Yeshiva Synagogue Inc v Karimbla Properties (No 10) Pty Ltd as Trustee of the Harry Triguboff Foundation

1. [1]

   BASTEN JA: The first and second applicants, Yeshiva Synagogue Inc and Sydney Talmudical College Association, occupy premises at 36 and 36A Flood Street, Bondi, the premises being known as the Yeshiva Centre. The third applicant is Rabbi Yosef Feldman. The respondent is the owner of the premises, which it purchased in December 2012. It is the trustee of a charitable foundation. At the time of purchase, the first and second applicants held leases from the previous owners, being Chabad Lubavitch of Sydney Inc and FCSC Ltd. The leases were varied as part of the arrangements by which the respondent purchased the properties, so that they became leases terminating on 19 December 2017, with no right of renewal. The leases were also subject to termination, pursuant to a new cl 27, which permitted the lessor to terminate the leases on 30 days’ notice if it determined in its absolute discretion that Yeshiva College Bondi Ltd was no longer a viable entity.

2. [2]

   The present proceedings, brought by the first and second applicants, were commenced in the Equity Division in April 2017 at a time when there were outstanding notices of termination under clause 27. The proceedings were heard by Darke J on 13 September 2017. Judgment was delivered on 10 October 2017, [1] but orders, prepared by the parties, were not made until 3 November 2017. By the commencement of the hearing, the respondent had abandoned its reliance upon the original (and subsequent) notices under cl 27 and was content to rely upon its rights to vacant possession on termination of the leases on 19 December 2017. [2] The third applicant became a party by the curious device of becoming a “cross-claimant” in a cross-claim brought by the present applicants against the previous owners and their directors or officers who were parties to two Deeds setting out the terms on which the respondent agreed to purchase the properties.

3. [3]

   Before the primary judge the applicants relied upon a construction of a particular clause in the Deeds (described by the primary judge as the “use clause”) which was in the following terms: [3]

4. [4]

   The issue was whether these clauses in the deeds (to which the first and second applicants were not party) conferred on them a right to continue to use the premises for the specific purposes after termination of the leases. The primary judge held that they did not.

5. [5]

   As a result of that finding, the first and second applicants’ right to occupation will terminate on 19 December 2017. They seek a stay of the orders made by the primary judge, pending determination of an appeal from that judgment. They also seek an order that they be “permitted to continue to occupy the premises at 36 and 36A Flood Street, Bondi in a manner consistent with its previous occupation until determination of the appeal.”

6. [6]

   The orders entered on 3 November 2017 noted undertakings by the respondent not to rely upon notices of termination given under clause 27 of the leases. The orders then included two declarations, in substantially identical terms with respect to the separate properties, of which only one need be set out:

7. [7]

   The Court then made orders otherwise dismissing the proceedings (including the cross-claims) and requiring the present applicants to pay part of the respondent’s costs.

8. [8]

   The applicants filed a notice of intention to appeal on the date the orders were made, namely 3 November 2017. They did not seek a stay from the trial judge. A notice of appeal was filed on 1 December 2017. No stay was then sought. The notice of appeal contained eight grounds of appeal which did little more than allege that certain findings and conclusions reached by the primary judge were wrong.

9. [9]

   A notice of motion seeking a stay of the orders was sent to the Registrar on 12 December 2017. It was accompanied by an affidavit of the first applicant’s solicitor, Eddy Neumann, and by draft appeal submissions prepared by counsel. The solicitor’s affidavit stated that he had received instructions on 11 December. He expressed the view that the appeal books could be filed within seven days and asked that the appeal be expedited.

10. [10]

    It is apparent that the appeal will not be heard before 19 December, by which date the applicants are required to have vacated the premises.

