Divoca Pty Ltd, Re; Goldshar Investments Pty Ltd, Re [1990] QSC 306

~/\ \,;? 1 10 20 30 40 50 60 IN THE SUPREME COURT OF QUEENSLAND CIVIL JURISDICTION O.S. No. 818 of 1990 BEFORE MR. JUSTICE CONNOLLY BRISBANE, 10 SEPTEMBER 1990 (Copyright in this transcript is vested in the Crown. Copies thereof must not be made or sold without the written authority of the Chief Court Reporter,Court Reporting Bureau.) IN THE MATTER OF the "Real Property Act 1861 - 1986" -and- IN THE MATTER OF a Caveat lodged by Divoca Pty. Ltd. -and- IN THE MATTER OF an application by Goldshar Investments Pty. Ltd. JUDGMENT HIS HONOUR: The conclusion to which I have come is that the following orders should be made: stay of proceedings is refused with costs to be taxed; I direct that Goldshar be at liberty to take out the order of 28 August 1990. I publish my reasons. -Govt. Printer, Old. 1 10 20 30 40 50 60 -- 1 of 8 -- IN THE SUPREME COURT OF QUEENSLAND 0.S. No. 818 of 1990 Before Mr. Justice Connolly IN THE MATTER of the "Real Property Act 1861-1986" - and - IN THE MATTER of a Caveat lodged by DIVOCA PTY. LTD. - and - IN THE MATTER of an application by GOLDSHAR INVESTMENTS PTY. LTD. JUDGMENT - CONNOLLY J. Delivered the 10th day of September, 1990. CATCHWORDS: Counsel: R.N. Chesterman Q.C. and P.D.T. Applegarth for applicant before 6.9.90 J.S. Douglas Q.C. and P.J. Favell for respondent Solicitors: Chambers McNab Tully & Wilson for applicantbefore 6.9.90 McDonald Partners for applicant after 6.9.90 Feez Ruthning for respondent Hearing date: 7th September, 1990. -- 2 of 8 -- IN THE SUPREME COURT OF QUEENSLAND 0.S. No. 818 of 1990 IN THE MATTER of the "Real Property Act 1861-1986" - and - IN THE MATTER of a Caveat lodged by DIVOCA PTY. LTD. - and - IN THE MATTER of an application by GOLDSHAR INVESTMENTS PTY. LTD. JUDGMENT - CONNOLLY J. Delivered the 10th day of September, 1990. On 28th August, 1990 I ordered that certain caveats against land the property of Goldshar Investments Pty. Ltd. be removed. These caveats had been lodged by Divoca Pty. Ltd. as purchaser under a contract of sale and purchase ,for $5 million. I found that this contract had been duly discharged by Goldshar for the failure of Divoca to complete. An appeal to the Full Court was instituted on 31st August and on the same day I was asked to stay execution of the order pending the determination of the appeal. This is not an altogether accurate way of describing the relief which Di voca seeks for no form of execution would really be relevant. What Divoca really wants is that the operation of the order should in some fashion be suspended or perhaps that Goldshar be restrained from perfecting the order or perhaps from serving it on the Registrar of Titles which would result in the instant removal of the caveats. When argument was completed on -- 3 of 8 -- 2 31st August, I directed that the order not be taken out while the application before me was pending. Essentially the ground of the application was that the appeal, if successful, would be rendered nugatory if the order I had made was not stayed in some fashion as Goldshar, which wishes to sell the land, would be free to do so. If a sale by Goldshar to another party were completed Divoca, which has instituted an action for specific performance, would be left with a right in damages only. According to the material put before me by Divoca the land in question seems to have extraordinary value. I have referred in my earlier judgment to a contract entered into by Divoca for the resale of the land to a company by the name of Freestar for $17.5 million. Tempting though that price would appear to be, one cannot help feeling that Divoca does not put much reliance upon this particular contract for I have had put before me valuations of the land ranging from a figure in excess of $10 million to a figure of about $20 million. If there is any substance in the valuation or, on the other hand, if Freestar were later shown to have been in a position to settle its contract of purchase from Divoca, the damages which Divoca would be able to claim against Goldshar, in the event of the appeal succeeding, would be very great indeed. It is plain enough, on the material before me, that Goldshar could not meet a judgment for substantial damages. Its financial accounts for the year ending 30th June, 1989 showed the company's total assets as $5 million and that is made up of the deposit of $50,000.00 paid by Divoca and the balance purchase price payable -- 4 of 8 -- 3 by that company. Goldshar is a member of the First Abbott Corporation Limited group and the profit of Goldshar due to the executory contract of sale to Divoca is shown to have converted a consolidated loss of the First Abbott Group of $1,201,151.00 to a consolidated profit of $1,245,000.00. On the other hand, Divoca is not a company with large resources. It is a wholly owned subsidiary of a company by the name of Cloydex Pty. Ltd., the principal shareholder of which is Caldervale Station Pty. Ltd., which is