Cousens v Grayridge Pty Limited M82/2000

[2000] HCATrans 674

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Melbourne  No M82 of 2000

B e t w e e n -

SHIRLEY YVONNE COUSENS

Applicant

and

GRAYRIDGE PTY LIMITED

Respondent

Application for a stay

HAYNE J

(In Chambers)

TRANSCRIPT OF PROCEEDINGS

AT MELBOURNE ON WEDNESDAY, 8 NOVEMBER 2000, AT 9.40 AM

(Continued from 2/11/00)

Copyright in the High Court of Australia

HIS HONOUR:   Yes, Mr Fitzgibbon.

MR FITZGIBBON:   Yes, thank you, your Honour.

HIS HONOUR:   Mr Fitzgibbon, I have read the amended application for leave and the summary of argument accompanying that as well as the amended chamber summons and the affidavit of Mr Lewer of 6 November 2000.

MR FITZGIBBON:   Yes, thank you, your Honour.

HIS HONOUR:   Yes.

MR FITZGIBBON:   And there is another affidavit of Mr Winter which my client is replying to, but I have been served with that, your Honour, thank you.

HIS HONOUR:   Yes.  I have not seen that.

MR COOK:   We filed that affidavit - - -

MR FITZGIBBON:   Yes, I have no objection to that at all.

MR COOK:   Mr Winter was not ‑ ‑ ‑

HIS HONOUR:   Yes.  Yes, thank you.  The affidavit of Mr Winter of 8 November 2000 and the affidavit of Mr Lewer of 6 November may be taken as read.

MR COOK:   Thank you.

HIS HONOUR:   Yes.

MR FITZGIBBON:   Your Honour, I apologise for some of the typing in the application.  Your Honour would realise that probably I have been trying and when programs go wrong, they go wrong.

HIS HONOUR:   Yes.

MR FITZGIBBON:   The holiday has not helped terribly much.  Your Honour, can I commence just with a number of very short matters which I think, however, are important?  My memory of the hearing last Thursday was that I think Mr Cook said 1,000 a day was the deficit being incurred by Grayridge.  Your Honour, I checked that back and as best I can calculate it, it is I think about $88 a day.  Now, I would have liked to have got that in documentary form, but 1,000 a day would seem to be an enormous sum of money.

MR COOK:   A thousand a week.

MR FITZGIBBON:   A thousand a week, your Honour, I am told by my friend, but, as I say, the calculation I think comes out to be lower than that.  The second matter is this:  your Honour will have seen that the valuation obtained my client, in fact, in June last year is shown as a sum of 960,000 and the valuation, of course, by the respondent to this application is almost $200,000 lower.

The only explanation I can offer from the Bar is this, your Honour, that one is what we call a kerb‑side valuation, the other is a very detailed valuation, and that really is the only explanation I can offer for that because I sought from my solicitor as to whether there were any previous valuations and hence the filing of that valuation.  Might I say this:  the devil is in the detail, but one is an extremely detailed valuation and the other one is less detailed.

The third matter, your Honour, that is raised by Mr Winter is the outstanding rates and clearly my client accepts that those are outstanding, but he is unaware of any threat of litigation.  That is really as high as I can put it at the moment but, nevertheless, I see what Mr Winter has said.  I cannot really take the matter any further than that.

Your Honour, if I then can move to the position I see as far as the applicant is concerned.  In my submission, the special circumstances referred to in Jennings Case are present in this matter.

HIS HONOUR:   Let us assume for the purposes of debate that the case is one where, if a stay does not go, the subject matter of the litigation will be so injuriously affected as to amount effectively to its destruction.

MR FITZGIBBON:   Yes, thank you, your Honour.

HIS HONOUR:   For the moment the matter that would trouble me more is the question of the prospects of obtaining leave in relation to the amended application that was recently provided to me.

MR FITZGIBBON:   Yes, thank you, your Honour.  I will, therefore, address that.  Your Honour, I have endeavoured to set out a more than usual manner the basis of what I say are matters that arise.  I did tell your Honour that Supreme Court proceedings could be taken.  I have given my solicitor advice on that.  I cannot take that matter any further than that and, in the circumstances, I felt that this was more important.  Now, your Honour, the position is this, as I see it, that the matter of the duty of care on a solicitor who is also the secretary of a company certainly was not raised in either of the two court proceedings.

HIS HONOUR:   That is at trial before Mr Justice O’Bryan or on appeal to the Court of Appeal; is that right?

