. 

It is also said that the assessment of quantum effectively gave the respondent half the net worth of the applicants, failing to recognise their role in the working of the properties and also the role of others who had assisted them, and there are some other matters identified in the written submission which, it is said, indicate that the award was excessive.

The second applicant has sworn an affidavit in which she says that she and her husband, having retired from farming, live at a property at Cooroy, which is valued at 1.1 million.  She omits, in that affidavit, to refer to a mortgage which was registered prior to the date that the affidavit was sworn.  It secures a bank loan up to $50,000, the purpose of which is to fund the applicants' legal costs of the appeal.

In addition, the first and second applicants hold bank accounts with about $75,000 in them, and the first applicant refers to their receipt of an allocated annual pension which, in the last financial year, was about $35,000 each.  She says they have unsecured debts to family and others for about $400,000.  The first applicant is in poor health.  It is common ground that the judgment could only be satisfied by sale of their home.  The proceeds of the sale of the property Shillingford, which was the subject of the trial Judge's order, an amount now at $417,851, is held in the trust account of the respondent's solicitors. 

As I have said, although it is difficult to assess at this stage the strength of the applicants' grounds, it does appear that they have an arguable case on appeal as to the finding of the representations.  Certainly, there seems a real and obvious basis for argument about the assessment of the respondent's compensation at $732,000. 

The position is this:  the applicants have now encumbered their house so as to secure the costs of the appeal.  The respondent wants to take a mortgage for the amount of the judgment costs and interest over that property with an undertaking not to execute against it until the appeal is resolved.  There is no consensus as to the funds held in the trust account; the applicants' fear is that they will no longer be recoverable, should they succeed on their appeal.  There is no material before me as to any assets which the respondent may own, but the judgment suggests - and I do not think there is any suggestion to the contrary - that he has no significant property.

The respondents say that there is presently a shortfall of $129,000 between what is owed by the applicants for judgment interests and costs, and the worth of their home - that, presumably, now could be as high as $179,000, given the further encumbering of the property - combined also, I should say, with the money in the trust account. 

Counsel for the respondent makes the point that if the respondent cannot execute now, he risks the size of the shortfall increasing with the accrual of interest.  There was also the difficulty about the respondent having available to him the means of funding his own appeal, should the trust account funds be frozen, but it seems to me that provision can be made for that.

The disadvantage to the respondent in staying judgment is the loss of the prospect of earning interest at the rate applicable to judgments on the funds now, as opposed to any commercial interest rate between now and resolution of the appeal.  That rather assumes, though, his complete success on an appeal and, on the information I have, it does not seem to me an overwhelming probability.  It is also pointed out that there was an agreement between the parties independent of the judgment that, upon judgment, those funds would be available to the successful party.

On the other hand, the applicants face the prospect of dissipation of the funds held in the solicitor's trust account.  There is a real risk that those funds will simply not be recoverable at all if judgment were executed now. 

Weighing the competing interests of the applicants and the respondent, I have come to the view that the balance favours the making of orders.  The orders I propose are these:  that the judgment of Justice Lyons dated 8th of November 2006 be stayed; that the proceeds of the sale of Shillingford, together with interest thereon, should continue to be held in the trust account of the respondent's solicitor, subject to the drawing of funds necessary to his defence of the appeal; that the applicants expeditiously prosecute their appeal; that the applicants not encumber or dispose of the property situated at Badnells Road, Cooroy, or any assets under the control of the third defendant; that the applicants not draw further on the loan secured by the existing mortgage registered against the property at Bagnalls Road, Cooroy.

...

HER HONOUR:  I will add this, then:  that the stay be granted, conditional on the applicant's undertaking to give their consent to the lodgement of a caveat by the respondent, based on the order restraining them from dealing with the property at Bagnalls Road, Cooroy.  I will alter the order in respect of the applicants' not making any further drawing to say that the applicants not draw further against the security constituted by the mortgage over Bagnalls Road, Cooroy. 

Also, I will alter the order in respect of the funds held in the solicitor's trust account, that they are to continue to be held in the trust account, subject to the drawing of funds necessary to the defence of the appeal and this application.

...

HER HONOUR:  The costs are reserved.

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