Bisognin v Hera Project Pty Ltd
[2017] VSCA 195
•27 July 2017
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S APCI 2017 0079
| GINO ANDREW BISOGNIN and LEAH JOAN BISOGNIN | Applicants |
| v | |
| HERA PROJECT PTY LTD (ACN 163 685 041) | Respondent |
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| JUDGES: | TATE and KYROU JJA |
| WHERE HELD: | MELBOURNE |
| DATE OF HEARING: | 17 July 2017 |
| DATE ORDERS MADE: | 17 July 2017 |
| DATE REASONS PUBLISHED: | 27 July 2017 |
| MEDIUM NEUTRAL CITATION: | [2017] VSCA 195 |
| JUDGMENT APPEALED FROM: | [2017] VSC 268 (Riordan J) |
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PRACTICE AND PROCEDURE – Application for stay of proceedings – Failure to establish special circumstances – Unable to establish that compliance with the orders made below would render the appeal nugatory – Prejudice – Application refused.
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| APPEARANCES: | Counsel | Solicitors |
| For the Applicants | Mr J A Ribbands with Mr L P Wirth | T F Grundy |
| For the Respondent | Mr N Pane QC with Mr J J Whelen | Russell Kennedy |
TATE JA
KYROU JA:
On 17 July 2017 this Court made orders for the dismissal of an application for a stay of orders made by Riordan J on 22 May 2017 and 29 June 2017.[1] The stay was sought by the applicants, Gino and Leah Bisognin (‘the Bisognins’), pending the hearing and determination of their application for leave to appeal, and, if leave is granted, the appeal, against the orders made by Riordan J.[2] At the time of dismissing the application for a stay, this Court also made orders that the application for leave to appeal and the appeal be heard together and for that hearing to be expedited.
[1]Hera Project Pty Ltd v Bisognin [No 3] [2017] VSC 268 (‘Riordan J reasons’). All references in these reasons to Riordan J’s order of 29 June 2017 are to that order as corrected on 30 June 2017.
[2]The application for a stay was made pursuant to rr 64.39 and 66.16 of the Supreme Court (General Civil Procedure) Rules 2015 (‘Rules of Court’).
At the time of making those orders we indicated that we would provide reasons in support of our orders as soon as practicable. These are those reasons.
Introduction and summary
The Bisognins are the registered proprietors of land known as 1 Adrian Street, Cranbourne East. By contract dated 13 March 2015, which they executed on 25 March 2015, they agreed to sell southern Lot 1 (‘the land’) as vendors, to the purchaser, Hera Project Pty Ltd (‘Hera’), for $3.6 million (‘the 2015 Contract’). Hera is the respondent to the application for leave to appeal and was the respondent to the application for a stay. When settlement did not occur by the due date, 31 August 2016, the Bisognins sought to terminate the 2015 Contract. Before Riordan J, Hera sought an injunction restraining the Bisognins from exercising a power of termination under the 2015 Contract and also sought specific performance. The judge granted specific performance against the Bisognins on 22 May 2017.[3] On 29 June 2017 he gave directions for certain steps to be taken by the Bisognins in aid of specific performance.[4]
[3]See [30] below.
[4]See, especially, [38] below.
The Bisognins sought a stay of the orders of Riordan J on the basis that unless the stay was granted, it was likely there would be approval of a plan of subdivision and transfer of the land to Hera under the 2015 Contract within weeks. They claimed that such a course would render the appeal nugatory and the orders made by Riordan J would in effect become irreversible. They alleged that the prejudice they would suffer from compliance with the orders of Riordan J far outweighed any prejudice that might be suffered by Hera from the grant of a stay.
However, it emerged during the course of argument that the Bisognins were unable to demonstrate that compliance with the orders of Riordan J would render any potential success on the appeal nugatory. Attempts were made at isolating more specifically which particular orders of the judge should be stayed to ensure the viability of the appeal. These attempts were various and not always consistent. The Bisognins also faced evidentiary difficulties in respect of establishing the financial prejudice they would suffer in the absence of a stay. There was much conjecture about liabilities the Bisognins would need to discharge upon settlement and whether, having received $3.6 million by the time of settlement, they could retain sufficient money to repay to Hera the purchase price in the event that their appeal was successful and the transaction reversed.
We ultimately formed the view that the Bisognins had not discharged their onus of establishing that there were special circumstances that warranted a stay. Moreover, it was relevant to the exercise of the Court’s discretion that, although the Bisognins, through their counsel, were willing to proffer an undertaking as to damages in order to obtain a stay,[5] they were not prepared to accept the imposition of a charge as security for any amount payable pursuant to that undertaking.
