Beton Pumping Group Pty Ltd (Subject to a Deed of Company Arrangement) v Zoomlion Capital (Australia) Pty Ltd [No 2]
[2017] VSCA 185
•13 July 2017
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S APCI 2017 0081
| BETON PUMPING GROUP PTY LTD (SUBJECT TO A DEED OF COMPANY ARRANGEMENT) | Applicant |
| v | |
| ZOOMLION CAPITAL (AUSTRALIA) PTY LTD [No 2] | Respondent |
---
| JUDGES: | WHELAN and SANTAMARIA JJA |
| WHERE HELD: | MELBOURNE |
| DATE OF HEARING: | 13 July 2017 |
| DATE OF JUDGMENT: | 13 July 2017 |
| MEDIUM NEUTRAL CITATION: | [2017] VSCA 185 |
---
PRACTICE AND PROCEDURE – Application for continuation of stay of order pending special leave application – Whether substantial prospect that special leave to appeal will be granted – Balance of convenience – Where applicant has not questioned validity of security granted by it or events of default under security entitling mortgagee to exercise right of possession – Where applicant unable to pay money into court – Application dismissed.
---
| APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Mr A W Sandbach | Blackstone Waterhouse Zouki Lawyers |
| For the Respondent | Mr J A Castelan | Parkston Lawyers |
WHELAN JA
SANTAMARIA JA:
Introduction
In this matter, Beton Pumping Group Pty Ltd (‘Beton’) has applied for a stay of orders made in the trial division on 21 June 2017 pending an application for special leave in the High Court of Australia. The orders made on 21 June 2017 entitled Zoomlion Capital (Australia) Pty Ltd (‘Zoomlion’) to take possession of concrete pumping equipment which was the subject of several chattel mortgages between itself and Beton. Yesterday, this Court dismissed an application by Beton to stay the orders made on 21 June 2017 pending the hearing of an application for leave to appeal those orders.
Circumstances of the present application
Beton carries on business as a concrete pumper offering its services in various construction sites around Victoria. Zoomlion is a company that carries on business as a financier in relation to concrete pumping equipment. Between 29 December 2014 and 28 January 2016, Beton and Zoomlion entered into some 15 agreements pursuant to which Zoomlion lent Beton the funds necessary to purchase concrete pumping equipment the subject of each agreement. It was a term of each agreement that Beton would grant a security interest, in the form of a chattel mortgage, to Zoomlion in respect of the equipment the subject of each agreement. Each of the agreements also provided that Beton would pay monthly instalments until the respective loans were fully repaid and that, on the occurrence of an event of default, at the option of Zoomlion, the whole of the secured money became due and payable without the need for any demand or notice and that Zoomlion could immediately terminate the agreement and enforce all of its rights under the agreement.
Upon the making of each agreement, Zoomlion registered its security interest in the equipment the subject of the particular agreement on the Personal Properties Securities Register established under the Personal Properties Securities Act 2009 (Cth) (‘PPSA’).
Beton began to suffer financial difficulties towards the second half of 2016. It failed to make payments to Zoomlion in respect of the 15 agreements. On 28 October 2016, Zoomlion served Beton with a default notice in respect of each chattel mortgage in which it sought payment by 4.00 pm on 17 November 2016. Each default notice provided that, if the payment was not made by the due date, the loan would become due and payable and that Zoomlion would be entitled to obtain possession of the equipment the subject of that chattel mortgage.
Beton did not make payment on any of the default notices in respect of the chattel mortgages.
On 22 February 2017, Zoomlion brought a proceeding in the trial division
against Beton in which it sought orders for the delivery up to it of the equipment that was the subject of each of the 15 agreements (‘the Zoomlion proceeding’).[1]
[1]Zoomlion Capital (Australia) Pty Ltd v Beton Pumping Group Pty Ltd (subject to a deed of company arrangement) (S ECI 2017 000036).
On 12 April 2017, Beton filed a defence and counterclaim in the Zoomlion proceeding. In its defence and counterclaim, Beton admitted:
(a) the existence of the 15 agreements on the terms alleged by Zoomlion; and
(b) the allegations of Zoomlion that it had failed to pay amounts payable under the respective agreements.
However, in respect of each agreement, Beton denied that Zoomlion was entitled to possession of the equipment the subject of each agreement. In doing so, it relied upon a defence and counterclaim, in which it said that it was entitled to a set-off the effect of which was to extinguish any liability that it had to Zoomlion. The set-off arose out of allegations in which it claimed, among other things, damages arising out of a conspiracy to injure its business. That conspiracy claim was developed and particularised more fully in a separate proceeding in which Beton was the plaintiff and several of its competitors and former employees and officers were defendants (‘the Beton proceeding’).[2]
[2]Beton Pumping Group Pty Ltd (subject to a deed of company arrangement) v Prasath Nilantha Hewa Haputhanthirige & ors (S ECI 2017 000053).
