Beeck v Kohlen - [2013] WASCA 134

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT : THE COURT OF APPEAL (WA)

CITATION: BEECK -v- KOHLEN [2013] WASCA 134

CORAM: MURPHY JA

HEARD: 23 MAY 2013

DELIVERED : 29 MAY 2013

FILE NO/S: CACV 51 of 2013

BETWEEN: MARTIN HARRY BEECK
Appellant
AND
PETER JOSEPH KOHLEN
First Respondent
SUSAN KAY FLEMING
Second Respondent

ON APPEAL FROM:
Jurisdiction              :  SUPREME COURT OF WESTERN AUSTRALIA
Coram  :ALLANSON J
Citation  :BEECK -v- KOHLEN [2013] WASC 166
File No  :CIV 1467 of 2011

Catchwords:

Stay - Appeal - Investment property - Damages adequate compensation - Question of reasonable prospects of success

Legislation:

Nil

Result:

Application for stay refused

Category: B

Representation:

Counsel:

Appellant:     Mr S M Davies SC & Mr G J Carter
First Respondent           :     Mr M S Macdonald
Second Respondent      :     Mr M S Macdonald

Solicitors:

Appellant:     Optima Legal
First Respondent           :     Macdonald Rudder
Second Respondent      :     Macdonald Rudder

Case(s) referred to in judgment(s):

Beeck v Kohlen [2013] WASC 166
Palmer v Permanent Custodians Ltd [2009] VSCA 164
Perri v Coolangatta Investments Pty Ltd [1982] HCA 29; (1982) 149 CLR 537
Raysun Investments Pty Ltd v Caruso [2013] WASCA 13
Rizhao Steel Holding Group Co Ltd v Koolan Iron Ore Pty Ltd [2012] WASCA 50
Tradesmen Technologies Pty Ltd v Ameduri [2012] WASCA 168

MURPHY JA: This is an application for a stay by the appellant.

Background

The appellant entered into an agreement dated 13 February 2006 to buy from the respondent a proposed lot in a proposed development. The contract remained executory for a period of over four years, and the respondents sent a notice to the appellant on 17 August 2010 to the effect that the respondents were terminating the contract based on the alleged non‑fulfilment of a 'subject to finance' condition. The appellant denied that there was a valid termination. He lodged a caveat over the land on 10 February 2011 claiming, in effect, an interest in the land as purchaser of the fee simple. On 11 March 2011, the appellant applied to the General Division of the Supreme Court to extend the caveat in proceedings CIV 1394 of 2011 (the caveat action). On 15 March 2011, the court extended the caveat, conditional upon the appellant commencing substantive proceedings to vindicate his claim. An undertaking as to damages was also given.
On 22 March 2011, the appellant commenced such proceedings - CIV 1467 of 2011 - which were heard by Allanson J on 12 ‑ 15 February 2013. In those proceedings (the specific performance proceedings) the appellant sought, relevantly, a declaration that the notice of termination was not effective and an order for specific performance.
On 9 May 2013, Allanson J dismissed the appellant's claims in the specific performance proceedings and delivered reasons for judgment in that regard: Beeck v Kohlen [2013] WASC 166. Also on 9 May 2013, in the caveat action, Allanson J ordered the withdrawal of the caveat but stayed the order until 16 May 2013. The period of the stay was later extended to 24 May 2013.
On 16 May 2013, the appellant filed a notice of appeal, by which he commenced an appeal against Allanson J's decision to dismiss his claims in the specific performance proceedings. The appeal is CACV 51 of 2013 (the appeal).
On 21 May 2013, the appellant filed an application in the appeal seeking orders that, until a determination of the appeal:
(a)'to the extent necessary' the whole of the judgment of Allanson J in the specific performance proceedings be suspended pursuant to s 15 of the Civil Judgments Enforcement Act 2004 (WA);
(b)there be a stay of the order of Allanson J in the caveat action to remove the caveat.
On 23 May 2013, I made an order that the period of the stay in the caveat action be further extended until 31 May 2013, or earlier order.
I would add here that the respondents originally raised an issue as to whether the court had jurisdiction to stay the operation of the order removing the caveat. It may be that the application rests upon the proposition that the judgment in the specific performance proceedings is being 'enforced' through the orders in the caveat action. In any event, the contention as to the absence of jurisdiction was withdrawn, and it is unnecessary to make any finding on that point.
The first affidavit in support of the application for a stay was sworn by Mr Molony, the appellant's solicitor, and is dated 21 May 2013. He recounts the procedural history.
In a further affidavit in support of the application, sworn by the appellant on 23 May 2013, the appellant deposed, in effect, to his assets. The appellant's affidavit was sworn in response to a letter sent by the respondents' solicitors on 22 May 2013 which sought a statement under oath from the appellant as to the assets and liabilities behind the appellant's undertaking as to damages. Having regard to the appellant's affidavit, there is no basis for finding that the undertaking as to damages is worthless.
The appellant also filed submissions which annexed draft grounds of appeal, which are to the following effect:
(1)on a proper construction of the contract, the contract was not subject to a finance condition;
(2)alternatively, if the contract was subject to finance, the time for compliance had not arisen at the time that the termination notice took effect on 17 August 2010;
(3)alternatively to (2), the judge ought to have found that any entitlement to terminate based on the failure to satisfy the finance condition 'had been lost, or alternatively the right to terminate had to be re‑enlivened with a notice, requiring the appellant to obtain finance approval or waive the clause';
(4)further, having regard to the primary judge's findings at [57] and [60] of his reasons, the primary judge 'erred in failing to find that the respondents were estopped from terminating the contract, on the ground that the parties proceeded on the common basis that the contract was on foot until 17 August 2010, and the appellant would suffer detriment if the contract was validly terminated on that date for a failure to satisfy the finance condition';
(5)the finance condition was subject to an implied term that the respondents would first give notice to the appellant before terminating on the basis that the condition had not been satisfied within a reasonable time.
It was common ground that the parties used the standard REIWA contract for sale, and that the alleged finance condition appeared on the first page. The judge found that alongside the finance condition were the words 'DELETE IF FINANCE APPROVAL IS NOT REQUIRED', and that the condition was not deleted [18]. The parties had turned their attention to the condition in that the words 'TBA' - to be advised - appear against the word 'Lender' in the condition. (The buyer's conveyancing representative was also noted, on the second page of the contract, as 'TBA' or to be advised.) The 'Latest Time' for the purposes of the clause was not filled in and the judge had inferred that a reasonable time was intended [29]. There was no figure written against the 'Amount of the Loan', and the buyer's initials did not appear at the foot of the clause.
There was also a special condition which provided that the contract was 'subject to completion of constructions'. The settlement date was recorded as being 30 days after the issue of title.

