Saleh v Romanous

[2010] NSWCA 373

New South Wales

Court of Appeal

CITATION:	Saleh v Romanous [2010] NSWCA 373
HEARING DATE(S):	6, 16 December 2010
JUDGMENT OF:	McColl JA at 1
EX TEMPORE JUDGMENT DATE:	16 December 2010
DECISION:	1. Upon the undertaking of the Second Appellant, to prosecute her application for special leave to appeal, and if each application be granted, the appeal, with due diligence and expedition, order that the orders made by Justice Forster on 20 November 2009 be stayed until the hearing and determination of the Applicant’s application for special leave to the High Court of Australia, and if special leave be granted, until the hearing and determination of her appeal. 2. Order that the Second Appellant be restrained until further order, without the consent of the Respondents in writing, from selling, transferring, mortgaging, charging, further encumbering or otherwise dealing in any way with the properties referred to in paragraph 17 of her affidavit of 19 November 2010, the Business referred to in that affidavit, being the business known as Cosmopolitan Shoes at Double Bay and any interest in Cosmo (NSW) Pty Ltd (together “the Properties”) and from doing anything whereby any of the same may be done in respect of the Properties. 3. Order that the Second Appellant be restrained until further order, without the consent of the Respondents in writing from increasing the borrowings secured upon any of the Properties and from doing or failing to do anything whereby any such borrowings may be increased, except for any drawings on the overdraft facility referred to in paragraph 19 of the said affidavit up to the limit as referred to in that affidavit and except in respect of the accumulation of interest in accordance with the terms of any relevant agreements with the lenders having the benefit of the said securities. 4. Order the Second Appellant to pay the costs of the hearing on 6 December 2010 and that the costs of the hearing today and of the application be costs in the application for special leave. 5. Grant liberty to the parties to apply on 2 days’ notice.
CATCHWORDS:	PROCEDURE – application for stay pending special leave application – principles to be applied
LEGISLATION CITED:	Civil Procedure Act 2005 (NSW) Federal Court Act 1976 (Cth)
CATEGORY:	Procedural and other rulings
CASES CITED:	Alexander v Cambridge Credit Corporation Ltd (Receivers appointed) (1985) 2 NSWLR 685 Bank Negara Indonesia v Hoalim [1973] 2 MLJ 3 Bennette v Cohen (No 2) [2009] NSWCA 162 Branir Pty Limited v Owston Nominees (No 2) Pty Ltd [2001] FCA 1833; (2001) 117 FCR 424 Bryant v Commonwealth Bank of Australia [1996] HCA 3; (1996) 70 ALJR 306 Clowes v Higginson (1813) 1 Ves & B 524; 35 ER 204 Commonwealth v Verwayen [1990] HCA 39; (1990) 170 CLR 394 Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55; (2004) 218 CLR 271 Franklins Pty Ltd v Metcash Trading Ltd [2009] NSWCA 407; (2009) 264 ALR 15 Giumelli v Giumelli [1999] HCA 10; (1999) 196 CLR 101 Hughes v Metropolitan Railway Co (1877) 2 App Cas Jennings Construction Ltd v Burgundy Royale Investments Pty Ltd [No 1] [1986] HCA 84; (1986) 161 CLR 681 Miller v Nationwide News [2008] NSWCA 261 Palmer v Permanent Custodians Ltd [2009] VSCA 164 Romanous v Saleh [2009] NSWSC 1166 Saleh v Romanous [2010] NSWCA 274 Saleh v Romanous (Tobias JA, 10 May 2010, unreported) Sibuse Pty Ltd v Shaw (No 2) (1988) 13 NSWLR 125 Sopov v Kane Constructions Pty Ltd [2009] VSCA 216 State Bank of New South Wales v Currabubula Holdings Pty Ltd [2001] NSWCA 239 SZKUO v Minister for Immigration and Citizenship [2009] FCA 1570; (2009) 262 ALR 632 Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7; (1988) 164 CLR 387 Winch v Winchester (1812) 1 Ves & B 375; 35 ER 146
TEXTS CITED:	Ashburner’s Principles of Equity, 2nd ed (1933), Butterworth & Co (Publishers) Ltd Meagher, Gummow & Lehane, Equity Doctrines and Remedies, 4th ed (2002) LexisNexis
PARTIES:	Michael Saleh - First applicant Rose Saleh - Second applicant Harris Romanous - First respondent Philomena Romanous - Second respondent
FILE NUMBER(S):	CA 2006/258370
COUNSEL:	BW Rayment QC/L Friedwald - for the Applicants FG Kalyk - for the Respondents
SOLICITORS:	Woods & Day Solicitors - Appellants Thurlow Fisher Solicitors - Respondents