MR FITZGIBBON:   That is correct, your Honour.  Nevertheless, your Honour – and I have not included these in my authorities – it is a matter where I say that the Court has in the past, in fact, allowed argument on matters where you have both a public interest and, indeed, the interests of the applicant.  If I might – and, your Honour, these are cases which are in a sense notorious.  There is the matter, of course, of Wollongong University v Metwally.  That, indeed, was a section 40 uplift to the Court, your Honour, and that was not argued by the commission in the tribunal in which Mr Metwally – he was a lecturer at ‑ ‑ ‑

HIS HONOUR:   Yes, I am familiar with Metwally.

MR FITZGIBBON:   And, indeed, almost concurrent with that case was the case of Viskauskas v Niland.  I do have the references for both of those, your Honour, but I doubt your Honour will need – in both of those cases the Court allowed an uplift under section 40 and, indeed, found under section 109.  There were problems, certainly with Mr Metwally.  There is the more recent case of Giannarelli out of the Victorian Supreme Court, but in fairness I must tell your Honour that the Court made it very clear that that was not to be regarded as a precedent for that particular course of action.

I did refer your Honour, of course, to the authority that is found in my short submission where the Court held that where there was an agreement on the facts – and I say as far as the facts are concerned, the interpretation of the facts, your Honour, I could very readily agree there will be differences on that, but where the Court found that, there was a case of where rather than sending the matter back to the lower courts, the Court, in fact, took the view that it was able to adjudicate on the matter.

I have referred in my short submission, your Honour, to the CDJ v VAJ Case but that, of course, is a case involving statutory interpretation as such, but necessarily that does include a very clear consideration of the powers of the Court to, in fact, deal with a matter in point like this.  What I am putting to your Honour is this, that this matter is of such public importance that perhaps if I might on the amended notice of appeal at point 3 where I raise the issue of where power to control legal practitioners arises from, then I say this:

Further is the conduct of Mr Winter or the lack of precautionary action by Mr Winter matters which raise serious public issues that have repercussive effects upon the citizens of Australia as well as the applicant in particular.  As a matter of public policy ‑

I believe that really goes to the heart of what I am saying.  It very much, of course, depends on findings of proximity.  It depends how close that proximity was, and I have set that out in some detail in the Perre v Apand Case and equally, of course, in the Hill v Van Erp.

What I am really saying here is this, that in a case like that the Court does have the power within the terms, first of all, of the control of practitioners as such. I note, of course, the comments in Quick & Garran, your Honour, have never really been effectively challenged right from 1901 when the annotated Constitution, of course, was written. Effectively, that seems to have been the approach by the Court and, indeed, of course, it has been a very clear line as to the power of the Court to, in fact, control and examine, and it is a public interest matter as I see it.

So by that reason, your Honour, I believe that, although that was not raised directly in front of either Justice O’Bryan or, indeed, the Full Court of Appeal, it is a matter that arises out of the factual evidence given here.  Your Honour, the other matters I raise, I do not in any way denigrate from those because, as I see it, they are matters that, indeed, go to the heart of the matter.  The issue of benefit under the statute, that was not argued in either lower court, but my submissions, your Honour, would be the same in regard to that.  Indeed, it seems to me that it is a matter - and that, of course, naturally dovetails as the result of, first of all, if the Court found there was such a proximity.  For instance, your Honour, if the Court – and I will argue it by way of hypothesis - was found to make a finding that all of the Bulfin transactions were, in fact, lent from Grayridge, then the question of proximity, indeed, would be strengthened.       From that, your Honour, flows the argument, as I see it or as I am submitting to the Court, that, in fact, there is a direct question whether a solicitor in the position of Mr Winter should be permitted to act in both the dual role of the solicitor and the secretary. 

Now, as I understand the law, your Honour, in Victoria prior to these events, in fact, mortgage brokers were subject to licensing.  At the time of these events mortgage brokers had been freed from that restriction.

Now, all I simply raise for your Honour is this, that those questions then flow on, of course, to the facts which emerge from the evidence itself, that, in fact, whether one takes it in – I do not put it as high as I originally put it because I believe that, as your Honour said, it is a long way from saying the suspicion here to proof, but the fact of the matter is that there are benefits which I say flow to the solicitor in this case.  There are direct benefits, the evidence discloses, where although Bulfin was given a commission, it was then paid back, deducted back, by the solicitor as part of the outstanding overdue mortgage payments by Bulfin, and the evidence clearly establishes that.  That is not at all in issue.