[5]The undertaking was in terms that the Bisognins would ‘abide by any order the Court may make as to damages, in case the Court shall hereafter be of the opinion that any person shall have sustained any loss, by reason of this order, which the party giving the undertaking ought to pay’.
Furthermore, we accepted that Hera was entitled to the benefits of the judgment below, most especially as it was premised on a rejection of the evidence of Mr Bisognin as a witness of truth. Riordan J stated that he ‘consider[ed] Mr Bisognin to be an unreliable witness who was prepared to give false answers for the purpose of attempting to advance his case’[6] and that he ‘deliberately concealed the existence of the CMJ Contract from the purchaser and from the Court’[7] (the CMJ Contract being a contract for the sale of the land to an alternative purchaser for a higher sum).
[6]Riordan J reasons [100].
[7]Riordan J reasons [99]. See [27] and [29] below.
In those circumstances, we dismissed the application for a stay but sought to preserve the positions of all parties, as best we could, by directions for the expedition of the hearing of the application for leave to appeal which shall be heard together with the appeal.
Litigation arising from contracts for the sale of land
The dispute between the parties has been a complex one.[8] The land forms the southern portion of a parcel of a rural block of land owned by the Bisognins in Cranbourne, which is located in an ‘urban growth zone’.[9] The Bisognins’ matrimonial home is situated in the northern portion of the rural block. In 2012 they were approached by a representative of a developer who sought to purchase the land as a site for the development of a supermarket. The Bisognins entered into a contract with the developer in February 2012 (‘the 2012 Contract’) for the sale of the land for $3.6 million.[10] Subsequently, the developer nominated Hera as the ‘substitute purchaser’. Since the land was a lot on an unregistered plan of subdivision, the 2012 Contract provided that the sale was subject to the Sale of Land Act 1962 and that settlement was due to take place on 31 December 2012
unless the land is a lot on an unregistered plan of subdivision, in which case settlement is due on the above date or 14 days after the vendor gives notice to the purchaser of registration of the plan, whichever is later.[11]
[8]This background is drawn from the findings of Sloss J in Bisognin v Hera Project Pty Ltd [2016] VSC 75 (‘Sloss J reasons’) and the Court of Appeal judgment on the appeal from Sloss J in Bisognin v Hera Project Pty Ltd [2016] VSCA 322 (‘Court of Appeal reasons’).
[9]Sloss J reasons [1].
[10]Riordan J reasons [4].
[11]Sloss J reasons [4].
It was therefore necessary for a plan of subdivision to be prepared and registered before settlement could take place. The parties fell into dispute in relation to the 2012 Contract, and proceedings were filed by Hera in 2013 which were settled on terms which included that the parties would enter into a new contract on substantially the same terms but with some modifications. This became the 2015 Contract. The 2015 Contract identified the land as:
The southern Lot 1, 12,850 m2 on the ‘Preliminary’ Plan of Subdivision prepared by Kevin J Barge dated 12 March 2014 being part of land particularly described in Certificate of Title Volume 8776 Folio 892.
The purchase price was stated to be ‘$3,600,000.00’. The deposit was $1,000,000.00. Of this, $10,000 was paid by the time of the execution of the 2015 Contract. Special Condition 1 provided that:
The balance of deposit namely $990,000.00 is payable within 7 days of the Plan of Subdivision being approved in accordance with Special Condition 3 herein.
The ‘Residue’ was specified as $2,600,000.00 which, as the balance of the purchase price, was to be paid:
on or within 14 days of approval of the Plan of Subdivision by the Registrar of Titles, whichever is the latter refer Special Condition 8.
Special Condition 2(a) imposed an obligation on Hera to prepare a plan of subdivision and an obligation to use its ‘best endeavours’ to expedite and procure the registration of the plan:
The Purchaser shall at its own cost and expense prepare a Plan of Subdivision in respect of the land comprised in the Parcel in or to like effect of the Plan of Subdivision annexed hereto and submit the same to the City of Casey for sealing in accordance with the provisions of Part 1 of the Act and shall use its best endeavours and do all things reasonably required to expedite and procure the registration of the said Plan pursuant to the provisions of Part II of the Act.
Special Condition 3 provided:
The deposit and other monies paid or payable by the Purchaser hereunder until such time as the said Plan of Subdivision shall have been so registered shall be held by Waters Lawyers Pty Ltd on trust for the Purchaser in accordance with the provisions of Section 9AA of the Sale of Land Act.
Special Condition 8 provided:
If the said Plan of Subdivision is not registered by 25th August 2015, then the parties may by notice in writing to each other end this Contract of Sale.
