O'Leary v G E Custodians [2011] NZCA 430 (30 August 2011)

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O'Leary v G E Custodians [2011] NZCA 430 (30 August 2011)

Last Updated: 8 September 2011

IN THE COURT OF APPEAL OF NEW ZEALAND

CA436/2010 [2011] NZCA 430

BETWEEN DION ANDRE O'LEARY Applicant

AND G E CUSTODIANS Respondent

Hearing: 29 August 2011

Court: O'Regan P, Arnold and Ellen France JJ

Counsel: Applicant in person E Cox for Respondent

Judgment: 30 August 2011 at 3.30 pm

JUDGMENT OF THE COURT

The application for a stay is refused.

REASONS OF THE COURT
(Given by Arnold J)

[1] This is an application for a stay in relation to a property sale which is scheduled for settlement on 30 August 2011. The application is opposed by the respondent, GE Custodians (GEC).
[2] After a telephone hearing on 29 August 2011, we rejected the application. We now give our reasons for that decision.
[3] The applicant, Mr O’Leary, mortgaged a four hectare coastal property with two rental cottages on it to secure borrowings from GEC. When he defaulted on the repayments, GEC issued proceedings against him in the High Court and sought vacant possession of the property by way of an application for summary judgment.
[4] Mr O’Leary advised the Court that he wished to defend the proceedings. Associate Judge Bell directed that there was to be a half-day fixture on 15 June 2010 to argue the summary judgment application. Mr O’Leary was to file an affidavit by 31 May 2010 and GEC was to file any affidavit in response by 8 June 2010. Both parties were to file and serve their written submissions by 11 June 2010.
[5] Subsequently Mr O’Leary applied for an adjournment of the hearing. He wanted more time to prepare his defence and was also attempting to obtain legal representation. GEC did not oppose the application but sought an “unless” order.
[6] Associate Judge Bell issued a minute in 1 June 2010 granting Mr O’Leary’s application for an adjournment. He directed Mr O’Leary to file any documents in support of his case by 14 June 2010 and directed that there was to be a further case management conference on 15 June 2010. The minute indicated that the summary judgment application could be heard on 20 or 21 July 2010.
[7] Mr O’Leary did not comply with this further timetable and, by the time of the 15 June conference, had not filed any documents. He said that he had received the email from the Court but had not opened the attachment containing the Associate Judge’s minute.
[8] In his minute of the 15 June conference, Associate Judge Bell noted that it was Mr O’Leary’s responsibility to read the minute and said that he must accept the consequences of not having done so. The Associate Judge also noted that, after some discussion, Mr O’Leary accepted that he was in default under the mortgage and that he had no good reason for opposing GEC’s application for vacant possession. He said, however, that he had other issues with GEC (it is not clear whether he identified what those were). In those circumstances, the Associate Judge considered that there was no reason not to grant GEC’s application for summary judgment immediately and did so.
[9] On 8 July 2010 Mr O’Leary filed an appeal against the Associate Judge’s decision. In essence, he alleged that the process was unfair because he thought the summary judgment application would be heard on 21 July 2010 rather than being dealt with on 15 June 2010. However, the various documents which he has filed do not reveal that he has any defence to GEC’s claim. Rather, he says that that he is committed to resolving his financial difficulties and has the capacity to do so if given a mortgage holiday for a period, something which he says he has asked for from the outset.
[10] An application for a stay requires the Court to balance competing interests, namely, the right of the successful party in the Court below to the benefit of its judgment against the need to preserve the position against the possibility that the applicant may be successful in the appeal.[1] A variety of factors will be taken into account, including the apparent strength of the appeal.[2]
[11] We consider that Mr O’Leary’s application for a stay should be declined. We make four points.
[12] First, Mr O’Leary says that he was taken by surprise by the Associate Judge’s decision to grant summary judgment at the 15 June conference. He argues that as a consequence he has not had an opportunity to be heard or to advance a defence. In this context, he places particular weight on wanting to pursue the option of a mortgage holiday.[3]
[13] The Associate Judge seems to have dealt with the summary judgment application at the 15 June conference on the basis that he had made “unless” orders in his minute of 1 June 2010. What is not clear to us, however, is whether the effect of non-compliance with the Associate Judge’s directions was explained to Mr O’Leary at that time. If, as seems likely, the effect was explained, Mr O’Leary can fairly be seen as having brought his difficulties on himself by not complying with the Associate Judge’s directions. If, however, no explanation was given, Mr O’Leary’s surprise is more understandable. But even assuming that no explanation was given, Mr O’Leary would not necessarily be entitled to a stay, given the position that has now been reached in relation to third party interests.[4]
[14] Second, a significant difficulty that Mr O’Leary faces is that at no point has he indicated that he has any arguable defence to GEC’s claim. Before the Associate Judge he accepted that he was in default under the mortgage and had no excuse for that. In the material filed in this Court he did, as we have said, raise the point that GEC should have given him a mortgage holiday to allow himself to get back on his feet financially. Under s 55 of the Credit Contracts and Consumer Finance Act 2003 a debtor who is unable to meet his or her obligations under a consumer credit contract[5] but expects to be able to do so in the future may apply to the creditor to have the contract varied. If the creditor declines the request, the debtor may apply under s 58 to the court (in this case, the High Court) for relief. While this may not, strictly speaking, have provided Mr O’Leary with a defence to GEC’s claim, it would, if accepted, have deferred the possibility of a mortgagee sale at least for a period. We are not, of course, in any position to say that such an application would have succeeded. But it may be that Mr O’Leary has not had a proper opportunity to advance such an application. While, in other circumstances, this might have justified the granting of relief, it is not sufficient at this stage, particularly in light of the next consideration.
[15] Third, since it obtained summary judgment in June 2010, GEC has been actively marketing the property. We understand that the property went to auction on 8 August 2011 and there is now an unconditional agreement for sale and purchase which is due to settle on 30 August 2011. Mr O’Leary filed this appeal in July 2010 and the present application on 25 August 2011. We consider that he could and should have advanced the appeal more quickly than he has. Now that a third party is involved (the purchaser of the property), its interests must be taken into account. We consider that it is now simply too late to seek to halt the sale process.
[16] Finally, Mr O’Leary is not left without a remedy if a stay is refused. He alleges that since the property has been under the control of GEC, it has deteriorated, to the extent that it has lost considerable value. As Mr Cox accepts, if Mr O’Leary is able to make out his case in this respect, he will be entitled to compensation.
[17] Accordingly, we decline the application for a stay. We make no order as to costs.

Solicitors:
Gibson Sheat, Lower Hutt for Respondent

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[1] Duncan v Osborne Buildings Ltd (1992) 6 PRNZ 85 (CA) at 87.
[2] Keung v GBR Investment Ltd [2010] NZCA 396 at [11].
[3] Credit Contracts and Consumer Finance Act 2003, s 56.
[4] See [15] below.
[5] As we understand it, there is no dispute that there is such a contract in this case.