Background
GCap Pty Ltd lent money to a borrower secured by a Deed of Loan and Guarantee executed on 8 December 2017 and a registered mortgage over a commercial property at Park Lane, Southport on the Gold Coast. Oxford On Crown Gold Coast Pty Ltd and two related companies, together with their director Robert Huang, executed the deed as guarantors. The loan went into default in December 2018, and GCap served notices of demand on the guarantors in May 2020 and March 2022 before commencing proceedings in 2024.
On 18 August 2025, Justice Freeburn granted summary judgment against all four applicants as guarantors, awarding damages of $3,074,212.00 for breach of the deed and associated mortgage. The primary judge also ordered that GCap was entitled to take possession of the Southport property under s 78(2)(c)(i) of the Land Title Act 1994 (Qld). The primary judge found that none of the nine defences raised in the applicants’ amended defence disclosed a real prospect of success, noting that the applicants had conceded money was owed even if they disputed the quantum.
The applicants, who were unrepresented by a lawyer and relied upon a non-lawyer consultant, filed a notice of appeal out of time in December 2025 and simultaneously sought leave to appeal. In January 2026 they applied for a stay of the August 2025 orders pending determination of that application. The stay application was beset by delay, non-compliance with directions, and a last-minute adjournment request, before being heard by Brown JA.
The Court’s Holding
Brown JA dismissed the stay application. Because no notice of appeal was on foot when the application was filed, the statutory stay power under r 761 of the Uniform Civil Procedure Rules was not engaged, and the Court instead proceeded under its inherent jurisdiction. Applying the principles in Cook’s Construction Pty Ltd v Stork Food Systems Australasia Pty Ltd [2008] 2 Qd R 453, the Court assessed whether the applicants had a good arguable case on appeal, the balance of disadvantage, and whether a successful appeal would be rendered nugatory without a stay. Her Honour found that each of the three substantive grounds advanced — disputed factual issues warranting cross-examination, the respondent’s alleged actions as mortgagee in possession blocking re-tenanting, and rejection of a refinancing offer — disclosed no arguable error by the primary judge.
On the balance of prejudice, the Court found the applicants had adduced no evidence of their financial position, offered no security, and had not demonstrated that the value of the property materially exceeded the debt. The respondent, by contrast, faced continuing interest accrual and had a potential opportunity to sell the property together with a neighbouring lot at greater value. Brown JA concluded that the poor prospects of the appeal did not provide a sufficient basis to deprive GCap of the fruits of its litigation, and that the disadvantage to the applicants did not outweigh the disadvantage to the respondent if a stay were granted. Costs were ordered against the applicants on an indemnity basis pursuant to clause 19 of the deed.
The Court declined to make any orders accelerating the hearing of the leave to appeal application, noting that the proceedings had already been substantially delayed by the applicants’ own conduct.
Key Takeaways
- A stay pending appeal requires more than mere financial hardship; the applicant must demonstrate a good arguable case, a favourable balance of disadvantage, and risk that a successful appeal would be rendered nugatory — and poor prospects of appeal weigh heavily against a stay.
- Guarantors who concede that a debt is owed but dispute only quantum face a high bar to resisting summary judgment and obtaining a stay, particularly where defences such as alleged mortgagee misconduct or verbal offset agreements are unsupported by evidence.
- A mortgagee’s post-default conduct — including taking possession, terminating a tenancy, or declining a refinancing proposal — does not of itself provide a defence to a guarantor’s liability where the event of default preceded those actions and the guarantors were obliged to pay from the date of default.
- An applicant for a stay who fails to place evidence of financial position, ability to pay, or property value before the court, and who offers no security or payment into court, significantly undermines any claim of prejudice sufficient to justify a stay.
Why It Matters
This decision reinforces the difficulty guarantors face in obtaining a stay of execution following summary judgment on a deed of guarantee, particularly where liability is not genuinely in dispute. The judgment is a clear illustration of how courts weigh the principle that successful litigants are entitled to the fruits of their judgment against the applicant’s prospects and the adequacy of security — and confirms that post-default mortgagee conduct, without more, cannot ground a defence or support a stay in favour of guarantors.
The case also serves as a practical reminder for lenders and their advisers that indemnity costs clauses in loan and guarantee documentation will be enforced on stay applications, and that courts will not allow procedural delays and evidential deficiencies to operate as a de facto stay in favour of uncooperative debtors.