‘Settlement Date’ was defined as:
[T]he date upon which vacant possession of the Property and the Chattels (or receipt of their rents and profits) shall be given by the Vendor to the Purchaser, namely upon acceptance of title and payment of the purchase price in full.
Special Condition 10 imposed a ‘best endeavours’ obligation on the Bisognins, as vendors, and an obligation on them to pay a Growth Areas Infrastructure Contribution (‘GAIC’) promptly if required:
The Vendor will use their best endeavours to co-operate with the Purchaser, sign all documents, do all acts and things necessary to give effect to the approval of the Plan of Subdivision and to give effect to the UDF [the Urban Design Framework], making the duplicate title available at the Land Titles Office for the purpose of the registration of the Plan of Subdivision, and will make any Growth Areas Infrastructure Contribution (GAIC) payment promptly if required by the relevant authorities.
Order 1 of the orders made by Riordan J on 29 June sought to enforce the obligation on the Bisognins to pay the GAIC.[12]
[12]See [38] below.
Further disputes arose in relation to the 2015 Contract. The Bisognins filed proceedings seeking answers to three questions about the parties’ contractual obligations.[13] Cameron J held in relation to the first question that the balance of the deposit (the $990,000.00 referred to above)[14] was payable by Hera upon registration of the plan of subdivision by the Registrar of Titles, rather than upon certification of that plan by the local council.[15] In relation to the second question, Sloss J held that, on its true construction, Special Condition 8 of the 2015 Contract provided that if the relevant plan of subdivision was not registered by 25 August 2015 then either party might end the contract by notice in writing to the other party.[16] Sloss J further held in answer to the third question that, on its true construction, apart from any GAIC payment, Special Condition 10 of the 2015 Contract required the Bisognins to make any payment to a third party that was necessary to secure registration of the plan of subdivision. Her Honour held:
The [Bisognins], as vendors of a lot on an unregistered plan of subdivision, undertook by special condition 10 of the Contract with Hera to use their ‘best endeavours to co-operate with the Purchaser, sign all documents, and do all acts and things necessary to give effect to the approval of the Plan of Subdivision and to give effect to the UDF …’. The planning permit issued by the City of Casey dated 11 June 2015 to allow the two lot subdivision of the 1 Adrian Street land, required the vendor as ‘owner of the land’ to enter into agreements with the relevant authorities in respect of each of the southern lot … and northern lot … for the provision of water supply, drainage, sewerage facilities, electricity and gas services, and telecommunication services (and fibre ready telecommunication facilities) in each case in accordance with the relevant authority’s requirements and relevant legislation at the time, and also to ensure that the land is drained to the satisfaction of the Responsible Authority with outfall drainage constructed to provide a legal point of discharge to each allotment. To the extent that entry into any such agreements required the payment of moneys, by way of fees and other charges, and the provision of bond moneys, those were obligations that were to be satisfied by the vendors.[17]
[13]Proceeding S CI 2015 04285. See Sloss J reasons [10].
[14]See [11] above.
[15]Bisognin v Hera Project Pty Ltd [2015] VSC 647 (‘Cameron J reasons’).
[16]Sloss J reasons [312].
[17]Sloss J reasons [312].
Sloss J further held that a default notice or notice of rescission served by the Bisognins on Hera dated 11 August 2015 was invalid.[18] However, she declined to grant further relief sought by Hera by summons, namely, a declaration that the Bisognins were not entitled to terminate the 2015 Contract pursuant to Special Condition 8, and an injunction restraining them from terminating or purporting to terminate the contract pursuant to Special Condition 8, together with an injunction restraining them from selling, encumbering or otherwise dealing with the land the subject of the contract.[19] Instead, she ordered on 22 June 2016 that the period of time specified in Special Condition 8 for registration of the plan of subdivision be extended to 31 August 2016. She further ordered that:
[18]Sloss J reasons [314].
[19]Sloss J reasons [315].
4.During the period of extension of time, the plaintiffs [the Bisognins] are to use their ‘best endeavours’ to co-operate with the defendant and do all acts and things necessary to give effect to the approval of the plan of subdivision and give effect to the Urban Design Framework (as approved by the City of Casey) as required by special condition 10, including:
(a) satisfying the conditions of the planning permit issued on 11 June 2015 by entering into the agreements with the relevant referral authorities, the Responsible Authority and the relevant telecommunications service provider in a timely way in respect of both lots on the plan of subdivision;
(b) making arrangements with their mortgagee to produce the duplicate Certificate of Title at the Land Titles Office (at the cost of the defendant); and
(c) promptly paying any Growth Areas Infrastructure Contribution Payment,
with a view to assisting the defendant to obtain the statement of compliance and thereby procure the registration of the plan.
