BM Sydney Building Materials Pty Ltd v AWT Building Pty Ltd; BM Sydney Building Materials Pty Ltd v AWT Building Group (AUST) Pty Ltd

[2017] NSWCA 67

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation:

BM Sydney Building Materials Pty Ltd v AWT Building Pty Ltd; BM Sydney Building Materials Pty Ltd v AWT Building Group (AUST) Pty Ltd [2017] NSWCA 67

Hearing dates:

27 March 2017

Date of orders:

27 March 2017

Decision date:

27 March 2017

Before:

McColl JA

Decision:

In each motion:

 

(1)   Stay the decision below pending determination of the appeal.

 (2)   Costs of the motion to be costs in the appeal.

Catchwords:

PRACTICE  –  stay of proceedings  –  where appeal nugatory if stay not granted  –  no question of principle

Legislation Cited:

Civil Procedure Act 2005 (NSW)
Real Property Act 1900 (NSW)
Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited:

Alexander v Cambridge Credit Corporation Limited (1985) 2 NSWLR 685
Fox v Percy (2003) 214 CLR 118; [2003] HCA 22
New South Wales Bar Association v Stevens [2003] NSWCA 95
Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387; [1988] HCA 7

Category:

Principal judgment

Parties:

BM Sydney Building Materials Pty Ltd (Applicant)
AWT Building Pty Ltd; AWT Building Group (AUST) Pty Ltd; Mr Wenge Teng; Mr Hui Li (Respondents)

Representation:

Counsel:
B K Nolan (Applicant)
A Norrie (Respondents)

  Solicitors:
Deutsch Partners (Applicant)
Wang Lawyers Pty Ltd Trading as Herald Legal (Respondents)

File Number(s):

2017/85330; 2017/85334

Publication restriction:

No

 Decision under appeal 

Court or tribunal:

District Court of New South Wales

Jurisdiction:

Civil

Citation:

Unreported

Date of Decision:

15 February 2017

Before:

Curtis DCJ

File Number(s):

2015/178796; 2015/178811

Judgment

1. McCOLL JA: The applicant, BM Sydney Building Materials Pty Ltd (BM) seeks orders staying a decision of his Honour Judge Curtis given on 15 February 2017. [1] In those proceedings, his Honour dismissed two proceedings BM had brought, one against AWT Building Pty Ltd and a Mr Hui Li and Mr Wenge Teng seeking to recover $308, 625.13 and the second, against AWT Building Group (AUST) Pty Ltd (AWTBG) and Mr Teng seeking to recover $503,183.92. The debts were alleged to be due under contracts for the supply of building materials. The individuals were sued pursuant to guarantees.

   1.    BM Sydney Building Materials Pty Ltd v AWT Building Group (AUST) Pty Ltd and Wenge Teng; BM Sydney Building Materials Pty Ltd v AWT Building Pty Ltd and Hui Li and Wenge Teng (District Court (NSW), 15 February 2017, unrep).

2. The proceedings were heard by Curtis DCJ on 14 and 15 December 2016, on which date his Honour reserved his decision.

3. The defendants admitted the supply of materials, the quantum of the debts and the execution of the guarantees, but contended BM was estopped from pursuing its claims by reason of oral agreements reached on or about 12 December 2014 between Mr Ming Lee, one of BM’s directors, and Mr Teng, a director of each of the AWT companies, and another reached on or about 15 December 2014 during a conversation which Mr Lee, Mr Teng and a Mr Lu, apparently the General Manager of one, or both, of the AWT companies, were present. Mr Lee denied either conversation occurred.

4. The primary judge delivered judgment on 15 February 2017. He rejected Mr Lee’s evidence for a number of reasons which included finding he “presented as an evasive and inconsistent witness”, and despite his Honour accepting there were recorded transactions between the parties subsequent to the date of the alleged conversations, apparently inconsistent with the propounded estoppel.