2006/258370

McCOLL JA

16 December 2010

Saleh v Romanous

Judgment ex tempore

1 McCOLL JA: By notice of motion filed on 19 November 2010 Michael Saleh and Rose Saleh seek an order that the execution of judgment in proceedings number CA 06/258370 be stayed until further order or, in the alternative, pending the determination of the application for special leave to appeal in the High Court. Michael Saleh is bankrupt. Accordingly, although the motion purports to be filed on both Rose and Michael Saleh’s behalf, it is Rose Saleh who is the moving party.

2 The application for special leave to appeal to the High Court is from this Court’s decision in Saleh v Romanous [2010] NSWCA 274 which was delivered on 28 October 2010. It arises in the following circumstances.

3 The applicant and her husband entered into a contract in May 2004 to sell a development property to the respondents with completion due in 42 days. The contract included an entire agreement clause (cl 10). It was found on trial, and apparently not disputed on appeal, that the parties contemplated that the property would be developed in accordance with a development consent obtained by the vendors and the owner of an adjoining property, Mr Saleh’s brother, to erect townhouses on the two properties. The respondents were unable to negotiate a satisfactory joint venture agreement with the neighbouring owner and, in due course, purported to rescind the contract. The proceedings arose from their application to recover the deposit, monies they apparently lent to the appellants while the contract was on foot and monies described in the Court of Appeal judgment as the “building debt”.

4 The respondents successfully alleged at trial that the vendors were prevented from enforcing the contract against them by a promissory estoppel based on a statement that if the neighbouring owner did not want to build “you don’t have to buy and you’ll get your money back”, and that they were, accordingly, entitled to recover their deposit and the other monies to which I have referred: Romanous v Saleh [2009] NSWSC 1166. The vendors failed to have that finding reversed on appeal.

5 In substance this Court held per Handley AJA (Giles JA and Sackville AJA agreeing) that the legal rights protected by the parol evidence and entire contract rules were “trumped where pre-contractual conduct establishes a ground for equitable relief” and that a pre-contractual promissory estoppel was such a ground preventing the appellants from enforcing the contract for sale: see [57], [68].

6 The application for special leave to appeal was filed in the High Court of Australia on 19 November 2010. The proposed grounds of appeal are:

“1. That evidence of a pre-contractual promise relied upon to support a promissory estoppel ought to have been excluded under the parol evidence rule.
2. That the provisions of clause 10 of the contract for sale were apt to preclude reliance upon the relevant pre-contractual promise.
3. That the doctrine of promissory estoppel does not permit the enforcement of a collateral contract inconsistent with a written contract.
4. That the effect of the entire contract clause was to produce a conventional estoppel inconsistent with the relevant promissory estoppel.”

7 This matter first came before me in the referrals list on 6 December 2010. Mr B W Rayment of Queens Counsel appeared with Ms L Friedwald, for the applicants. Mr F Kalyk appeared for the respondents.