On 20 July 2016, the time provided for filing an application for leave to appeal against the orders of Sloss J expired.
On 26 August 2016, Hera filed a writ seeking interlocutory and permanent injunctions restraining the Bisognins from terminating the 2015 Contract and requiring them to take certain specified steps (‘the 2016 proceeding’).[20] This is the proceeding ultimately heard by Riordan J. Hera alleged that the Bisognins were not entitled to terminate from 31 August 2016 because, subsequent to the 22 June 2016 orders:
[20]Proceeding S CI 2016 03457.
(a) their acts ‘have prevented and are continuing to prevent registration of the plan of subdivision’;
(b) in breach of Special Condition 10, the Bisognins have failed to use their best endeavours; and
(c) they breached order 4 of the Sloss J orders.
Macaulay J, sitting in the Practice Court, made an interim order on 30 August 2016 (without opposition from the Bisognins) in the 2016 proceeding restraining the Bisognins from terminating the 2015 Contract until further order of the Court.[21] On 3 October 2016, Macaulay J found that there was a serious question to be tried, namely, whether the Bisognins were ‘in breach of their obligations to use best endeavours to do all acts and things necessary to give effect to the approval of the plan of subdivision’.[22] On 5 October 2016, he restrained the Bisognins from terminating the 2015 Contract pursuant to Special Condition 8 on 31 August 2016 or any other date, until further order. A later application made by the Bisognins for the injunction to be discharged was refused. The injunction remains in effect.
[21]Hera Project Pty Ltd v Bisognin [2016] VSC 591 [3] (‘Macaulay J reasons’).
[22]Macaulay J reasons [21].
On 29 August 2016 the Bisognins filed an application for an extension of time within which to file an application for leave to appeal from Sloss J. The Judicial Registrar granted that extension on 29 September 2016. The Bisognins relied on the following proposed grounds:[23]
[23]Proceeding S APCI 2016 0117. This is the application for leave to appeal from Sloss J.
(d) Sloss J erred in determining that, on its true construction, Special Condition 10 of the 2015 Contract required the Bisognins to make payments to third parties that were necessary to be made to secure registration of the subdivision;
(e) Sloss J erred in finding that no express agreement was reached between Hera and the Bisognins as to who was responsible to pay for the establishment or provision of services to the subject land and that in the absence of any such agreement the Bisognins as owners were required to do so;
(f) Sloss J erred in finding that the Bisognins as vendors were unable to avail themselves of the right to terminate the 2015 Contract because they had breached their obligations under Special Condition 10 of the 2015 Contract in failing to use their best endeavours to make payments to referral authorities.[24]
[24]Court of Appeal reasons [60].
The Court of Appeal (Santamaria and Ferguson JJA and Riordan AJA) granted leave to appeal and allowed the appeal. The Court held that the special conditions are ‘expressed in general terms and are poorly drafted’[25] and as such, in construing those terms, ‘regard must be had to the text, context and purpose aided by reference to the surrounding circumstances known to the parties at the time that the contract was entered into’.[26] They concluded that the effect of the special conditions in the 2015 Contract is to shift the risk of registration of the plan of subdivision and the financial expenses associated with it from the vendors to the purchaser.[27] Although they acknowledged that ordinarily under the statutory and regulatory matrix relevant responsibility for taking the steps necessary to have a plan of subdivision registered is placed upon a vendor, the parties to a contract for the sale of land on an unregistered plan of subdivision are able to shift the risks between themselves, including the costs associated with the registration.[28] That is what occurred in this instance. They rejected the submission put by Hera that the Bisognins had assumed the role of developer; rather, the Bisognins had been approached by a developer who had already developed plans for the site. In those circumstances, ‘[a]s a matter of common sense, one would not expect the vendors to have taken on the commercial risk involved in the registration of the necessary plan of subdivision’.[29] They therefore held:
It follows from what we have said that on its proper construction the 2015 contract required [Hera] to pay the amounts provided for in the referral agreements, albeit that it was for the [Bisognins] to enter into those agreements.[30]
[25]Court of Appeal reasons [77].
[26]Court of Appeal reasons [78].
[27]Court of Appeal reasons [79].
[28]Court of Appeal reasons [86], [90].
[29]Court of Appeal reasons [98].
[30]Court of Appeal reasons [101].