5. Accordingly, his Honour upheld the estoppel defence finding that “the evidence of the plaintiff [sic, defendant]” satisfied the conditions for an equitable estoppel as explained by Brennan J in Waltons Stores (Interstate) Ltd v Maher. [2] His Honour also held that the defendants’ actions in placing further orders with BM on the basis they would have credit of some $900,000 as asserted in the estoppel defence, would cause them detriment if BM was not held to its promise. Accordingly his Honour held BM was estopped from bringing the proceedings against each defendant, entered judgment for the defendants and ordered BM to pay the defendants’ costs as agreed or assessed.

   2. (1988) 164 CLR 387 (at 428 – 429); [1988] HCA 7.

6. The primary judge apparently granted an interim stay of his orders. On 8 March 2017, a District Court judge made orders by consent extending that stay until 20 March 2017 on condition that a notice of appeal was filed by 15 March 2017. BM filed a notice of appeal from the primary judgment on 20 March 2017, but the respondents do not complain about that lapse before me.

7. On 21 March 2017, BM filed a motion in each appeal seeking a stay of the decision below pursuant to Uniform Civil Procedure Rules 2005 (NSW) r 51.44 pending the determination of the appeal. The appeals have been given an expedited hearing on 17 May 2017.

8. In order to understand the substratum of the stay application, it is necessary to appreciate another aspect of the parties’ relationship. Although as shall become apparent, some of this is contentious, it appears to be common ground that in July 2014 BM entered into a Commercial Credit Facility Supply Agreement with AWTBG in respect of the supply of building materials, supported by Mr Teng’s guarantee. In purported reliance on what Mr Lee contends was an “express charge” given in the guarantee, on 4 December 2014 BM lodged a caveat over land owned by Mr Teng.

9. On 22 December 2016 BM received a notice from the Registrar-General’s Office advising that Mr Teng had sought an order pursuant to s 74J of the Real Property Act 1900 (NSW) effectively lapsing the caveat (lapsing notice). BM thereupon commenced proceedings by summons filed in the Equity Division on 23 December 2016 seeking a declaration that it had the benefit of an equitable charge over Mr Teng’s land to secure monies owing by him pursuant to the guarantee. By short minutes of order made in the Equity Division on 3 February 2017, the caveat was extended until further order of the Court, the matter was stood over for directions in the Real Property List on 21 April 2017 and directions concerning the filing of evidence were made.

10. Ms B K Nolan of counsel, who appeared for BM on the stay application and at trial, submits that if a stay is not granted, the caveat will be removed as the debt BM has been found to have been estopped from recovering was the sole basis upon which BM could propound a caveatable interest in Mr Teng’s land.

11. Ms Nolan submitted that BM had an arguable case on appeal, despite the primary judge’s adverse credit findings, because the estoppel conversations did not demonstrate any agreement on BM’s part to forbear from suing the respondents. She also contended there was no, or no sufficient, evidence that the respondents relied upon anything Mr Lee said to their detriment. She complained that the primary judgment disclosed no adequate reasoning process. She argued that the appeal would prove abortive if a stay was not granted, contending, without demur from Mr A Norrie, who appeared for the respondents on the stay motion and at trial, that the corporate respondents were in a financially precarious position.

12. Mr Norrie tendered a letter from Mr Teng’s solicitors to BM’s solicitors in respect of which his client waived privilege, in which Mr Teng’s solicitors asserted the basis for the lapsing notice, in short, was that “Mr Teng did not agree to charge his interest in favour of your client in the Credit Application”. However, Mr Norrie fairly accepted that, as Ms Nolan submitted, the only legal basis for the caveat was the debt propounded in the District Court such that, if the primary judgment was not stayed, that would be another basis upon which Mr Teng would be entitled to have the caveat removed.