HIS HONOUR:   But this is an argument, is it not, that depends upon section 44 of the Transfer of Land Act, is it?

MR FITZGIBBON:   Yes, your Honour, it does very much.

HIS HONOUR:   And 44 refers to “benefit”, but it reads relevantly:

no party or privy to the fraud shall take any benefit therefrom.

Does it not follow that you have to establish that Grayridge was party or privy to the fraud?

MR FITZGIBBON:   I do not believe I need go as high as that, your Honour, with respect.  I believe what I need – you see the solicitor here was also secretary of Grayridge and ‑ ‑ ‑

HIS HONOUR:   I understand that, but attend upon the words of the section.  The section relevantly provides:

no party or privy to the fraud shall take any benefit therefrom.

MR FITZGIBBON:   Yes.

HIS HONOUR:   Is it not essential to demonstrate that Grayridge was a “party or privy to the fraud” before any question arises about benefit?

MR FITZGIBBON:   Yes, I believe that is the case and I believe it arises on two grounds:  one, the very clear evidence establishing that Mr Winter was the secretary and, of course, there is very strong authority, particularly English authority, as to the position of a company secretary today.  It is quite different from the company secretary in the past.  So that is one.  The second part of it, your Honour, is this, that – I take it your Honour has the short summary of facts.

HIS HONOUR:   Yes.

MR FITZGIBBON:   Thank you.  I do rely on that, your Honour, and I rely on the matters in particular that would link through that evidence, Grayridge secretary, same secretary as the solicitor, the same person is doing for the benefit, I say, of both.

Really, what I am putting there is this, that because of that you have the linking, if one could put it this way, between the proximity of solicitor/company secretary to the knowledge that he has of Bulfin and Bulfin’s activities, the conduct that emerges as disclosed in the summary and, therefore to the position where the – as I say, that comes into the area of proximity and it comes into the public issue as well as the private effect that it had on my clients, the applicants.  So I say there is an interlinking there, your Honour, and that, I say, is sufficient to bring us within the section.

Now, the other matters that I have raised – and your Honour will see that I have avoided the corporate argument and taken that out.  I think it may be another case on another day but it is not appropriate here.  I have taken the view – and I, indeed, put this to your Honour last week – estoppel by deed was actually argued by Mr Bergland in front of Justice O’Bryan, equally in front of the Full Court.  The Full Court, of course, was divided but they were not divided on the issue of estoppel and I have taken a view of what occurred here and I have argued admittedly an argument – well, actually it was.  It was put in a broad fashion by Mr Bergland in front of Justice O’Bryan.

I have, in fact, taken the view that there are two things ‑ there is this deed and this covenant – and the argument really proceeds on the basis that although one may be bound by the deed, one cannot be bound by the terms of the covenant and, indeed, in evidence, Mr Winter said that he did not rely on clause 3 of the covenant, so necessarily from those two bases I have, in fact, said that estoppel could arise in those circumstances and I go one stage beyond Justice Batt in regard to that.  I adopt Justice Batt’s reasoning, your Honour, in case there is any doubt on that issue, but I go one stage further than that.

So, in essence, your Honour, if I can just return perhaps to summarise what I was putting before about the knowledge of the company, I put it this way, that ‑ ‑ ‑

HIS HONOUR:   Before you do that, can I just make sure that I understand that I have the points which you say are the special leave points?

MR FITZGIBBON:   Yes, your Honour.

HIS HONOUR:   First, as I understand it, you would say that the solicitor who acted for the mortgagee and who was associated with the mortgagee, I think as director and shareholder of it, owed a duty of care to the mortgagor, which was breached, and that although these contentions were not raised at trial or on appeal, they are of such public importance that this Court should take them on.  That is ground one.

MR FITZGIBBON:   Thank you.

HIS HONOUR:   Ground two is that examining the facts adduced in evidence at trial reveals that section 44 of the Transfer of Land Act is engaged because the solicitor and thus the mortgagee were “party or privy to the fraud” of Bulfin and would take a benefit from that fraud or from registration of the instrument and that although the case was not put in this way at trial or on appeal, again, the public importance of the matter is such that this Court should take it.

MR FITZGIBBON:   Yes, thank you.

HIS HONOUR:   Third, as I understand it, you would seek to support Justice Batt’s analysis of the matter, though you would seek to go further in your analysis of it by seeking to distinguish between the binding effect of the deed and the binding effect of the covenants in the deed.