The Court also upheld proposed ground 2, concluding ‘on its proper construction, the contract imposed the obligation to make the payments to the referral authorities on [Hera].’[31] However, they found that proposed ground 3 failed, observing that:
As [Hera] observed, the judge found that there were other breaches of the best endeavours requirement imposed on the [Bisognins] by special condition 10, including their failure to enter into the relevant agreements with the referral authorities. The [Bisognins] contended that, even if they did fail to do the things identified by the primary judge, it was incumbent on the purchaser to step in and perform them. We do not accept that contention. The [Bisognins] could point to no authority which stands for the proposition that it is the responsibility of an innocent party under a best endeavours obligation, in effect, to rectify the breach by the defaulting party. In our opinion, albeit that responsibility for making payments to the referral authorities fell to [Hera], it was incumbent on the [Bisognins] to enter into the relevant agreements with the referral authorities. Those agreements were provided to the [Bisognins’] solicitor on 11 August 2015, two weeks before the sunset date in special condition 8. Having failed to execute those agreements in a timely manner, the [Bisognins] were not entitled to terminate the contract as at 25 August 2015.[32]
[31]Court of Appeal reasons [102].
[32]Court of Appeal reasons [103] (citations omitted).
It is against this background that the substantive hearing of the 2016 proceeding came on before Riordan J in late March 2017. Following a four-day trial, his Honour delivered reasons for judgment on 22 May 2017. The judge noted that late on the fourth day of trial counsel for the Bisognins had produced and tendered a contract of sale of the land between the Bisognins and CMJ Property Group Pty Ltd (‘CMJ’), which had been executed on 6 and 9 July 2015 (‘the CMJ Contract’).[33] This document was produced following cross examination of Mr Bisognin on 28 March 2017 during which he gave evidence that he had engaged Gadens Lawyers and a town planning consulting firm, Contour Consultants Australia Pty Ltd. Counsel for Hera called for production of any files held by those entities. Riordan J granted leave the following afternoon for Hera to issue a subpoena for production of documents.
[33]Riordan J reasons [91].
The contract price for the land under the CMJ Contract was $7,100,000. Special Condition 3.1 of the CMJ Contract provided that the formation of a binding contract was subject to the 2015 Contract being terminated.[34] The Bisognins agreed to terminate the 2015 Contract at the earliest lawful opportunity, and in any event by no later than 26 August 2015, and to act at all times consistent with facilitating the earliest termination of the 2015 Contract.[35] The Bisognins and CMJ agreed that they would each use their best endeavours (within their capacity) to ensure that the 2015 Contract was terminated by the ‘Condition Expiry Date’[36] (being ‘26 August 2015 or such later date as advised by the Purchaser [CMJ] acting reasonably’).[37]
[34]Riordan J reasons [92].
[35]Clause 3.2.
[36]Clause 3.3.
[37]Clause 3.2.
Riordan J found that Mr Bisognin deliberately concealed the existence of the CMJ Contract from Hera and from the Court.[38] He further found that the best endeavours clause under the CMJ Contract was in direct conflict with that under the 2015 Contract.[39] Having reviewed the steps taken by the Bisognins following the orders made by Sloss J, Riordan J concluded:
On the basis of the above, in my opinion, the steps taken by the [Bisognins] during the relevant period fell well short of what would be expected of an owner who was anxious and determined to obtain registration of the plan of subdivision by the specified date. In fact, the [Bisognins’] conduct was consistent with an owner who, while purporting to comply with his obligations, was determined to ‘facilitat[e] the earliest termination of the Contract’ — as they were required to do under the CMJ Contract.[40]
[38]Riordan J reasons [99].
[39]Riordan J reasons [104].
[40]Riordan J reasons [121].
Hera had argued before Riordan J that the Bisognins had lost their right to terminate the 2015 Contract when settlement had not occurred by 31 August 2016 in circumstances where they had breached their best endeavours obligation under the 2015 Contract. On 22 May 2017 Riordan J ordered that the Bisognins specifically perform the 2015 Contract, declaring:
THE JUDGMENT OF THE COURT IS THAT: the defendants [the Bisognins] specifically perform the contract exchanged on 25 March 2015 for sale of Lot 1 on an unregistered Plan of Subdivision, being part of the land described in Certificate of Title Volume 8776 Folio 892, being part of 1 Adrian Street, Cranbourne East.
Riordan J also granted liberty to apply with respect to specific orders in aid of specific performance, and listed the matter for further hearing on 29 May 2017.
The decree of specific performance is one of the orders which the Bisognins initially sought to stay and which they ultimately accepted could remain in force without their suffering prejudice. They eventually accepted that it was not the order of Riordan J declaring that a decree of specific performance be granted that caused any irreversibility, if the appeal was successful, but it was rather the specific steps directed in facilitation of that decree that created the potential difficulty.