13. Mr Norrie also submitted, perhaps encouraged by the fact this was an initial view I formed, that the question of the continuance of the caveat was better resolved in the Equity Division proceedings. He disputed Ms Nolan’s contention there was no evidence of reliance and also pointed to one part of the estoppel conversations which he contended demonstrated relevant agreement on Mr Lee’s part to forbear from suing the respondents. Mr Norrie did not point to any prejudice the respondents, in particular, Mr Teng, would suffer if the stay was not granted although he submitted that, as is a given, the respondents were entitled to the fruits of their verdict.

Determination

14. The overriding principle on an application for a stay is to determine “what the interests of justice require”. [3]

    3. New South Wales Bar Association v Stevens [2003] NSWCA 95 (at [83]) per Spigelman CJ (Meagher and Sheller JJA agreeing).

15. The fundamental principles were identified in Alexander v Cambridge Credit Corporation Limited,[4] as follows:

    4. (1985) 2 NSWLR 685 (at 693 – 695).

1. Where there is a risk that an appeal will prove abortive if the appellant succeeds and a stay is not granted, the Court will normally exercise its discretion in favour of granting a stay;

2. the onus is upon the applicant to demonstrate a proper basis for a stay;

3. although the Court will not generally speculate about the appellant’s prospects of success, still some preliminary assessment could be conducted about whether the appellant has an arguable case;

4. it is a matter of discretion whether the Court grants a stay and, if so, as to the terms which would be fair as part of the granting of a stay;

5. what is important in considering whether or not a stay ought be granted is the balance of convenience and the competing rights of the parties;

6. it is not necessary that special or exceptional circumstances should be made out; it is sufficient for the applicant to demonstrate a reason or an appropriate case to warrant the exercise of discretion in its favour. [5]

   5. Ibid (at 691 – 692).

16. In my view, the interests of justice and the balance of convenience warrant the grant of a stay of the orders made by the primary judgment. This is primarily for the reasons that, otherwise, BM is at risk in the Equity Division proceedings of suffering a lapsing order. In addition, there is the circumstance of the apparent financial precariousness of the corporate respondents which appears to mean Mr Teng and the caveat in particular held over his real property is the only substantial asset to which BM might, if successful on appeal, in due course be able to have recourse.

17. I accept that a judge in the Equity Division may be persuaded to await hearing the lapsing proceedings pending resolution of the appeal proceedings, however it is, in my view, consistent with the overriding purpose in s 56 of the Civil Procedure Act 2005 (NSW) that, being seized of the matter, I effectively deal with the matter in the stay applications.

18. The grant of a stay does not, of course, amount to any decision as to the arguability of the appeal. The question of the characterisation of the estoppel conversations will clearly be a matter for debate. There is, of course, the fact that Mr Lee’s credit was substantially in doubt, a point Ms Nolan submitted would be the subject of Fox v Percy [6] submissions and I infer, possibly arguments about the inconsistent conduct the primary judge considered. However, despite those matters, and as a preliminary assessment, it cannot be said that the appeal is hopeless

    6. (2003) 214 CLR 118; [2003] HCA 22.

19. Having regard to the fact that the appeal will be heard expeditiously and, as I have said, that the respondents do not point to any particular prejudice to them, the balance of convenience favours the grant of a stay.

Preparation

20. Before I make the orders sought in the motions I have to say something about the preparation of this matter. When the matter was called over before the Registrar in his morning list as is customary prior to determining which if any of the motions listed, might go forward as a referral, other than the motions, there was nothing in the papers.

21. Indeed, Ms Nolan had to provide a copy of her brief to the Registrar so that this Court could have any papers. There was no affidavit as there should have been from the applicant's solicitor setting out the background, the basis for the application and the history which I have recited in the course of this judgment explaining the inter relationship between the primary judgment and the Equity Division proceedings. All that matter had to emerge in the course of oral submissions from counsel, with, in my view, inconvenience to the Court not being given the proper opportunity to consider the matter. This is not the appropriate way to approach a stay application.

Orders

22. I make the following orders in each motion:

1. Stay the decision below pending determination of the appeal;

2. Costs of the motion to be costs in the appeal.

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Endnotes

Decision last updated: 31 March 2017