Politarhis v Westpac Banking Corporation (No 2) - [2009] SASC 109

SUPREME COURT OF SOUTH AUSTRALIA
(Full Court: Application)
POLITARHIS & ANOR v WESTPAC BANKING CORPORATION (No 2)
[2009] SASC 109
Reasons for Decision of The Full Court (ex tempore)
(The Honourable Chief Justice Doyle, The Honourable Justice Sulan and The Honourable Justice Vanstone)
21 April 2009
PROCEDURE - SUPREME COURT PROCEDURE - SOUTH AUSTRALIA - PROCEDURE UNDER RULES OF COURT - JUDGMENTS AND ORDERS
Appellants appealed to Full Court of Supreme Court against judgment of a single Judge - single Judge made an order in favour of the respondent for possession of the appellants' home for the purposes of sale pursuant to a mortgage - judgment and orders of single Judge upheld on appeal - appellants sought an order staying the execution of the order for possession made by the single Judge pending an application for special leave to appeal to the High Court.
Held: Prospects of appellants obtaining grant of special leave remote - appeal would be rendered substantially nugatory if stay were not granted - amount of debt owed to respondent exceeds value of appellants' home - respondent suffering ongoing prejudice by reason of increase in the difference between value of debt and value of home because of accrual of interest - no amount paid into court or security given on account of outstanding balance - balance of convenience against the grant of a stay - application for a stay of order of possession refused.
Jennings Construction Ltd v Burgundy Royale Investments Pty Ltd (1986) 161 CLR 681; Re The Duke Group Ltd (In Liq) and Corporations Law of South Australia; Gerah Imports Pty Ltd v The Duke Group Ltd (In Liq) (1994) 119 ALR 401; Byrant v Commonwealth Bank of Australia (1996) 134 ALR 460; Zollo v National Australia Bank Ltd & Ors; National Australia Bank Ltd v Zollo (Unreported, Supreme Court of South Australia, Doyle CJ, 12 June 1997), applied.
Politarhis v Westpac Banking Corporation; Politarhis v Australian Central Credit Union Ltd [2008] SASC 296; Inglis v Commonwealth Trading Bank of Australia (1971-1972) 126 CLR 161; Politarhis & Anor v Westpac Banking Corporation [2009] SASC 96, considered.

POLITARHIS & ANOR v WESTPAC BANKING CORPORATION (No 2)
[2009] SASC 109
Full Court: Doyle CJ and Vanstone J (Sulan J absent)