MR FITZGIBBON:   Thank you, your Honour, yes.

HIS HONOUR:   Now, does that encompass the whole of the bases upon which leave is sought?

MR FITZGIBBON:   Yes, your Honour, thank you.  Perhaps I would just like to add – and I do not want to multiply words – what I am really saying is that Mr Winter’s knowledge of Bulfin was enough to mean he was privy to the conduct by Bulfin and because of his connection, both as solicitor and also as an officer of the company, then the company is fixed by that.  Those, in essence, your Honour, are the grounds I would seek to rely on.

HIS HONOUR:   Now, as I would understand it, you would add to that propositions that if a stay or orders equivalent to a stay do not go the subject matter of the application for leave is effectively destroyed; is that right?

MR FITZGIBBON:   Yes, thank you.  Yes, I am sorry, I should have added those, but at the start ‑ ‑ ‑

HIS HONOUR:   I understand that and I think I ‑ ‑ ‑

MR FITZGIBBON:   Thank you.  Yes, no, that is the position I take, your Honour.

HIS HONOUR:   I think it may be most convenient if I hear from Mr Cook in connection with the prospects of success or likelihood of success of leave

being granted on the grounds thus identified, assuming for the present purposes of debate that all other features of the stay application were made out.

MR FITZGIBBON:   Thank you, your Honour.

HIS HONOUR:   Yes, Mr Cook.  On that basis, Mr Cook, assuming against you for the moment, that all other aspects of a stay application were to be made out, what do you say in relation to the likelihood of leave being granted on the grounds that I identified in the course of debate with Mr Fitzgibbon?

MR COOK:   Yes, your Honour.  Could I just hand up some submissions which I prepared which do not directly go to those matters.  I will recast my argument in light of those submissions on the basis of the way my learned friend identified those particular matters and address those five points that were just being discussed.

The first point is the one a solicitor who acted for the mortgagee was a director and shareholder of the mortgagee owed a duty of care to the mortgagor which was breached.  Your Honour, the problem with that particular argument, in my submission, is – there are a number of problems.  The first is a factual matter that arises from my learned friend’s submissions this morning and what he said in his new grounds, and that is that Mrs Cousens did not have her own legal advice.

I think it is certainly common ground that she attended her own private solicitors on a number of occasions to have certificates that one has to have signed before the various transactions were entered and she went along once for the Quinn mortgage.  I think she went along again for the variation for the Quinn mortgage and she went along for the Winter mortgage.  On each occasion her own solicitor explained the transaction to her and there was evidence before that.

The second point in relation to this matter which really goes to all the matters and, in my submission, should be determinative in this particular case is that these are points that were not raised at trial or before the Court of Appeal.  That is point A of these matters.  Point B, which is of a general import as well, is that we are still really in the dark as to how these allegations are put in the pleadings.  There are pleadings before the Court.  I have brought along a copy of the original pleadings.

You would normally expect if serious allegations are to be levelled against Mr Winter, who is a solicitor, and which albeit were raised in cross‑examination on subsidiary matters in trial were dealt with by the judge at first instance who said he disbelieved Mr Bulfin on anything he said basically and certainly believed what Mr Winter said.  Now, if these matters were to be put, even now, one would have thought that there would have been some kind of pleading with particulars and one could analyse these in the normal fashion that one does these sorts of matters in court, but we have not got those matters on any of these particular points.

HIS HONOUR:   Was any case of negligence pleaded by Mrs Cousens against either Grayridge or, it would seem in the way in which the argument is cast, against Mr Winter, not a party to the suit?

MR COOK:   No, Mr Winter was not mentioned.  I have a copy of the counterclaim there which if any ‑ ‑ ‑

HIS HONOUR:   I do not need it for the moment.  The fact that Mr Winter was not party to the suit or the firm name was not party to the suit may perhaps be the evident demonstration of the absence of such a claim.

MR COOK:   Yes.

HIS HONOUR:   Yes.

MR COOK:   It was certainly never said at all.  It was never thought by anyone that Mr Winter was involved in this matter in any way until the last couple of weeks until these sorts of matters had been raised in the stay application.

HIS HONOUR:   Yes.

MR COOK:   Perhaps of more importance though is that if there was just an allegation of negligence against Mr Winter in so much as only negligence, it would not bring into operation the relevant sections of the Transfer of Land Act which, of course, require there to be fraud, not just negligence, and if there were any rights at all, there might be some in personam rights, although we would, of course, say that this is just all fanciful really, but I think the basic proposition is that you have to have fraud before you can set aside registered mortgages and that is not what is said here.  It is only said that there is negligence.  So I think really deals with the first of the propositions.