Principles

Applications both for a suspension order under s 15 of the Civil Judgments Enforcement Act, and for a stay pursuant to pt 5 r 44 of the Supreme Court (Court of Appeal) Rules 2005 (WA), involve a consideration of the following principles, summarised by Pullin JA in Tradesmen Technologies Pty Ltd v Ameduri [2012] WASCA 168 [22]:
(a)The successful litigant is ordinarily entitled to enforce a judgment pending the determination of any appeal.
(b)It is for the applicant for a stay to move the court to a favourable exercise of its discretion. Under s 15(3) this court may only make a suspension order if there are 'special circumstances' that justify doing so and in an application for a stay under the rules this is also a usual requirement.
(c)The central issue will be whether the grant of a stay is perceived to be necessary to preserve the subject matter or the integrity of the litigation or whether a refusal of a stay could create practical difficulties in respect of the relief which may be granted on appeal. This may shortly be described as requiring the court to consider whether the right of appeal will be rendered nugatory if a stay is not granted.
(d)If it can be demonstrated that the right of appeal will be rendered nugatory if a stay is not granted, the stay will generally still be refused unless it can be established that the appeal has ultimately reasonable prospects of success.
(e)Finally, the stay may still be refused where it appears that the balance of convenience does not lie in favour of the applicant where, for example, the grant of a stay will occasion hardship to the respondent which may not be alleviated by the terms upon which the stay may be granted: Eastland Technology Australia Pty Ltd v Whisson [2003] WASCA 307; (2003) 28 WAR 308.