DOYLE CJ: This is an application for an order staying the enforcement of an order that Mr and Mrs Politarhis give possession to Westpac Banking Corporation (“Westpac”) of certain land.
The land includes the house in which Mr and Mrs Politarhis live. It is their family home.
The order for possession was made in favour of Westpac by a Judge of this Court after the trial of an action before the Judge. The Judge dismissed a claim for damages made by Mr and Mrs Politarhis against Westpac.
The order for possession in favour of Westpac was made on the basis that it is the mortgagee of the land in question, and further on the basis that there had been a default under the mortgage and that Westpac was entitled to enforce the mortgage and so was entitled to possession.
The Judge made an order for possession in favour of Westpac on the basis that Mr Politarhis at least was liable to Westpac for the amount claimed by Westpac on each of two accounts in his name.
As at 27 February 2006, when what Westpac called a “regularisation” of the accounts took place, the amount owing to Westpac on the so-called new account was $197,999.64 and the amount owing on the old account was $188,469.85. These are the amounts set out in the reasons of the trial judge: Politarhis v Westpac Banking Corporation; Politarhis v Australian Central Credit Union Ltd [2008] SASC 296 at [275].
The combined amount as at February or March 2006 was $386,469.49. Since then further interest will have accrued.
In the trial before him, the Judge did not have to determine the precise amount owing by Mr and Mrs Politarhis to Westpac and did not do so. Nor was this an issue on appeal.
Mr and Mrs Politarhis appealed against the dismissal of their damages claim. They also appealed against the order for possession.
The Full Court on 14 April 2009 published its reasons for dismissing those appeals: Politarhis & Anor v Westpac Banking Corporation [2009] SASC 96.
The enforcement of the order for possession was stayed pending the appeal to the Full Court.
Mr and Mrs Politarhis have indicated that they propose to apply to the High Court for special leave to appeal against the decision of the Full Court, or against part of that decision.
In deciding whether to grant a stay pending the making of that application, and pending the outcome of the application, the following matters are relevant.
First the question of whether there is a substantial or realistic prospect that special leave to appeal will be granted by the High Court. Second, whether the grant of a stay will cause loss to Westpac. Third, the balance of convenience. These propositions are drawn from decisions in Jennings Construction Ltd v Burgundy Royale Investments Pty Ltd (1986) 161 CLR 681 at 685; Re The Duke Group Ltd (In Liq) and Corporations Law of South Australia; Gerah Imports Pty Ltd v The Duke Group Ltd (In Liq) (1994) 119 ALR 401 at 403; Bryant v Commonwealth Bank of Australia Ltd & Ors (1996) 134 ALR 460 at 461; Zollo v National Australia Bank Ltd & Ors; National Australia Bank Ltd v Zollo (Unreported, Supreme Court of South Australia, Doyle CJ, 12 June 1997).
I take into account at the outset the circumstance that the application relates to the family home. If Westpac takes possession of the property, Mr and Mrs Politarhis will be forced to leave their home. I accept that this will cause significant disruption and some hardship.
Moreover, if the family home is sold, the only remedy if Mr and Mrs Politarhis ultimately succeed before the High Court will be a monetary one. If a stay is refused, Mr and Mrs Politarhis will lose their house even if their appeal succeeds, and so to that extent, the refusal of a stay will mean that the appeal cannot achieve what they want. Of course, they would still recoup their damages if the appeal against the dismissal of the claim for damages succeeds, and if they establish that Westpac is not entitled to enforce the mortgage, they would have a monetary claim against Westpac for reimbursement.
In short, I take into account the circumstance that the refusal of the stay would inflict hardship on Mr and Mrs Politarhis and will render their appeal substantially nugatory.
As to the prospects of obtaining a grant of special leave to appeal, I consider those prospects to be remote. It not appropriate for this Court to embark upon a detailed consideration of this question. Nor is it the function of this Court to make a forecast of the outcome of the application before the High Court. But it is necessary for the Court to make some assessment of the prospects of the application for special leave to appeal succeeding. As I have said, I consider the prospects of success to be remote.
In relation to the claim by Westpac for an order for possession, I also take into account the circumstance that there is no doubt that Westpac made substantial advances to Mr and Mrs Politarhis and that no repayment has been made by them.
On the hearing of the appeal before the Full Court, there was no real challenge to the claim by Westpac that the amount owing to it was secured by the mortgage. The main issue raised by way of challenge to Westpac’s entitlement to an order for possession was the so-called regularisation of the two accounts opened by Westpac in the name of Mr and Mrs Politarhis. Both the trial judge and the Full Court have held that Westpac was entitled to make the adjustment as between the two accounts that it made.
That is, of course, subject to the general question of Mr Politarhis’ claim for damages and subject to his claim that Westpac, because of its mistake, was not entitled to recover the full amount advanced or was not entitled to recover the amount advanced under both accounts. The Judge dealt with that issue at [266]-[267] in his reasons and also at [280]-[282]. I referred to this same issue in my reasons at [81]-[84].
In short, I consider that there is no realistic prospect of a grant of special leave to appeal in relation to the claim for damages, and no realistic prospect of a grant of special leave to appeal in relation to the claim by Westpac for an order for possession.
The next matter for consideration is the question of whether the grant of a stay will cause loss to Westpac.
The evidence put before the trial Judge indicates that the property is worth less than the amount owing to Westpac. We were referred to that evidence briefly. As interest continues to accrue on the amount owing, with the passage of time the amount owing to Westpac will increase further. It follows from this that Westpac is likely to find that the value of the house is substantially less than the amount owing to it, and the amount owing to Westpac is likely to increase further.
There is a real risk of Westpac sustaining a loss which it will be unable to recover from Mr and Mrs Politarhis in the event of a stay being granted.
I turn to the question of the balance of convenience.
I have referred already to the impact of enforcement of the order on Mr and Mrs Politarhis and to the circumstance that the refusal of the stay will to some extent make their proposed appeal to the High Court pointless. On the other hand, there is the prospect of an increasing loss to Westpac in the circumstance that Mr and Mrs Politarhis have remained in possession now for four years since demand for payment was made, making no payments to Westpac on account of the money owed.
Another factor is that when a mortgagee is apparently entitled to possession, the mortgagee will usually be restrained from taking possession, only if the amount in dispute is paid into court or security is given. I refer to Inglis v Commonwealth Trading Bank of Australia (1971-1972) 126 CLR 161.
Neither Mr nor Mrs Politarhis have paid the amount owing into court, nor have they offered to do so. They are not making any payment on account of rent for the use of the premises. However, the principle to which I refer is not a rigid one, but is certainly a factor to take into account on this application.
When I consider the balance of convenience overall, it appears to me that matters are balanced fairly evenly.
To my mind, the circumstance that the prospect of obtaining a grant of special leave to appeal is remote or slender tilts the balance against the grant of a stay.
For those reasons I would not grant a stay of the enforcement of the order for possession and accordingly for those reasons I would refuse the application for a stay.
VANSTONE J: I agree with the order proposed by the Chief Justice and with the reasons he has given.