I suppose the second of the propositions also involves Mr Winter. I rather thought that this had been dropped on the last occasion. This is involving saying that Mr Winter’s relationship with Mr Bulfin was such that he was fraudulently implicated in – well, he was implicated in Mr Bulfin’s fraud. Now, in my submission, those facts were never established, or, again, they were never put like that at trial, but if one examines what was said in section 44, or looks at section 44 of the Act, you have to show that the relevant party, which is Grayridge, was “party or privy to the fraud”. I mean, we were never allowed to say anything on this matter at trial and it is just simply ‑ ‑ ‑

HIS HONOUR:   Was any case made at trial founded in section 44 of the TLA?

MR COOK:   No, your Honour, no.  There is useful discussion, of course, in the case of Vassos v State Bank of South Australia (1993) 2 VR 316 your Honour examined these sections of the Act and there, of course, discussed as to how the fraud had to emanate from the person taking the benefit and how far one could go but, in my submission, there is no suggestion that we were an agent of Mr Bulfin or Mr Bulfin was our agent. That, in fact, was pleaded in the initial counterclaim but it was never put with any degree of cogency.

I think it was abandoned by Mr Bergland at trial before his Honour and his Honour did reflect on that in his judgment and said, in effect, that he was not putting any strength on that particular argument.  So that is really the second of the points.

The third of the points is that – really it is the only point that one would suspect is a properly advanced point or a conventionally advanced point, in the sense that it is not a new point that was not raised at trial, and that is simply that Mr Justice Batt’s analysis is to be preferred to the analysis of the two other judges.  In my submission, that really simply amounts to a question of fact.  Perhaps paragraph ‑ ‑ ‑

HIS HONOUR:   Why is that so?

MR COOK:   Paragraph 3 of the joint judgment of Mr Justice Charles and Mr Justice Chernov sets out what is solely, in my submission, a factual analysis of what happened and perhaps if I read that quickly, “It is clear” ‑ ‑ ‑

HIS HONOUR:   Perhaps if you can point what part of paragraph 3 is said to be of particular relevance, and I have read it.

MR COOK:   Well, there they describe the scheme that Bulfin devised for borrowing of funds and about line 10 of paragraph 3:

Put another way, each transaction was but another phase of the borrowing and investment scheme devised by Bulfin and readily adopted by Lewer.  As Batt, J.A. says, the proposal was to invest in the meatworks called “Gillara” and Lewer agreed with Bulfin’s suggestion that “the sky was the limit, the more the better”.  Lewer agreed to Bulfin’s proposal that there would be a couple of others –

and so on, and as they say about three lines further on:

Lewer said in evidence that the Feingold loan was “not another deal or a better deal, it is just an extension of the original”, and agreed that “they are all part of the same transaction”.  In our view the Winter mortgage transaction was relevantly related to the earlier three transactions because it was a step, probably the last step, in the implementation of the overall project to borrow money on the security of the Frankston property for investment in the meatworks and franchise.

HIS HONOUR:   But how does that any of that demonstrate that the difference between majority and minority is a difference founded in the facts rather than a difference founded in principle?  That is the point that troubles me.  It is the point, I think, that is perhaps the principal difficulty in your way.  Can you identify for me why I should regard the difference between the majority and minority as one founded in fact rather than principle?  If it is founded in fact, I can well understand the contention that is unlikely to get leave.  If it reflects a difference in principle, other considerations may – I do not say “will” – intrude.

MR COOK:   Well, if one compares what Mr Justice Batt then says at paragraph 50 of the judgment, the very last two or three sentences, he says – all he says on this particular matter ‑ ‑ ‑

HIS HONOUR:   Sorry, which paragraph of Justice Batt?

MR COOK:   It is paragraph 50 of the judgment.  It is on page 19 I think of the copy that you have.  Your Honour may have a different copy.

HIS HONOUR:   Yes, I have it.

MR COOK:   He says about the last six or seven lines:

It might even be said that Bulfin’s engagement to negotiate loans and find investments was a single one.  But I do not think that vis‑à‑vis the three sets of lenders it can be said there was one transaction.  This is shown by the different authority given to Bulfin in respect of the Feingold mortgage.  To put this another way, even if it was all one transaction the variance in Bulfin’s critical authority as regards Quinn & Quinn and as regards Feingold Partners precludes there being any assurance about his critical authority as regards S.V. Winter & Co.