On 29 May 2017 the judge ordered that the Bisognins sign certain documents to facilitate the registration of a plan of subdivision of the land (including a telecommunications agreement).
On 7 June 2017, the judge ordered that the Bisognins complete, sign and return to Hera’s solicitors by 4:00 pm on 7 June 2017 the extension of time application form in respect of the subdivision permit that was emailed by Hera’s solicitors to the Bisognins’ solicitors on 2 June 2017. He also required the Bisognins to complete, sign and return to Hera’s solicitors the authority forms to the City of Casey and Clear Networks regarding an NBN agreement. He further required affidavits be filed by the Bisognins explaining why they had not complied with some of the orders of 29 May 2017 and gave directions with respect to submissions on costs.
On 29 June 2017, Riordan J declared that Hera should have reasonable access to the land:
THE COURT DECLARES THAT pursuant to s 9AD(3) of the Sale of Land Act 1962 (Vic) the plaintiff [Hera] has a right of reasonable access to Lot 1 on the unregistered plan of subdivision being part of the land described in Certificate of Title Volume 8776 Folio 892, being part of 1 Adrian Street, Cranbourne East (‘Lot 1’), for any purpose connected with its proposed development or use of Lot 1.
The Bisognins initially also sought to stay this declaration, and relied on an affidavit of their solicitor, Terrence Francis Grundy, sworn 30 June 2017 for this purpose. Mr Grundy swore that there was a real risk that the access granted would interfere with the training of greyhounds on the land by the Bisognins with consequent potential liability for injuries to those dogs. Mr Grundy also swore that the access sought by Hera was for the purpose of the preparation of a Cultural Heritage Assessment Plan (‘the CHMP assessment’) and, if undertaken at this stage, before subdivision, would have an impact on the northern portion of the land which could be adverse to the Bisognins. In opposition, Hera relied on an affidavit of its solicitor, Leonard Adrian Warren, affirmed 6 July 2017, who deposed that the CHMP assessment would be carried out by independent contractors who have relevant insurance.
At the start of the hearing of the stay application, the Bisognins clarified that they no longer sought to stay the order declaring that Hera has a right of reasonable access. They accepted that the access order could remain in force without their suffering prejudice.
On 29 June 2017 Riordan J also made orders facilitating specific performance of the 2015 Contract. In particular, he ordered that:
1.The defendants [the Bisognins] give to [the plaintiff] [Hera] a notice relating to Lot 1 issued by the Commissioner of State Revenue under s 201SZG of the Planning and Environment Act 1987 (Vic) as required by s 22(1)(g) of the Subdivision Act 1988 (Vic) by 1:00 pm on 20 July 2017.
2. The defendants [the Bisognins] procure the ANZ Bank to:
(a)make the Certificate of Title for the land described in Volume 8776 Folio 892 available; and
(b)give its consent to the registration of the plan of subdivision PS765801Q
for the purposes of the registration of the plan of subdivision at a time as soon as practicable after 1:00 pm on 20 July 2017.
Order 1 relates to the GAIC liability.[41] Orders 1 and 2 ultimately became the focus of the stay application.
[41]See [17] above. Section 22(1)(g) of the Subdivision Act relevantly provides that the Registrar may register a plan of subdivision where there is a GAIC recording in respect of the land if the application to register the plan is accompanied by a notice relating to that land issued by the Commissioner of State Revenue under s 201SZG of the Planning and Environment Act.
Riordan J also ordered the Bisognins to pay Hera’s costs on an indemnity basis.
The Bisognins seek leave to appeal against the orders of Riordan J made 22 May 2017 (and those made on 29 June 2017) on the grounds that, amongst other things, the judge failed to determine whether, as at the date of the commencement of the proceedings on 26 August 2016, Hera was ready, willing and able to perform its obligations under the 2015 Contract by either 31 August 2016 or an appropriately extended date by application of the prevention principle[42] (ground 1); or that he erred in determining that Hera was ready, willing and able to perform those obligations where Hera was obliged to use its best endeavours to expedite and procure the registration of the plan of subdivision, and it had not performed that obligation by either 31 August 2016 or an appropriately extended date by application of the prevention principle (ground 2). There is also a challenge to the grant of specific performance in circumstances where it is alleged the orders made failed to identify any specific obligation to perform, would require the continual supervision of the Court, and were not subject to any time constraints (ground 3), as well as a challenge based on the failure to order security for costs (ground 4). Furthermore, there is a challenge to the construction of s 9AD of the Sale of Land Act (ground 5) and a challenge to the order for indemnity costs (ground 6).
