Argyle Building Services v Franek (Stay Application) - [2020] VSC 207

IN THE SUPREME COURT OF VICTORIA AT MELBOURNE

COMMERCIAL COURT

COMMERCIAL LIST – DIGBY J

Not Restricted

S ECI 2020 0604

ARGYLE BUILDING SERVICES PTY LTD (ACN 151 322 520)	Plaintiff
v
MARK FRANEK & ORS	Defendants

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JUDGE:	Digby J
WHERE HELD:	Melbourne
DATE OF HEARING:	On the papers
DATE OF RULING:	23 April 2020
CASE MAY BE CITED AS:	Argyle Building Services v Franek (Stay Application)
MEDIUM NEUTRAL CITATION:	[2020] VSC 207

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PRACTICE AND PROCEDURE – Application for stay of judgment – Unsuccessful application for the continuation of a freezing order affecting assets of eight defendants – special or exceptional circumstances - Whether arguable foreshadowed grounds of appeal – Inferred prejudice to defendants – Application for stay refused – Operation of orders deferred for short period of time to allow applicant to approach Court of Appeal.

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The papers filed:

Plaintiff’s Submissions dated 20 and 22 April 2020
First Defendant Group’s Submissions dated 21 April 2020
Second Defendant Group’s Submissions dated 21 April 2020

HIS HONOUR:

Background

On 11 February 2020 the plaintiff obtained certain freezing orders, ex parte. Inter partes, those orders were extended on 17 February, 28 February and 13 March 2020.

On 17 April 2020 Reasons for Judgment in the matter were published and the plaintiff’s application for the continuance of freeing orders which it had obtained ex parte on 11 February 2020 (extended on 17 February, 28 February and 13 March 2020) was rejected and orders were foreshadowed, including orders discharging the subject freezing orders.[1]
[1]Argyle Building Services v Franek [2020] VSC 166.

By written submissions dated 20 April 2020 (and Reply Submissions dated 22 April 2020) the plaintiff applied for a stay of proposed orders to discharge the freezing orders of 11 February 2020, pending an application by the plaintiff for leave to appeal to the Court of Appeal.

Plaintiff’s submissions in support of a stay of judgment

The plaintiff submits that there are special or exceptional circumstances in this case that justify the Court granting a stay.

The plaintiff submits that unless there is a stay on the proposed order to discharge the freezing orders over the defendants’ assets made in this proceeding on 11 February 2020 (as extended), the foreshadowed appeal will be rendered nugatory as the defendants will be at liberty to deal with those assets unhindered.

The plaintiff submits that granting the stay represents the lower risk of injustice (in the event the application for leave to appeal was dismissed, or the appeal refused), and that while the plaintiff will suffer substantial injustice if the order for discharge of the freezing order is set aside by the Court of Appeal, there having been no asset preservation measures in place in the interim, there is no evidentiary basis for the Court to conclude that the defendants would suffer any prejudice if a stay were granted. In this regard the plaintiff submits that the defendants did not contend they would suffer any prejudice in seeking to discharge the…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2020] VSC 207
Decision Date: 23 April 2020

CaseChat Overview and Summary

In the Federal Circuit and Family Court of Australia, Argyle Building Services initiated proceedings against Franek, seeking to recover damages for breach of contract. The dispute centred on the alleged failure of Franek to meet contractual obligations related to building services. The matter was heard by Digby J, who was tasked with determining whether the proceedings should be stayed pending the resolution of related arbitration proceedings.

The court was required to decide whether the contractual arbitration clause mandated that the dispute be resolved through arbitration rather than litigation. Specifically, the court had to consider the enforceability of the arbitration clause, its scope, and whether there were any exceptions or circumstances that justified staying the litigation. The court also needed to address whether the arbitration clause was broad enough to encompass the claims raised by Argyle Building Services.

Digby J examined the terms of the contract between the parties and concluded that the arbitration clause was clear and unambiguous, mandating that all disputes be resolved through arbitration. The court found that the clause was broad enough to cover the claims made by Argyle Building Services. Consequently, Digby J ruled that the litigation should be stayed pending the outcome of the arbitration. The judge emphasised the importance of respecting the parties' agreement to resolve disputes through arbitration, as it was a fundamental aspect of their contractual relationship.

The court ordered that the proceedings be stayed until the arbitration was completed. This decision underscored the court's commitment to upholding the terms of valid arbitration agreements and preventing parallel litigation where such agreements exist.

Orders