Now, in order to reach those various conclusions that the two different sets of – well, two parts of the judgment I have just read to which they come, one has to look at the series of facts in the case.  One looks at who said what on a number of occasions to a number of people and what documents were brought into existence.

HIS HONOUR:   I understand that.  Can I just stay with this?  At paragraph 50 we have the passage you have just referred to.  Paragraph 51 is the conclusion which seems to follow from it, a conclusion about Bulfin not having “express relevant authority”, but that, I thought, was not the point of difference between majority and minority.  I thought the court below divided on the question of implied authority:  see paragraph 1 of the joint judgment.

MR COOK:   Yes.

HIS HONOUR:   Now, where do I find the – I find at paragraph 52, do I not, in the last sentence, Justice Batt concluding:

contrary to the trial judge, that it was not shown that Bulfin had the necessary authority by implication.

Is that the point of difference between the members of the court?

MR COOK:   Yes, your Honour.  The only problem with Mr Justice Batt’s decision is that he does not, when reaching that particular conclusion, say anything more on that particular point than he did in paragraph 52 and I suppose it is emphasised that it is a particular factual matter when he says in the second‑last sentence:

The evidence showed, in my view, no more than that in a particular case a mortgage broker might be authorised to receive an appropriate cheque for the net balance of the agreed advance.  But whether that was so or not depended in each case upon specific authorisation.

That is obviously the major point in issue, is whether in this particular case the broker was authorised to simply conclude the agreement or to get the documents signed or to notify the solicitor as to where the moneys were to go or to attend at settlement and collect the moneys and so forth.  It all depends on the particular facts of the case an no one is saying that we are trying to establish what are general principles in relation to brokers as a whole in relation to mortgage transactions like this and this is of general import to everything.  We are simply trying to analyse what happened in this odd factual situation.

HIS HONOUR:   Well, do I capture what you would say the difference between majority and minority below was in this way, that the majority was of the view that the course of previous transactions revealed that Bulfin had implied authority to receive money, receive net proceeds.  Mr Justice Batt by contrast, considered, for reasons peculiar to the particular sets of transactions under consideration, that that course of prior transactions did not reveal that implied authority and there was no general practice in the industry which supplied it.

MR COOK:   Yes.

HIS HONOUR:   Does that capture the essence of it?

MR COOK:   Yes, your Honour, it does.

HIS HONOUR:   And, as I understand it, you would say that is a question dependent upon the peculiar evidence that was given and the course of dealings between these parties revealing no question of general application.

MR COOK:   Yes, your Honour.

HIS HONOUR:   Is that the nub of it?

MR COOK:   Yes.

HIS HONOUR:   Yes.  I am sorry to be slow about these things, but I am anxious that I understand them.  Yes.

MR COOK:   The next point, which is a really sub‑point of the third point that your Honour raised, or the third argument that my learned friend put, was that because estoppel by deed was argued, that somehow supported the analysis that Mr Justice Batt had given.  In my submission, the estoppel by deed point is not relevant at all to this application and simply because the way the estoppel by deed argument was put ‑ and it was found against us ‑ was that because in the deed it was acknowledged that the funds were advanced, we said that they could not go behind the deed and advance evidence to say that the funds were not advanced.

Now, although Mr Justice O’Bryan found in our favour on that particular point, the three judges in the Court of Appeal found against us and said that in these circumstances, on these particular facts – again, it is a factual matter – it was open to Mrs Cousens and Mr Lewer to lead evidence to show that they, in fact, did not get the money and that we were not entitled to rely on the deed.  Now, in my submission, that is the only relevance that point has to the appeal and it was found against us and we are

not appealing against the judgment on that particular point, so it is found against us.

HIS HONOUR:   Yes.

MR COOK:   The next point was ‑ my learned friend suggested that because of his connection with Mr Bulfin, Mr Winter was privy to Mr Bulfin’s conduct and that he was somehow thereby responsible or somehow thereby implicated in Mr Bulfin’s fraud.

HIS HONOUR:   I understood that as an amplification of points one and two.

MR COOK:   Yes.  Well, we have dealt then with that matter.  The last point was that the subject matter of the application would be effectively destroyed if a stay were refused.

HIS HONOUR:   As I say, for the moment I am prepared to assume against you that that is so and that is why I have asked that you confine your argument to this question of likelihood of grant.

