Technilock (Aust) Pty Ltd v Mondami Pty Ltd

[1999] SASC 94

TECHNILOCK (AUSTRALIA) PTY LTD & ORS v MONDAMI PTY LTD
[1999] SASC 94

1. WICKS J          This is an application for an order that proceedings on the judgment of Millhouse J delivered on 2 February 1999 be stayed pending the determination of an appeal against the judgment to the Full Court.  By the judgment in question, the Court ordered that certain sums totalling in excess of $860,000 be recovered from the defendants.

2. On 5 March 1999 I ordered a stay of proceedings until further order and adjourned the application for argument to Monday 8 March 1999.

3. As a condition of making the order, Mr John Bacchiaz and Mrs Georgia Bacchiaz undertook to the Court that they would not sell, transfer, charge or otherwise encumber the property known and described as Queensland Title Reference No 13221034 being 96 Haven Road, Pullenvale, Queensland until released from the undertaking by the Court.

4. The Court has an inherent power to grant a stay in circumstances such as the present: Dwyer v National Companies and Securities Commission (No 2) (1988) 15 NSWLR 285 at p287.

5. One begins with a presumption that the judgment entered is correct.  Under the older authorities, it was necessary to show a feature which was “exceptional” or “special”.  That is no longer required.  In considering the question of a stay, the Court has a broadly based general discretion: Duke Group Limited (In Liquidation) v Pilmer & Ors (No 9) per Mullighan J, Jt No S6716, 15 June 1998, unreported.  In that case, Mullighan J observed:

   "The onus is upon the applicant to demonstrate a proper basis for a stay which will be fair to all parties.  The mere filing of the appeal is insufficient.  The discretion to be exercised by the Court includes the terms upon which the stay would be fair.  The Court must weigh considerations such as the balance of convenience and the competing rights of the parties before it ..."

1. I have considered the case to be argued by the defendants on appeal.  This seems to me to be the starting point.  In my view the case is arguable but I would not regard it as a strong case.  However, in the exercise of a general discretion, I would take this matter into account along with other factors relevant to the discretion which I am asked to exercise.  If I had found the case not to be arguable, the proper course would have been to refuse the stay.

2. In an affidavit sworn on 20 February 1997 to which I was referred during argument, the second defendant said that goods were supplied from Italy and the United States of America in connection with his business and that his house property at Pullenvale was continually used for letter of credit facilities required by the first defendant from time to time.  It was also used as security for a guarantee to the National Australia Bank in respect of obligations undertaken from by the first defendant.

3. I have considered the matters raised by Mr Bacchiaz in his affidavit sworn 1 March 1999.  In the circumstances, I do not believe that those considerations outweigh the need to impose conditions on any stay order to ensure that the house property is available as security in this matter and that the security concerned amounts to more than a mere personal assurance.

4. During the course of argument, I put to counsel for the defendants that the imposition of a mareva injunction might be a suitable condition to attach to the stay order.  However, it was put to me that a mareva injunction could be registered and that customers and creditors would then become aware of its existence.  It was argued that knowledge by customers and creditors of such an injunction would be highly prejudicial to the first defendant’s business.

5. Reference was made by counsel to an application for a mareva injunction which came on for hearing before a master in chambers on 21 February 1997.  Included in the relief sought in that application was an injunction restraining the second defendant until further order from disposing of the proceeds of any sale of, or any dealing with, the property at 96 Haven Road, Pullenvale, Queensland which was at that time registered in the name of the second defendant alone.

6. After hearing argument, the learned master accepted an undertaking from the second defendant that he would not sign any agreement for sale of the property which had a settlement date of less than fourteen days from the date of signing, and that if a contract were signed for the sale of the property, the second defendant would notify the plaintiffs within two days of the signing.

7. During the course of argument, it was pointed out to me that since the giving of the undertaking to the learned master, the second defendant and his wife Georgia Bacchiaz have entered into a transaction whereby the property at 96 Haven Road, Pullenvale became registered in their names as joint tenants and that the transfer of the property into their names was made without prior reference to the plaintiffs.  It would appear that the second defendant and his wife are presently registered as the proprietors of the property as joint tenants.  The transfer to the second defendant and his wife may not have involved a sale and may therefore have fallen outside the undertaking given to the learned master.  Details of that transaction were not before me. 

8. Counsel for the plaintiffs submitted that it would be appropriate in this instance if, as a condition of the stay, Mr & Mrs Bacchiaz were required to execute a mortgage to secure payment of the judgment sum, interest and costs, such mortgage to be registered on the title in respect of the property at Haven Road, Pullenvale.

9. Where a judgment has been obtained, a much stronger case exists for the imposition of conditions on the grant of a stay designed to ensure that assets are not disposed of pending the determination of an appeal.

10. It seems to me that this is an appropriate case where an order for a stay of proceedings on the judgment should be subject to a condition that Mr & Mrs Bacchiaz execute and register a mortgage (to rank as a first mortgage) over the property at 96 Haven Road, Pullenvale, Queensland to secure the due payment of the judgment sum, interest thereon and costs payable by the defendant to the plaintiffs or any of them.  The moneys secured would be payable in accordance with the judgment on appeal.  Whatever amount is payable in respect of the judgment, interest and costs in consequence of the judgment on appeal, that amount is to be secured by the mortgage and become payable thereunder.  If the appeal is discontinued, abandoned or dismissed, the amount secured by the mortgage would be the amount of the judgment of Millhouse J (inclusive of interest and costs, including any costs of the discontinued, abandoned or dismissed appeal).  The mortgage should be stamped in Queensland as security for an appropriate sum.  The second defendant would be required to produce the Certificate of Title for the property to enable the mortgage to be registered and generally co-operate to facilitate the due execution and registration of the mortgage.

11. At this stage, I think it would be appropriate if I did nothing more than approve in principle the giving of a mortgage as a condition for the maintenance of the stay order pending the determination of the appeal and that matters of detail, including the approval of the form of mortgage and a timetable for the execution and registration of the mortgage, be dealt with in chambers on a subsequent application.  In the first instance it would be for the second defendant to indicate whether or not he would be prepared to execute a mortgage over the Pullenvale property.  It would then be for the plaintiffs’ solicitors to arrange for the preparation of a suitable mortgage in Queensland and submit the same in due course for approval by the Court and the concurrence of the second defendant.

12. So far as Mrs Bacchiaz is concerned, it is essential that the question of the execution of the mortgage by her be a matter on which she should take legal advice separately and independently from her husband.  A legal practitioner in Queensland would need to advise her (but not in the presence of her husband) and the legal adviser should be required to provide a certificate to the Court that separate and independent advice has been obtained.  Of course, it may be that after receiving independent advice, Mrs Bacchiaz may wish to have nothing to do with the transaction.

13. Summarising the position, I would be prepared in principle to continue the stay until the appeal is disposed of (or the appeal is discontinued, abandoned or dismissed) provided the judgment sum on disposal of the appeal, interest and the plaintiffs’ costs (or where the appeal is discontinued, abandoned or dismissed, all amounts payable in the event of any such contingency) are properly secured by a first mortgage over the property of the second defendant and his wife at 96 Haven Road, Pullenvale, Queensland and that in the meantime every effort is made by the parties to that end.

14. I will hear counsel on the further progress of the matter and the question of costs.