[42]The ‘prevention principle’ is the principle that a person cannot take advantage of the existence of a state of affairs that he or she has produced himself or herself: New Zealand Shipping Co Ltd v Société des Ateliers et Chantiers de France [1919] AC 1, 6-7 (Lord Finlay LC).
The stay application was brought as incidental to the application for leave to appeal.
Principles governing a stay
In Sandri v O’Driscoll[43] Santamaria JA made the following observations about the legal principles governing the power to order a stay:
The power ... to order a stay of execution is discretionary, and such an order will generally not be made except where ‘special circumstances’ are demonstrated.
The onus is upon the applicant for a stay to satisfy the Court that the discretion should be exercised in its favour.
The principles which describe the jurisdiction to grant a stay of execution and which inform the exercise of the judicial discretion are usefully set out in Maher v Commonwealth Bank of Australia. They are very familiar.
The discretion, as explained in Maher, requires this Court to balance:
[t]he prospect that the appeal may be rendered nugatory [against] the principle that the successful party is entitled to the fruits of the judgment. A stay should not be granted unless there is at least an arguable ground of appeal, although otherwise speculation as to the ultimate prospects of success is usually inappropriate.[44]
[43][2013] VSCA 281.
[44][2013] VSCA 281 [39]-[42] (citations omitted).
These principles are not in contest.
Application of the principles governing a stay
The Bisognins, having clarified that they no longer sought a stay of the declaration that there be reasonable access for the purposes of the CHMP assessment, and eventually having clarified that they no longer sought a stay of the grant of specific performance, submitted that a stay of orders 1 and 2 of 29 June 2017 should be granted because their application for leave to appeal against Riordan J, and any consequent appeal, have real prospects of success and yet, even if they were to succeed, compliance with the orders of Riordan J would be effectively irreversible.
As noted in Maher v Commonwealth Bank of Australia,[45] it is not appropriate to speculate upon the prospects of success of proposed grounds of appeal in a stay application but it is important to note, as Hera submitted, that the judge at least appears to deal with the issue of whether Hera was ready, willing and able to perform its obligations at the relevant times. This can be inferred from the following observations he made:
On behalf of the [Bisognins], it was contended that [Hera] was not deprived of a substantial chance of obtaining registration of the plan of subdivision by 31 August 2016 and settling the 2015 Contract because:
(a) [Hera] would have been unable to raise the finance and pay the authorities’ fees;
(b) if the plan of subdivision had been registered by 31 August 2016, [Hera][[46]] would have been unable to raise the finance to settle the 2015 Contract within 14 days; and
(c) [Hera] would have been unable to meet the National Broadband Network (‘the NBN’) conditions in the Planning Permit.[47]
[45][2008] VSCA 122 [27].
[46]Riordan J refers to ‘the vendors’ in his reasons, but this would appear to be an error.
[47]Riordan J reasons [128].
The judge responded to the contentions of the Bisognins by making the following findings:
Accordingly, I find that:
(a) [Hera] would have been able to raise the finance and pay the authorities’ fees; and
(b) if the plan of subdivision had been registered by 31 August 2016, [Hera] would have been able to raise the finance to settle the 2015 Contract within 14 days.[48]
[48]Riordan J reasons [135].
He concludes:
In the circumstances, I consider that the conduct of the [Bisognins] in breach of their obligation to use their best endeavours and their failure to comply with the orders of Sloss J during the relevant period deprived [Hera] of a substantial chance of the plan of subdivision being registered by 31 August 2016.[49]
[49]Riordan J reasons [142].
He noted the submission of the Bisognins that Hera was not ready, willing or able to fulfil its obligation in the relevant period independently of the Bisognins’ conduct:
The [Bisognins] submitted that [Hera] was not ready, willing or able to fulfil its obligation in the relevant period regardless of the [Bisognins’] conduct; and, therefore, the above conditions provided a balance between the competing interests of the [Bisognins] and [Hera].[50]
[50]Riordan J reasons [147].
He rejected that submission when he said:
The [Bisognins’] submissions were based on the proposition that [Hera] was not ready, willing and able to fulfil its obligations in the relevant period. In my opinion, for the reasons set out above, I find that [Hera] would have been ready, willing and able to fulfil its obligations under the 2015 Contract, but for the conduct of the [Bisognins].[51]
[51]Riordan J reasons [149(a)].