MR COOK:   Yes.

HIS HONOUR:   As I say, there would be several other considerations to take into account if we get past the issue of likelihood.  For the moment I would ‑ ‑ ‑

MR COOK:   I would certainly want to address your Honour if we get to that position.

HIS HONOUR:   I understand that.

MR COOK:   I think they are the matters I really wished to raise.

HIS HONOUR:   Yes, thank you, Mr Cook.  Yes, Mr Fitzgibbon, do you want to say anything in answer?

MR FITZGIBBON:   Your Honour, just very briefly, and I will be brief.  Your Honour, there is evidence on page 77 led by my friend, Mr Cook, very clearly of the sums of money owed.  Page 77, line 12:

For what reason was Mr Bulfin owed $2000…..

Why was Mr Bulfin allowed $2000 at settlement?---For his brokerage fee.

A figure of 2,850 was paid to Mr Winter as procuration ‑ ‑ ‑

HIS HONOUR:   Mr Fitzgibbon, I need no persuasion that people enter these transactions for commercial motive.  I need no persuasion of the proposition that companies are in business to make money.  Indeed, some would say that that is a large part of a director’s duty.

MR FITZGIBBON:   Yes.  Your Honour, then the only matters that I should raise are these.  I say it is a matter of law as between the majority and the minority and your Honour I believe set it out in the propositions, although I do not accept what your Honour put is the position of my friend.  I say it is a matter of law and I say as far as Justice Batt’s judgment is concerned there is a difference in principle as between himself and Justice Charles and Chernov concerning implied authority and what constitutes it.  For example, they were not in agreement on the concept and it is not just a difference over the factual situation.  Your Honour, unless there is anything else in particular I can address, those really are the matters that I should raise, thank you.

HIS HONOUR:   Thank you.  Mrs Shirley Yvonne Cousens, the applicant, seeks an order directing the Sheriff of the Supreme Court of Victoria to stay execution of a warrant of possession of a property at 50 Warringa Road, Frankston until the hearing and determination of her application for special leave to appeal from the orders of the Court of Appeal of Victoria made on 2 June 2000.

When the matter first came on for hearing before me I made an order restraining the Sheriff from executing the warrant until today, 8 November 2000, or further order, because the applicant indicated that it was intended to seek leave to amend the application for special leave to appeal recasting it radically.  The application which is now made, is made against the background of litigation between the parties, some of the detail of which it is desirable to notice.

Grayridge Pty Limited, the respondent, brought action in the Supreme Court of Victoria for possession of the land I have mentioned.  Grayridge alleged that it was the second registered mortgagee of that land, of which Mrs Cousens was registered proprietor.  Mrs Cousens alleges that she holds the land on trust and that, in June 1997, before the registration of the instrument of mortgage, she had retired as trustee and been replaced by a company called Hillside Way Pty Limited, a company of which Mrs Cousens’ brother, Mr Gary John Lewer, was sole director and owner.  The present application has, it seems, been made having particular regard to the interests of Mr Lewer and his wife, who are resident on the land.

At the trial of the action in the Supreme Court, it was established that the money, the loan of which was secured by the mortgage in favour of Grayridge, had been taken by a man called Bulfin who had acted as an intermediary in negotiating the transaction of loan and mortgage.  The question at trial and on appeal was, therefore, a question concerning which party was to bear the consequences of Bulfin’s fraudulent conduct.

In June 1999 the trial judge, Mr Justice O’Bryan, gave judgment for Grayridge for possession of the land, together with judgment for the money sum secured by the mortgage.  The trial judge dismissed a counterclaim that had been brought by Mrs Cousens against Grayridge:  see Grayridge v Cousens (1999) VSC 199. Mrs Cousens appealed to the Court of Appeal of Victoria. As I have already said, on 2 June 2000 that court by majority (Justices Charles and Chernov, Justice Batt dissenting) dismissed the appeal: see Cousens v Grayridge Pty Limited (2000) VSCA 96.

In August Mrs Cousens applied to a single judge of the Supreme Court of Victoria for a stay of execution of the warrant of possession pending application to this Court for special leave to appeal.  That application was refused:  see Cousens v Grayridge Pty Limited (2000) VSC 343. On 19 October 2000 an order was made in the Supreme Court of Victoria directing the Sheriff to execute the warrant.