described as the private investment company of a Mr. Raymond Lord. The managing director of Divoca, Mr. Huxley, has sworn that Divoca has a standby credit line with Caldervale available to it of no less than $6.9 million. However, there is no suggestion that Divoca has substantial funds of its own and indeed, as I have already found, the contract between Divoca and Goldshar went off because Divoca's directors did not wish to incur the cost of borrowing the necessary funds to settle on the due date. It follows that, if the operation of my earlier order is suspended so that the caveat remains on the titles, any loss sustained by Goldshar as a result of difficulty in negotiating a satisfactory contract of sale or settling such a contract is unlikely to be recoverable against Divoca, for there would be no likelihood of its using its line of credit, assuming that still to exist, for the sole purpose of satisfying a judgment. I am satisfied that it is unlikely that the appeal would be brought on for hearing in 1990 and, when the application for a stay of execution was made to me I said that, to put it shortly, -- 5 of 8 -- 4 Divoca seeks to maintain caveats which I have already held should be removed. An applicant for a stay must show special circumstances, for a stay is not granted as a matter of course: Barker v. Lavery {1885) 14 Q.B.D. 769. In the case of an appeal against a money judgment, what must ordinarily be shown is that the successful party to the action would be unable to repay the judgment if he were unsuccessful on appeal: The Annot Lyle {1886) 11 P.D. 114. By a parity of reasoning Divoca in this case must be able to show that Goldshar would be unable to pay damages for breach of the original contract of sale if Di voca were to succeed on the appeal. Cf. Commissioner of Taxation v. The Myer Emporium Limited (No. 1) {1986) 160 C.L.R. 220 per Dawson J.; J.C. Scott Constructions v. Mermaid waters Tavern Pty. Ltd. (No. 1) [1983] 2 Qd. R. 243 at pp. 248-9. It is fair to say that, in my judgment, there is a,strong probability that Goldshar could not pay substantial damages should Divoca succeed on the appeal but, by reason of Goldshar's having resold the property, being confined to its remedy in damages. Divoca thus shows special circumstances but that cannot be the end of the matter, if, as is the case, Goldshar shows a likelihood of similar prejudice. There being a probability of irrecoverable damages on both sides, one has to consider where the justice of the case lies. Prima facie, Goldshar is entitled to the fruits of the order which I have already made. It seemed to me on 31st August that, if the operation of that order were to be suspended for a long period of time, Divoca should produce a credible undertaking to answer for damages. I was assured on that day that Divoca's -- 6 of 8 -- 5 backers, which I understood to mean Mr. Lord or a substantial company with which he was associated, would produce such an undertaking. Indeed, counsel's understanding was that that should become available within a couple of hours on 31st August. I then informed the parties that I would not give a decision until it were known whether such an undertaking would be available. It did not come to hand but, on 6th September, I was informed that there had been a change of solicitors for Divoca and documents were sent to my chambers which recorded an undertaking by Mr. Huxley to pay to any party affected by a stay of proceedings any damages which such party might sustain together with a document recording a similar undertaking by Clerbridge Limited. I immediately listed the matter for further consideration on 7th September when Mr. McDonald of McDonald Partners, Solicitors, appeared for Divoca and gave the undertakings on behalf of Mr. Huxley and Clerbridge. The undertakings were supported by a statement of assets in relation to Mr. Huxley which disclosed his assets as being what are described as trade receivables $1 .8 million, said to be based on information given by him and being silent as to liabilities. A similar statement of assets in relation to Clerbridge showed its total assets as being $514,250.00, the statement being based on information supplied by a director of the company who would appear to be Mr. Huxley and again being silent as to liabilities. Despite the $6.9 million line of credit which Mr. Huxley had previously sworn was available to Di voca from Caldervale, no -- 7 of 8 -- 6 undertaking from that quarter has materialised. I cannot regard the undertakings offered as adequate. In the circumstances therefore it seems to me that, as there must necessarily be considerable delay before this matter is finally resolved and the situation being that one side or the other must ultimately be the loser, the proper course is to refuse a stay. The order will therefore be: stay of proceedings refused with costs to be taxed. Direct that Goldshar Investments Pty. Ltd. be at liberty to take out the order herein of 28th August, 1990. -- 8 of 8 --