Orders made in the Zoomlion proceeding
On 12 April 2017, Zoomlion applied for an order, pursuant to ss 61 and 63(1) of the Civil Procedure Act 2010 and regs 22.03 and 22.13 of the Supreme Court (General Civil Procedure) Rules 2015 that it obtain summary judgment in the Zoomlion proceeding.[3]
[3]It appears that several interlocutory applications had been made in the Beton proceeding. On 7 March 2017, Vickery J made a search order pursuant to reg 37B.02 of the Supreme Court (General Civil Procedure) Rules 2015 directed at all of the defendants in that proceeding other than Zoomlion. On the same day, Vickery J made a freezing order pursuant to reg 37A.02 against Prasath. On 6 June 2017, on the application of Prasath, a judicial registrar made an order that Beton give security for Prasath’s costs.
On 21 June 2017, Vickery J heard Zoomlion’s application for summary judgment for possession of the equipment the subject of the chattel mortgages. Beton resisted that application on the basis of the allegations contained in its set-off and counterclaim.
On 21 June 2017, Vickery J granted Zoomlion’s application for summary judgment and ordered that Beton deliver up possession of the equipment the subject of the chattel mortgages to Zoomlion. It seems that the effect of Vickery J’s reasons is to hold that the set-off and counterclaim – based on conspiracy and s 111 of the
PPSA – should be summarily dismissed.
When he made the order for possession, Vickery J imposed a short stay on the execution of the judgment. On 6 July 2017, Hargrave J made the following orders, in relevant part:
1.The stay on execution of the orders made by the Honourable Justice Vickery on 21 June 2017 (‘the orders’) is extended to 5.00 pm on 11 July 2017.
2.Until 5.00 pm on 11 July 2017 or further order, [Beton] shall not, by itself, its directors, employees, agents, or howsoever otherwise, dispose of, lease, or otherwise encumber the equipment listed in Schedule A to the orders.
Application for leave to appeal and for a stay
On 7 July 2017, Beton applied to this Court for leave to appeal the order made on 21 June 2017 that it deliver up to Zoomlion various items of concrete pumping equipment that was listed in a schedule to the order. In its application for leave to appeal, Beton applied for a stay of the order made on 21 June 2017.
On 11 July 2017, Beton’s application for a stay pending the determination of its application for leave to appeal was heard.
At the completion of the hearing of the present application, this Court made the following orders:
1.The stay of execution of the orders made by the Honourable Justice Vickery on 21 June 2017 (‘the orders’) is extended to 5.00 pm on 12 July 2017.
2.Until 5.00 pm on 12 July 2017 or further order, [Beton] shall not, by itself, its directors, employees, agents, or howsoever otherwise, dispose of, lease, or otherwise encumber, damage or destroy the equipment listed in Schedule A to the orders.
3.[Beton’s] application for a stay of execution of the orders pending the hearing of [Beton’s] application for leave to appeal is adjourned to 4.15 pm on 12 July 2017.
On 12 July 2017, this Court dismissed Beton’s application for a stay of the orders made on 21 June 2017.[4]
[4]Beton Pumping Group Pty Ltd (subject to a deed of company arrangement) v Zoomlion Capital (Australia) Pty Ltd [2017] VSCA 183.
Application for further stay pending application for special leave
On 13 July 2017, Beton made a further application. In summary, it applied for a stay pending an application for special leave to the High Court of Australia.
The nature of the jurisdiction has been described as ‘extraordinary’. The principles which govern its exercise were articulated by Brennan J in Jennings Construction Ltd v Burgundy Royale Investments Pty Ltd (No 1).[5]
[5](1986) 161 CLR 681. In making the present application, counsel for the applicant referred to Lagarna Pty Ltd v Bridge Wholesale Acceptance Corporation (Australia) Ltd [1995] 1 VR 150. In relation to the period of any stay that might be granted, he also referred to John Fairfax & Sons Ltd v Kelly (2) (1987) 8 NSWLR 510 and Miller v Nationwide News Pty Ltd [2008] NSWCA 261.
In that case, Brennan J identified four relevant considerations:
(a) whether there is a substantial prospect that special leave to appeal will be granted;[6]
[6]See also Mercanti v Mercanti [2017] HCA 1 [11]–[12] (Kiefel J).
(b) whether the applicant has failed to take whatever steps are necessary to seek a stay from the court in which the matter is pending;[7]
[7]In making its present application, the applicant has satisfied this consideration.
(c) whether the grant of the stay will cause loss to the respondent; and
(d) where the balance of convenience lies.[8]
[8]Ibid 685.