8 Mr Rayment read Ms Saleh’s affidavit of 19 November 2010. That affidavit revealed that she is the proprietor of a company, Cosmopolitan Shoes (NSW) Pty Ltd, which she has operated for over 13 years. She holds several facilities with the Arab Bank totalling $3.705 million. Those facilities are secured over six of eight properties in which she holds interests. Her other two properties are mortgaged to the National Australia Bank. The total amount of her mortgage debt is approximately $3.9 million. She asserts that the value of the properties is approximately $5.5 million. There is attached to her affidavit an email from a manager of the Arab Bank, Mr Aboud dated 19 November 2010 in which he advises that six of the properties which the Arab Bank holds as security were last valued in July 2009 for an amount of $4.45 million. Taking into account other business and personal facilities secured by the properties and an overdraft facility, the applicant’s total liabilities as secured by the properties are approximately $4.7 million. The overdraft facility is secured by a mortgage over a North Parramatta property as well as by a fixed and floating charge over her business. The Arab Bank also has a fixed and floating charge over her business assets.

9 The applicant has put two of her properties on the market for sale but, to date, they have not sold. The respondents have placed a caveat over one of her properties. Since the primary judgment was delivered they have also placed writs of execution on all of her properties except one property in Strathfield.

10 On 1 April 2010 the respondents served a bankruptcy notice on the applicant which she moved to set aside. On 10 May 2010 Tobias JA granted a stay of the primary judge’s orders pending the hearing and determination of the appeal in Saleh v Romanous (Tobias JA, 10 May 2010, unreported). At the time Tobias JA was considering the application for a stay, the applicant was hopeful that once she had sold one of her properties and repaid the Arab Bank an amount of approximately $1 million secured on that property, the Bank would extend to her further credit which would, if necessary, enable her to pay the judgment debt: Tobias JA (at [20]). Tobias JA explained the applicant’s financial position to be such that she was not, at that time, in a position to meet the judgment debt and that, given the applicant’s lack of liquidity (despite the fact she was running a business which was “just making a profit but not by much”), refusal to grant a stay would mean inevitable bankruptcy. Although his Honour did not expressly advert to the matter of security, it is apparent from his Honour’s reasons that in light of his view about the arguability of the appeal (a part of which at that stage the respondents apparently conceded) he would not require security for the stay.

11 Following that stay being granted, the respondents consented to the bankruptcy proceedings being stood over until the determination of the appeal. After the judgment in the appeal was delivered, their solicitors asked the Federal Magistrates Court to re-list the bankruptcy proceedings. On 7 November the bankruptcy proceedings were stood over by consent to allow time for the filing of an application for special leave to appeal to the High Court and an application to this Court to seek a stay. The time for compliance with the bankruptcy notice was also extended up to and including 23 November 2010.

12 When the matter was called on on 6 December 2010, the primary ground Mr Rayment relied upon to seek the stay was, in substance, that advanced before Tobias JA, namely that having regard to the applicant’s lack of liquidity a bankruptcy would “bring the cards down” and “particularly … might bring the lease to an end for her business”. Mr Kalyk indicated, I thought, that the respondents would not take any action in furtherance of the bankruptcy of the applicant pending the application for special leave to appeal but, nevertheless said they would move to enforce the writs of execution they have placed on the applicant’s properties.

13 A question was then raised as to whether the evidence established that the bank securities were cross-collateralised so that any action by the respondents against one property would lead to default entitling either or both the Arab and National Australia Banks to issue notices of default. The proceedings were adjourned, in effect, on the applicant’s application, to enable further evidence going to that issue to be placed before the Court. At that stage I granted a stay of the execution of the judgment until the disposition of this application, adjourned the hearing until today and made directions as to the further service of evidence and submissions.

14 The applicant’s solicitor, Ms A M Barwick, swore an affidavit dated 8 December 2010 to which she annexed copies of the mortgages over seven of the applicant’s properties and exhibited letters of offer from the Arab Bank. Mr Rayment has this morning read a further affidavit of Ms Barwick of 15 December 2010 to which she attaches the registered memoranda of mortgage applying to each of the mortgages the Arab Bank and the National Australia Bank holds over the applicant’s properties.

15 In her 8 December 2010 affidavit, Ms Barwick deposed to a conversation with a manager of the Arab Bank during which he advised that there were no defaults on the mortgages the Arab Bank held and that the applicant was servicing all of the loans.