Relevant legal principles

1. [11]

   The language of the Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”) is partly obscure in its operation. Rule 51.44(1) empowers the Court to order that “the decision below or the proceedings under the decision be stayed.” Rule 51.44(2) provides that the filing of a notice of appeal (or similar originating process) will “not operate as a stay of proceedings under the decision below”, language which does not precisely reflect subr (1). The rule must be read coherently with s 135 of the Civil Procedure Act 2005 (NSW), but it is not necessary to explore the limits of the power in the present case, no point having been taken in that respect by the respondent.

2. [12]

   Although it is possible to find references in the case law, including the early judgment of Cotton LJ in Polini v Gray, [4] to stays of declarations, what is meant by that language will depend on the nature of the declaration. The existence of a legal right is not affected by an order suspending the operation of a judgment; rather, what is usually intended by such an order is, in effect, to restrain the successful party from acting in reliance on the correctness of the declaration. In the present case, that is reflected in the alternative order sought by the applicants, namely that they be permitted to continue to occupy the premises after the termination of the leases. However, what is in truth required is an interim injunction restraining the respondent from exercising its entitlement to evict the applicants from the premises on the termination of the leases held by the first and second applicants.

3. [13]

   This more precise formulation is not, as the respondent noted, a matter of semantics; rather, if the Court is to permit the continued occupation of the premises, even for a limited period, it is necessary to determine the terms on which such occupation is to be permitted. On the applicants’ case, they seek to maintain the status quo, by which is meant continuing occupation on the terms set out in the leases.

4. [14]

   No doubt the Court could impose such terms, but in doing so it would effectively be extending the operation of the leases in circumstances where it is common ground that the leases will have terminated (from 19 December) and in circumstances where the alleged entitlement does not arise under the leases, but under the Deeds.

5. [15]

   The established basis upon which this Court may intervene to grant such relief pending an appeal is, in broad terms, to prevent the subject matter of the appeal being destroyed or substantially impaired in such a way as to render a successful appeal nugatory. [5] A common example may be found in cases where an appellant resists payment of a sum in accordance with the judgment under appeal on the basis that the money will probably be irrecoverable notwithstanding success on the appeal. [6]

6. [16]

   More broadly, the Court is exercising a discretionary power and will need to weigh the hardship and inconvenience likely to be caused to each party by granting or not granting the order sought. The relevant circumstances are likely to include the period for which the relief will need to operate, the promptness with which the applicant for relief has come to the Court and the strength of the proposed appeal.

7. [17]

   So far as the last matter is concerned, the inquiry is usually constrained to a determination whether the appeal is reasonably arguable. With respect to the prospects of success on an appeal, the Court stated in Alexander v Cambridge Credit Corporation Ltd (Receivers appointed): [7]

8. [18]

   The grammatical structure of this statement is not entirely clear, but the availability of “some preliminary assessment” has generally been regarded as going to the merits of granting a stay or declining to do so, and not merely to the terms on which it may be granted.

(a) hardship and prejudice

1. [19]

   The evidence of hardship or prejudice relied upon by the applicants, if required to vacate the premises on 19 December and if successful on the appeal, was limited to the following statement from their solicitor’s affidavit of 12 December 2017: [8]

2. [20]

   In response, the solicitor for the respondent stated in an affidavit dated 13 December 2017: [9]

3. [21]

   On the basis of this material, the respondent submitted that such building works as were proposed for the future would not make the premises unusable as a synagogue, but would improve the facilities.

4. [22]

   There was nothing to contradict the respondent’s evidence. While it was true, as Mr Neumann noted, that construction work was taking place in the building, there was no basis for supposing that that work would be inconsistent with the continued use of the building as a synagogue. The respondent’s evidence was to the contrary; the facilities were to be improved, not destroyed or redesigned for a different use.

5. [23]

   While the respondent called no evidence of hardship or prejudice if the stay should be granted, that fact was largely immaterial, given the absence of a basis for concluding that, if the applicants were successful on the appeal, the premises would not be available for continued use in accordance with their purposes.

(b) merit of appeal

1. [24]

   The respondent did not argue that the grounds of appeal were unarguable or otherwise frivolous or vexatious. It accepted that there was an issue of construction of the Deeds. It did not, however, concede that the appeal had reasonable prospects of success.