The Bisognins submit, in support of their proposed grounds of appeal 1 and 2, that any finding by Riordan J that Hera was ready, willing and able to perform its obligations under the 2015 Contract at the relevant time was compromised by being made in the context of determining whether the order for specific performance should be subject to conditions, and founded upon conclusions reached concerning the Bisognins’ breach of the best endeavours obligation and the prevention principle, rather than being squarely directed to the question of whether Hera was ready, willing and able to perform its contractual obligations independently of the issues about the Bisognins’ conduct. These are issues the merits of which stand to be assessed on another day.
With respect to the issue of irreversibility, the Bisognins pointed to the obligations imposed upon them by the 2015 Contract in respect of which Riordan J had ordered specific performance. As noted, the 2015 Contract requires, in the first instance, Hera to procure the registration of a plan of subdivision whereby the land is subdivided into two lots. The Bisognins submitted that it appears that the only steps now required to obtain the registration of the plan of subdivision are those steps set out in Riordan J’s orders of 29 June 2017, being the production of a notice from the Commissioner of State Revenue with respect to the GAIC liability and production of the certificate of title.[52] Pursuant to the terms of the 2015 Contract, within seven days of the registration of the plan of subdivision, Hera is obliged to pay the further deposit in the sum of $990,000. The balance of the contract payment is required 14 days thereafter.[53]
[52]See [38] above.
[53]See [11]-[12] above.
More specifically, the Bisognins submitted that, pursuant to order 1, they will be required to pay $200,000 to the Commissioner of State Revenue for the GAIC for which they will need to raise finance, and this may not be recoverable from the Commissioner nor recoverable from Hera. In this context the Bisognins relied upon an affidavit of Mr Grundy sworn 22 June 2017 in which he deposed that Hera is a company that was incorporated for the limited purpose of transacting the purchase of the land and it has no assets. Mr Grundy also swore that eventually Hera had been able to procure sufficient funds with which to settle the transaction with the consequence that any attempt to reverse the transaction would have an adverse effect on third party interests, namely, Hera’s financiers.
The Bisognins also submitted that if order 2 of the orders of Riordan J made 29 June 2017 is not stayed pending the hearing and determination of the appeal:
(1) their land will be subdivided into the northern lot (which they will retain) and southern lot 1 (comprising the land to be purchased pursuant to the 2015 Contract); and
(2) the southern lot 1 will be sold and transferred to Hera.
They submitted that the transfer will be irreversible given that the registration of the plan of subdivision is almost complete and given that there are short timelines under the 2015 Contract.
In support, they relied upon Mr Grundy’s affidavit in which he swore that the Bisognins are unemployed, have existing liabilities over the land, and if the appeal was successful they would face difficulty in securing finance which would permit them to refund the purchase price and put them in the same position as they were prior to the transaction being given effect. In those circumstances, the Bisognins submitted that success on the appeal would be rendered nugatory unless a stay was ordered.
However, during the course of the hearing the Bisognins conceded that, if the appeal was successful, the subdivision could be reversed by consolidation. It was put to them that, if the transaction went ahead, they would be in receipt of $3.6 million and any losses or expenses incurred could be deducted from the amount they repaid, as could the $220,000 GAIC payment. There was much speculation as to the extent of their own liabilities that would need to be discharged which might place them in a position of not being able to make the repayment. It was said that there was a mortgage in favour of the ANZ Bank in the sum of $1 million that still had to be discharged. The Court was not taken to any mortgage document in support of that proposition. It was said that the other liabilities on the land included a caveat by the Bisognins’ instructing solicitors for payment of legal costs. The Bisognins also have an indemnity costs award against them from Riordan J and costs orders in their favour from the Court of Appeal proceeding.[54] During the hearing there were estimates given by counsel as to whether the costs orders might cancel each other out.
[54]In addition, there was a costs order made in the Bisognins’ favour when special leave was refused by the High Court on 14 June 2017 from the Court of Appeal’s decision.
It was apparent that the evidentiary basis upon which the stay application was founded was inadequate. Against this was the prejudice that Hera was able to identify in terms of an apparent risk relating to an agreement to lease into which it entered with Woolworths on 18 October 2013 for the development of the land for a supermarket. The termination date of the agreement for lease is 1 June 2019. Hera relied upon an affidavit of Mr Luciano Pozzebon sworn 6 June 2017 who deposed that Woolworths has not, despite request, extended the termination date. It became clear that the Bisognins had not been able to discharge their onus of establishing that there were special circumstances that warranted the granting of a stay.
In those circumstances, we formed the view that it would not be appropriate for the stay to be granted. Our view was supported by the unwillingness of the Bisognins to accept that the undertaking as to damages which they were prepared to give ought be supported by a charge over the land as security for any amount payable pursuant to that undertaking.
Conclusion
For the reasons set out above, we declined the relief sought.
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