16 The three letters of offer from the Arab Bank exhibited to Ms Barwick’s 8 December affidavit are each dated 12 November 2009, are on the letterhead of Arab Bank Australia and offer loans respectively in the sums of $100,000, $300,000 and $450,000. The letter of offer in relation to the $100,000 loan is addressed to the applicant alone. The other two letters of offer are addressed to the applicant and her husband. The first and third letters of offer required, as security, inter alia, a first registered mortgage over an Oatlands property owned by the applicant and her husband. The second letter of offer required a first registered mortgage over the Oatlands property and also over three properties in Dundas, the latter three properties also being owned by the applicant and her husband. Each letter of offer provided that an event of default was the customer’s failure to pay any amount due under the specific agreement or under another loan agreement the customer had with the bank and also if the customer became insolvent or steps were taken to make the customer insolvent.

17 The three registered memoranda which are incorporated in the mortgages, which are attached to Ms Barwick’s most recent affidavit, demonstrate that those facilities are cross-collateralised by virtue of provisions in each registered memoranda, to which I do not think I need to make specific reference. Mr Kalyk did not contend otherwise.

Submissions

18 Mr Rayment submits that the consequence of the respondents seeking to enforce the writs they hold over the mortgaged properties is that it is likely that either or both the National Australia Bank and the Arab Bank will take action against the applicant pending the hearing of the special leave application, with the consequence of, in effect, bringing her business to an end and, I infer, rendering the application nugatory.

19 Mr Rayment submits that it is appropriate that a stay be granted: see Miller v Nationwide News [2008] NSWCA 261 at (at [23]). In the alternative he contends that if it was considered that a stay would only be granted if the Court was of the view that exceptional circumstances had to be established (see Bryant v Commonwealth Bank of Australia [1996] HCA 3; (1996) 70 ALJR 306), such exceptional circumstances are established.

20 Mr Kalyk submits that the applicant must show extraordinary circumstances which would justify the exercise of the Court’s discretion in her favour and that, in the event such circumstances are established, must also satisfy the Court to exercise its discretion in the applicant’s favour having regard to the positions of the parties, the preservation of the subject matter of appeal and the prospects of success on the special leave application. Mr Kalyk submits that the applicant’s evidence does not disclose that she has established her ability to meet her interest commitments as they fall due under her mortgages. Absent such evidence, he contends, and on the basis of the income she discloses, the Court should conclude that, absent a stay, she is unable to meet her debts as they fall due.

21 Mr Kalyk also points out that it is apparent from cl 24(e) of the Arab Bank’s general terms for commercial products that default has already occurred both because Mr Saleh is bankrupt and because the bankruptcy notice has been issued against the applicant. He contends that the evidence does not disclose those defaults can be remedied or have been, or will be, waived by the Arab Bank.

Consideration

22 When the matter was before me on 6 December, Mr Kalyk appeared to accept that the approach this Court took to an application for a stay pending a special leave application was that set out in my judgment in Miller. In that judgment I explained that in a line of authority commencing with Sibuse Pty Ltd v Shaw (No 2) (1988) 13 NSWLR 125, (Hope and Priestley JJA, Kirby P dissenting as to the result but not as to the principles) the Court had held that a stay would be granted pending an application for special leave to appeal to the High Court if it was “appropriate”. As I said (at [23]) Sibuse has been seen in subsequent authorities in this Court as requiring the application of a less stringent standard in considering an application for a stay pending a special leave application than that which the High Court applies. In the High Court, the jurisdiction to grant a stay pending a special leave application is only exercised prior to a grant of special leave in exceptional circumstances: Jennings Construction Ltd v Burgundy Royale Investments Pty Ltd [No 1] [1986] HCA 84; (1986) 161 CLR 681.

23 The divergence of approach I identified in Miller was referred to without demur by Tobias JA (Ipp and Campbell JJA agreeing) in Bennette v Cohen (No 2) [2009] NSWCA 162 (at [63] – [65]). Jagot J also accepted that such a divergence of approach existed, and that she would, if necessary, apply the less stringent approach, in SZKUO v Minister for Immigration and Citizenship [2009] FCA 1570; (2009) 262 ALR 632 (at [8] – [10]).