Parties' contentions

The appellant contends that: the grant of the stay is necessary to preserve the subject matter, given that the relief sought is specific performance of the contract of sale; if the property were sold to a third party prior to the determination of the appeal, the right of appeal would be rendered nugatory; the proposed grounds of appeal have reasonable prospects of success; and the balance of convenience favours the appellant in that the appellant gave an undertaking as to damages in support of his application to remove the caveat which continues, and the property is currently being leased by the respondents and the respondents are receiving rent from the property, and there is no evidence of an imminent proposed sale.
The respondents contend that the property in question is a commercial unit in a mixed development with no unique features, and that this is a relevant consideration: Raysun Investments Pty Ltd v Caruso [2013] WASCA 13 [15]. They also contend that the appeal has no merit in relation to the proper construction of the contract. In relation to proposed ground 2, the respondents note that one of the appellant's arguments raises a factual matter which was not the subject of evidence by the appellant at the trial - see the affidavit of Mr London sworn 23 May 2013. They further contend that the appellant did not run a case at first instance in relation to proposed grounds 3, 4 and 5. They also contend that, in any event, the allegation of estoppel has no prospects of success. They also contend that the alleged implied term is predicated on a false premise, namely that the contract was unworkable if the 'Latest Time' were construed to be a reasonable time. They contend that a reasonable time is simply a question of fact, that the finance condition was a contingent condition, and that the alleged implied term is inconsistent with the reasoning of the High Court in Perri v Coolangatta Investments Pty Ltd [1982] HCA 29; (1982) 149 CLR 537, 566 ‑ 567.

Disposition

I would make, at the outset, the following observations on the draft grounds of appeal. Senior counsel for the appellant described the first ground as the appellant's primary argument. The point of the argument, as I understood it, was that the finance condition was, in effect, unworkable without the 'Latest Time' being specified, and that the proper inference to be drawn is that the parties treated the condition as being deleted even though it was not expressly deleted. Senior counsel said that ground 2 was not 'really our strongest ground' (ts 6). Proposed grounds 3, 4 and 5 were not run at trial. Also, the juristic basis for ground 3 is not readily apparent. As I understood senior counsel for the appellant, its success is, generally speaking, likely to be tied up with the appellant's ability to establish grounds 4 and 5. Insofar as ground 4 alleges that the judge erred in failing to find the estoppel alleged, the proposed ground suffers the deficiency that the appellant did not advance such a case at trial. Insofar as ground 4 is predicated (as it appears to be) on the judge's findings at [57] and [60] of his reasons, those findings relate to a different part of the case at trial, namely the operation of cl 13 of the General Conditions. The respondents had pleaded that the contract had come to an end by reason of cl 13 of the General Conditions on 13 May 2006, alternatively 13 August 2006, alternatively 16 June 2009 (reasons [46]). The findings at [57] and [60] are to the effect that the respondents were estopped from contending that the contract had come to an end before August 2010. In that regard, the judge observed:
But both parties continued for some years on the common basis that the contract remained in place. Mr Beeck pleads that the defendants induced in him a reasonable assumption or expectation that the contract was on foot at all times up to the termination in August 2010 [60].
At least ordinarily, it would be difficult to contend that the appellant's belief that the contract continued on foot until termination in August 2010 generated an estoppel which precluded termination on 17 August 2010. In relation to proposed ground 5, the appellant's submissions did not extend to addressing, even in a cursory fashion, the High Court authority of Perri v Coolangatta referred to by the respondents, which prima facie has some bearing on the alleged implied term. Moreover, the appellant's submissions were insufficient in detail to allow me to conclude that there were good arguable prospects that the appellant would be allowed to litigate in the appeal matters which were not run at trial - as to which see Rizhao Steel Holding Group Co Ltd v Koolan Iron Ore Pty Ltd [2012] WASCA 50 [48] ‑ [53].
Having taken into account the parties' respective arguments, the following matters seem to me to carry the most weight. First, the property is an investment unit. There is nothing in the evidence to indicate that it has irreplaceable value such that damages would not be adequate compensation in the event of a successful appeal: see, eg, Palmer v Permanent Custodians Ltd [2009] VSCA 164 [62]; Raysun v Caruso [15]. Secondly, I am not satisfied that if the property were sold ahead of the determination of the appeal, damages in lieu of specific performance would not still be available: Meagher RP, Heydon JD & Leeming MJ, Meagher, Gummow and Lehane's Equity: Doctrines & Remedies (4th ed, 2002) [23 ‑ 050]; Spry ICF, Equitable Remedies (7th ed, 2007) 632. Thirdly, my present impression (necessarily formed on a very limited basis) is that based on the appellant's proposed grounds and arguments presented to me, the appellant will face considerable obstacles to success in the appeal. Taking into account all the circumstances of this case, I would refuse the application for a stay.