Those governing principles have been considered by various intermediate appellate courts on a number of occasions,[9] including by this Court in Sunland Waterfront (BVI) Ltd v Prudentia Investments Pty Ltd.[10]
[9]See, eg, Palmer v Permanent Custodians Ltd [2009] VSCA 164; Maher v Commonwealth Bank of Australia [2008] VSCA 12; Miller v Nationwide News Pty Ltd [2008] NSWCA 261; Rinehart v Welker (2012) 83 NSWLR 347, 356–8 [32]–[49]; Apple and Pear Australia Limited v Pink Lady America LLC (No 2) [2017] VSCA 10.
[10][2013] VSCA 266. In paragraphs [11] to [36] of her reasons, the Chief Justice outlined the application of the principles to the circumstances before her.
It is true that an intermediate Court of Appeal should not be diffident about exercising this ‘extraordinary’ jurisdiction. In Minister for Local Government v South Sydney Council (No 3),[11] Spigelman CJ said that ‘an intermediate court of appeal should not be diffident in granting a stay or an injunction, in an appropriate case, notwithstanding the difficulty that may sometimes be occasioned for a member of an intermediate court of appeal in making an assessment of the prospects of a grant of special leave in a particular case’.[12] Spigelman CJ observed that it appeared on the authorities that a number of elements often arose in such matters and that it was always material to look at the prospects of success in the circumstances of a grant of special leave.[13]
[11][2002] NSWCA 327.
[12]Ibid [11].
[13]Ibid [12].
Is there a substantial prospect of a grant of special leave?
The first thing that an applicant needs to do is to point to circumstances that demonstrate that there is a substantial prospect that special leave to appeal will be granted. Originally, counsel for the applicant said that, if a stay were not granted, the application for special leave would be rendered nugatory. He said that the fact that an appeal may be rendered nugatory outweighed the considerations that normally apply when a mortgagee seeks to take possession of its security: Inglis v Commonwealth Trading Bank of Australia.[14] Eventually, counsel recast the issue in respect of which he said special leave would be granted. He accepted that (a) the security was valid and (b) there was an event of default entitling Zoomlion to take possession of its security. He said that it was reasonable to proceed on the basis that the High Court would grant special leave on the question whether, by reason of the manner in which Zoomlion had purported to exercise its right to possession, it had lost its right to do so either because of s 111 of the PPSA or because the very object of the conspiracy (which is the subject of the Beton proceeding) had been to secure possession of the secured property.
[14](1972) 126 CLR 161.
In our opinion, there is nothing in the point. It is true that there are circumstances in which a court does not insist upon a mortgagor making a payment into court in order to resist recovery proceedings. Without attempting to be exhaustive, those circumstances include where (a) the validity of the security is in question or (b) the issue of default giving rise to the right to possession is in dispute. Neither of those circumstances exists here. The applicant’s position here is the commonly seen position where a claim is made by a debtor based upon the way in which a financier has gone about realising its security. This Court’s refusal to order a further stay because the applicant would not or could not make a reasonable proposal to pay money into court is most unlikely, in our view, to attract a grant of special leave.
Balance of convenience
We move to the question of the balance of convenience. In the present case, the applicant has not questioned either the validity of the security granted by it to Zoomlion or that there have been events of default under that security entitling Zoomlion to exercise its rights of possession. Furthermore, the applicant has candidly stated that it is not in a position to pay its outstanding indebtedness into court. On the contrary, the amount that it proposed to us yesterday that it could pay into court was less than the amount that it proposed to pay a month ago when the matter was in the trial division.[15] Zoomlion has recovered possession of some of its equipment and has placed evidence before the Court that there has been confrontation and that equipment has been damaged. The applicant denies that it has been responsible for any of that damage. It is unnecessary to decide the question of responsibility. But, it is sufficient to point to the fact that there has been confrontation between the parties and that the present situation seems volatile.
[15]See Beton Pumping Group Pty Ltd (subject to a deed of company arrangement) v Zoomlion Capital (Australia) Pty Ltd [2017] VSCA 183 [35].
In all the circumstances, it seems to us that the question of the balance of convenience tends against the grant of a stay. We wish to stress that we have not considered the merits of the applicant’s conspiracy claim or its claim based on s 111 of the PPSA in the Beton proceeding. However, nothing has been placed before us to suggest that, in the event that there is any judgment against Zoomlion, it will not be able to meet it.[16]
[16]Counsel for the applicant told us that Zoomlion belongs to a group of companies which is one of the largest manufacturers of construction equipment in the world.
Conclusion
For these reasons, the application for a grant of a stay pending an application for special leave in the High Court of Australia should be dismissed.
1