24 The Victorian Court of Appeal applies the exceptional circumstances test, being of the view that Sibuse did not suggest any different approach: see Palmer v Permanent Custodians Ltd [2009] VSCA 164 (at [55]) per Dodds-Streeton JA (Beach AJA agreeing). It is possible that the reason for the divergence of views recognised in this Court, but not apparently in Victoria, lies in the fact that it appears that in that State, the exceptional circumstances test is also applied where a stay is sought from a first instance judgment to that Court of Appeal, whereas this Court has rejected that approach at: Alexander v Cambridge Credit Corporation Ltd (Receivers appointed) (1985) 2 NSWLR 685.

25 As I have said, Mr Rayment contended for the approach outlined in summary in Miller, but argued that even if the exceptional circumstance test was applicable, it was satisfied in at least one respect in this case by the respondents’ threat to bankrupt the applicant: see Sopov v Kane Constructions Pty Ltd [2009] VSCA 216 (at [54] ff) per Mandie JA and Beach AJA. In those passages in Sopov, the Court referred to a number of Victorian decisions which establish that the prospect of bankruptcy rendering an appeal nugatory is a relevant, but not decisive, factor to be considered in an application for a stay, but that the court must always take all the circumstances into account, including whether the applicant for a stay has an arguable case on appeal, or, relevantly, on an application for special leave to appeal.

26 The test applied in this Court to granting a stay should be applied. That is to say, a stay should be granted pending an application for special leave to appeal if it is “appropriate”.

27 Mr Kalyk submitted that a stay should not be granted because the Court should take judicial notice of the likelihood that the Federal Court on the hearing of any petition for sequestration, would adjourn such application to the completion of appeal processes, referring to the approach taken by Mason P in State Bank of New South Wales v Currabubula Holdings Pty Ltd [2001] NSWCA 239 (at [26], [27] and [29]). In that case, Mason P said:

“27 I have previously referred to O’Hern v Deputy Commissioner of Taxation (1987) 76 ALR 137 at 148 which indicates that as a general principle a court faced with an application to make a person bankrupt or to wind up a company can and normally will grant an adjournment of the hearing of the petition pending the exercise of proper appellate rights. I think it quite likely, and I do not really understand the State Bank to contend to the contrary, that any summons to wind up would not proceed to a hearing at least so long as the claimants prosecute with diligence their application for special leave. Perhaps they will have to prosecute it with even more diligence by pressing for expedition but I say nothing more on that account.”

28 I have two difficulties with Mr Kalyk’s reliance on that passage. The first is that, if he is contending that I should refuse a stay and leave it to the Federal Court to hear, again, the arguments canvassed before me over two days and determine whether to adjourn the bankruptcy petition, I would regard such an approach as endorsing a duplication of costs in a manner inconsistent with this Court’s overriding purpose (s 56, Civil Procedure Act 2005 (NSW)) and, I might add, the Federal Court’s overarching purpose: s 37M,. Secondly, as can be seen, the successful party before Mason P had indicated it would not pursue a winding-up application if the claimants prosecuted their application for special leave with diligence. The respondents have not taken such a benign approach – rather indicating that they intend, absent a stay, to seek, at least, to enforce the writs of execution they have placed over the properties.

29 I have paid anxious consideration to Mr Kalyk’s submissions concerning the position revealed by the applicant’s evidence in relation to the mortgages, the securities, her income, and his submission about whether in fact a default has already occurred on some or all of the Arab Bank facilities. It is not for me to reach a final view on the latter point. All I can say is that it would appear that if the Arab Bank were of the view that the service of the bankruptcy notice constituted an event of default under its securities, it does not appear, when one has regard to Ms Barwick’s conversation with Mr Aboud last week, that it presently intends to take any steps in relation to it. Otherwise, although I appreciate there is an apparent discrepancy between the interest burden to which the applicant is subject under the securities compared to her annual income, she is currently servicing the loans, and there is no evidence before the Court save as the matters to which I have referred of any indication of any default under those securities at this stage, nor is there any evidence that any of the mortgagees have taken any steps to notify an event of default.