2. [25]

   That approach should be accepted. As was said by Priestley JA in Jesasu: [10]

3. [26]

   The same may be said of Darke J’s reasoning and the prospects of appeal in the present case.

(c) discretionary considerations

1. [27]

   In the absence of any evidence suggesting that the subject matter of the appeal will be destroyed or diminished if a stay is not granted, there is no reason to make an order which restrain the respondent from acting in accordance with the judgment below. In fact, the evidence supports the view that the premises may well be enhanced, though perhaps not within the likely timeframe of the proceedings in this Court. In those circumstances, it would not be appropriate to grant a stay of the orders below. Particularly is that so where it cannot be said that the prospects of success on the appeal favour the grant of a stay.

2. [28]

   There are further considerations which militate against the grant of a stay, were it otherwise appropriate. First, knowing, at least since 10 October 2017, that they would be required to vacate the premises according to the judgment of the primary judge within a period of some two months, no steps were taken to seek a stay until this week, that is, some five working days before the leases terminated. Secondly, until a letter was sent to the primary judge on 11 December, no attempt was made to seek a stay from him, as would normally be expected. Thirdly, the terms on which continued occupation was proposed, namely the terms of the terminated leases, were inconsistent with the inevitable acceptance of the fact that the leases had terminated and did not provide a legal basis for the incidents of any continued occupation. Fourthly, in so far as the first and second applicants sought to rely upon the Deeds, to which they were not parties, their standing to obtain the relief sought in the principal proceedings (and hence for the purposes of this application) was at least doubtful. Although the third applicant was a party to the Deeds, that was to ensure that he did not take steps inconsistent with the proposed continuation of occupation by the first and second applicants (and other parties) and not as the recipient of any promise or benefit, or as a person whose rights or interests were acknowledged.

3. [29]

   Had relief otherwise been available, it would likely have been refused on these discretionary grounds.

Conclusions

1. [30]

   Taken cumulatively, there is no factor which establishes a legitimate basis for an order restraining the respondent from interfering with the continued occupation of the premises by the applicants after the leases terminate on 19 December 2017.

2. [31]

   The notice of motion prepared for the applicants and dated 12 December 2017 should be filed in the Registry, if that step has not yet been taken. Order 3 (seeking short service) has been impliedly granted and no order is required. The case is an appropriate one for expedition, as sought in order 4 of the notice of motion, but no order is necessary to obtain an early hearing date. Otherwise the motion should be dismissed; the applicants must pay the respondent’s costs of the motion.

3. [32]

   With respect to the question of expedition two issues arise. First, the appropriate steps to have the matter prepared for trial should take place as a matter of some urgency, as accepted by the applicants’ solicitor in his affidavit. In preparing the matter for trial, consideration should be given to whether or not the appeal is competent as of right, or whether leave is required pursuant to s 101(2)(r) of the Supreme Court Act 1970 (NSW). If the applicants consider that leave is required a summons should be filed. It is an appropriate matter in which, if leave is to be sought, there be a concurrent hearing of the application and the appeal.

4. [33]

   Finally, the Court can make time available to hear the appeal in the first week of the sittings in 2018, the preferred date being Wednesday, 31 January 2018.

5. [34]

   Accordingly, the Court makes the following orders:

   1. (1)

      Direct that the applicants’ notice of motion dated 12 December 2017 be filed in the Registry, if that step has not yet been taken.

   2. (2)

      Dismiss the motion.

   3. (3)

      Order the applicants to pay the respondent’s costs of the motion.

   4. (4)

      Direct that, if leave is to be sought, there be a concurrent hearing of that application and the proposed appeal.

   5. (5)

      Direct that the parties prepare and file a timetable for the service and filing of submissions and appeal books.

   6. (6)

      Set the matter down for hearing on Wednesday, 31 January 2018, or such other date as may be fixed by the Registrar.