Hardship applications

Individuals suffering from financial hardship faced with the execution of a possession order may make an application to the court staying the execution.

In Western Australia, an application for stay of execution of a judgment is made under section 15 of the Civil Judgment Enforcement Act 2001 (WA).  In considering such application, the courts follow the rule that a successful litigant in the first instance will ordinarily be entitled to enforce judgment, unless there are special circumstances that justify the departure from this ordinary rule.   The definition of “special circumstances” have not yet been a subject of in depth consideration in Western Australian courts.

The New South Wales Supreme Court has recently held that hardship alone will not be sufficient grounds to obtain a stay of the execution of a possession order.

In a recent case¹, Mr Damelian, the mortgagor (also a bankrupt), sought a stay of the execution of the bank’s writ of possession (the equivalent of a possession order in Western Australia) on the grounds that, although he had found alternative accommodation at Whale Beach, such accommodation would not be available until approximately six weeks later and in the interim, he had no accommodation.  He explained that he was also in poor health.

In considering Mr Damelian’s application, the Court applied the principles in GE Personal Finance Pty Ltd v Smith [2006] NSWSC (GE Personal Finance).  In GE Personal Finance, it was held that a stay may be granted if the defendant indicates that:

  • the proceedings are to be defended;

  • the loan is to be re-financed; and

  • the property is likely to be sold.

The Court in GE Personal Finance added that even if the defendant’s case does not fall into any of the three scenarios, the court may still exercise its discretion to stay the execution if there are particular factors that warrant the Court to do so.  As Mr Damelian’s case did not fall into any of the three scenarios, the Court considered whether there were other "particular factors".

The Court appreciated that Mr Damelian suffered from a myriad of health problems including diabetes, kidney failure, ischemic heart disease, obstructive sleep apnoea and characteristic sleep disturbance.   However, Mr Damelian failed to provide evidence to show that he tried to secure accommodation. The Court then observed that Mr Damelian had his heart set on moving into Whale Beach and it seems that the thrust of Mr Damelian’s hardship application was that he would have to move twice, rather than once, if the writ of possession was executed.

The Court also considered that the sale of the property would not satisfy the bank’s debt and the delay will result in the bank incurring another $74,000, being the interests that will compound on Mr Damelian’s principal debt.

In these circumstances, the Court rejected Mr Damelian’s application.

Lavan Legal comment

Lenders faced with an application based on hardship should take comfort that mere inconvenience pursuant to the hardship may not be sufficient grounds to stay the execution of a judgment.