30 Mr Kalyk submitted that I should require as a condition of any relief I was minded to grant, that the applicant put one of her properties on sale “on an appropriate basis [that] will ensure they are sold”. It does not seem to me that I should order the applicant to sell one of the properties. She has in the past, as I have said, taken steps to sell at least two of them and, for whatever reason, has been unsuccessful in doing so to date. There is an apparent excess of assets over liabilities which would in due course in my view be available to meet what appears to be the judgment debt presently outstanding under the Court of Appeal judgment. The position as to costs has not been explored.

31 In my view, the applicant has established that were the respondents to move to bankrupt her or to enforce the writs of execution, then her financial position would be substantially jeopardised and indeed she may be in a position where she will be unable to proceed with the application for special leave to appeal. In such circumstances, in my view she has established a prima facie case that it is appropriate to grant a stay subject to considering other aspects of the matter, in particular the prospects of success on the special leave application

32 I turn to consider the applicant’s prosects of success on the special leave application, bearing in mind the natural diffidence a single judge of this Court exercises in anticipating the outcome of a special leave application.

33 I have seen the applicants’ submissions in support of the special leave application. They rely in particular on two English cases said to support the proposition that, contrary to decisions of this Court, including the judgment the subject of the special leave application, the parol evidence rule applies in equity. Those two cases are Winch v Winchester (1812) 1 Ves & B 375; 35 ER 146 and Clowes v Higginson (1813) 1 Ves & B 524; 35 ER 204. In both cases it was held that parol evidence was not admissible to resist an application for specific performance if the purpose of the evidence was merely to seek to vary, add to or explain a written agreement.

34 It has to be said neither authority has received substantial consideration in texts on equity. Neither is referred to in Meagher, Gummow & Lehane, Equity Doctrines and Remedies, 4th ed (2002) LexisNexis. Clowes v Higginson is referred to in Ashburner’s Principles of Equity, 2^nd ed (1933), Butterworth & Co (Publishers) Ltd (at 394) apparently as authority for the contrary proposition, namely that no rule of evidence prevents a defendant to a specific performance suit from showing that the document signed does not accurately express the terms of the contract.

35 The judgment under appeal explores the history of promissory estoppel, pointing out that it is an equitable doctrine which was recognised in Hughes v Metropolitan Railway Co (1877) 2 App Cas 439 and subsequent decisions, none of which appear to have referred to either Winch v Winchester or Clowes v Higginson. It applies Bank Negara Indonesia v Hoalim [1973] 2 MLJ 3 pointing out (at [68]) that that decision was referred to with approval in Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7; (1988) 164 CLR 387 by Mason CJ and Wilson J (at 399), by Brennan J (at 420), and by Gaudron J (at 459). That case was, however, one in which the High Court held that although for want of an exchange of parts no binding agreement for a lease had come into existence, a company which had impliedly promised that it would enter into a lease was, in circumstances which would otherwise be unconscionable, estopped from denying that it was bound to proceed with the lease.

36 In the judgment under appeal, Handley AJA referred (at [71]) to Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55; (2004) 218 CLR 271 (at [35]) where the Court, in the joint judgment of Gleeson CJ, McHugh, Kirby, Hayne and Callinan JJ said:

“Where parties entered into a written agreement, the Court will generally hold them to the obligations which they have assumed by that agreement. At least, it will do so unless relief is afforded by the operation of statute or some other legal or equitable principle applicable to the case.”

37 Handley AJA then said:

“72 The case is significant because, despite the parol evidence rule, the High Court remitted issues to the Queensland Court of Appeal which included the promissory estoppel pleaded by the borrowers. The judgment of Holmes J on the remitted issues: [2006] QCA 194 at [118]-[119] contains further dicta in support of the views expressed above.”

38 Mr Rayment observes that there was no mention in Equuscorp in the High Court of promissory estoppel at all, let alone as a remitted issue – submitting that issue only appeared in the pleadings when the matter was remitted. Mr Kalyk’s detailed written submissions, arguing there was no prospect of success on the special leave application, did not suggest the contrary.

39 In his written submissions, Mr Kalyk referred to a number of decisions of intermediate courts of appeal in New South Wales, Queensland and in the Full Federal Court, in which he contends that the propositions raised by the applicant in her special leave application were considered and rejected or commented upon adversely.

40 He also drew attention to views expressed on promissory estoppel in Waltons Stores, Commonwealth v Verwayen [1990] HCA 39; (1990) 170 CLR 394 and Giumelli v Giumelli [1999] HCA 10; (1999) 196 CLR 101. He submitted that in Waltons Stores the High Court “approved of the principle enunciated in that case as not being constrained to contracts already in existence, but as extending to conduct before the entry in contracts”. I do not understand the passages of Waltons Stores to which he refers as being authority for that proposition. As far as the three High Court authorities to which he referred are concerned, none concerned a representation alleged to conflict with a written contract.

41 It is apparent from at least two of the decisions to which Mr Kalyk refers in his submissions Branir Pty Limited v Owston Nominees (No 2) Pty Ltd [2001] FCA 1833; (2001) 117 FCR 424 and Franklins Pty Ltd v Metcash Trading Ltd [2009] NSWCA 407; (2009) 264 ALR 15 that the question of the extent to which an estoppel can outflank contractual rules has been the subject of anxious consideration at intermediate appellate court level in this country. The point does not appear to have been considered by the High Court. In such circumstances it seems to me that the applicant has some prospects of obtaining a grant of special leave to appeal. Whether or not such a grant will ultimately lead to a decision in her favour does not, of course, necessarily follow.

Conclusion

42 In such circumstances it seems to me that this is an appropriate case in which I should grant the application for a stay pending the outcome of the special leave application and if that application is successful, pending the disposition of the appeal in the High Court.

43 I have raised with counsel today my concern that the respondents‘ position should be protected to the greatest extent possible. Mr Rayment said that his client would accept orders in the nature of those issued in a Mareva situation in effect requiring her to undertake not to further encumber, dispose of or charge the properties and in the event that she did so to notify the respondents and hold any balance of the funds in a secured account, pending as I say, the outcome of any special leave application.

44 Insofar as costs are concerned, given that the matter had to be adjourned on 6 December to enable evidence to be obtained relating to cross-collaterisation of the applicant’s facilities, I will order the applicant to pay the respondent’s costs of 6 December 2010, and make the costs of today costs in the special leave application.

Orders

45 I make the following orders:

1. Upon the undertaking of the Second Appellant, to prosecute her application for special leave to appeal, and if such application be granted, the appeal, with due diligence and expedition, order that the orders made by Justice Forster on 20 November 2009 be stayed until the hearing and determination of the Applicant’s Application for Special Leave to the High Court of Australia, and if special leave be granted, until the hearing and determination of her appeal.

2. Order that the Second Appellant be restrained until further order, without the consent of the Respondents in writing, from selling, transferring, mortgaging, charging, further encumbering or otherwise dealing in any way with the properties referred to in paragraph 17 of her affidavit of 19 November 2010, the Business referred to in that affidavit, being the business known as Cosmopolitan Shoes at Double Bay and any interest in Cosmo (NSW) Pty Ltd (together “the Properties”) and from doing anything whereby any of the same may be done in respect of the Properties.

3. Order that the Second Appellant be restrained until further order, without the consent of the Respondents in writing from increasing the borrowings secured upon any of the Properties and from doing or failing to do anything whereby any such borrowings may be increased, except for any drawings on the overdraft facility referred to in paragraph 19 of the said affidavit up to the limit as referred to in that affidavit and except in respect of the accumulation of interest in accordance with the terms of any relevant agreements with the lenders having the benefit of the said securities.

4. Order the Second Appellant to pay the costs of the hearing on 6 December 2010 and that the costs of the hearing today and of the application be costs in the application for special leave.

5. Grant liberty to the parties to apply on 2 days’ notice.

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