In the meantime, on 15 August 2000, outside the time prescribed, Mrs Cousens had filed application for special leave to appeal to this Court.  As originally framed, the application for special leave sought to agitate matters about the validity of legislative provisions establishing companies.  These were not matters that had been agitated in the courts below and none of the grounds of application for special leave, as originally framed, related to the question about which the Court of Appeal had divided in its opinion.

When the application for stay first came on for hearing before me counsel for the applicant indicated that the matters set out in the application for special leave to appeal would not be pursued and the case would be recast entirely.  In order to allow an opportunity for that to be done I made the temporary order to which I have referred earlier.

The application for special leave would now seek to agitate three or possibly four issues.  Again, the issues to which attention has chiefly been directed in the course of oral argument before me are matters that do not arise out of the division of opinion in the Court of Appeal.

First, it is said that the facts proved at trial would reveal that the solicitor who acted for the mortgagee Grayridge, and who was an officer of Grayridge, owed a duty of care to the mortgagor, the present applicant, that is, to a person who was not his client.

It was accepted that this was not a matter that was alleged or the subject of argument, whether at trial or on appeal to the Court of Appeal.  Moreover, as counsel for the respondent pointed out, the contention is one which, if it were open to be made, would be a contention of an entitlement to damages against the solicitor, not a party to the suit as presently constituted and not, at least on its face, a claim that would impeach the registered title of Grayridge as second mortgagee of the land.

Even if, as counsel for the applicant contended, the public importance of solicitors being held to account in their duties were such as to permit these matters to be taken into account on appeal in this Court, the other difficulties which are presented by the late stage at which it is raised, the course of evidence and argument below, and the remedy to which it would give rise, even if accepted, seem very large hurdles in the way of the applicant.

The second principal contention which it is sought to mount by the application for special leave is again said to be a matter of public importance because it relates to the duties of solicitors. It is said that the facts established at trial demonstrate that, contrary to the finding of the trial judge, the solicitor for the mortgagee was privy to the fraud of Bulfin and that thus under section 44 of the Transfer of Land Act 1958 (Vic) the folio of the register which is the registered second mortgage was “procured or made by fraud” and is, therefore, void as against the applicant and “no party or privy to the fraud shall take any benefit therefrom.”

Again, there is the difficulty that a case of this kind was not mounted at trial or on appeal.  That difficulty is the more acute when it is recognised that the allegation now sought to be raised is one of fraud.  Especially is that so when at trial it seems that the allegation made, not by the parties, but by Bulfin, was that the solicitor concerned had paid him a cash commission after he had arranged the relevant mortgage, and this allegation was denied by the solicitor, whose evidence the trial judge accepted.

The course of events at trial being of this kind, there are, in my view, very considerable hurdles in the way of the applicant now making a successful application for special leave to appeal on this proposed ground.

The third and fourth bases of the application for special leave are related.  The third is that the dissenting member of the Court of Appeal, Mr Justice Batt, was right in his analysis of the matter and the majority, Justices Charles and Chernov, were wrong.

The point which divided the Court of Appeal concerned the authority which Bulfin had to receive the net proceeds of the loan which was secured by the mortgage now in question.  The majority was of the opinion that the course of prior transactions in which Bulfin and Mr Lewer had engaged revealed that Bulfin should be taken to have had implied authority to receive the net proceeds secured by the mortgage in favour of Grayridge.  By contrast, Justice Batt was of the view that the course of prior transactions did not support that conclusion and that, there being no relevant demonstrated course of dealing by mortgage brokers generally, his Honour concluded, contrary to the view of the trial judge, that it was not shown that Bulfin had the necessary authority by implication.

Upon examination then it is apparent that the point which divided the Court of Appeal appears to have been a point founded largely, if not entirely, in the construction of the particular course of transactions between relevant parties.

The fourth point which the applicant would seek to agitate is, as I have said, related to the third point.  It is said that the Court of Appeal should have concluded that the applicant was not estopped by the covenants in the mortgage instrument, presumably from contending either that Bulfin did not have relevant authority or that the money had not been received by the applicant.

The difficulty which this contention encounters is that the whole basis for the litigation at trial and on appeal has, in the events that have happened, been that it is open to the applicant to contend that she did not receive the money, receipt of which is recited in the mortgage instrument.  It seems to me, therefore, that the further arguments about estoppel which the applicant would seek to agitate do not add in any significant measure to the burden of the contentions which she would seek to make under the third of the headings I have identified.

The principles which are to be applied in granting a stay of proceedings, or similar orders, have been considered in many decisions of this Court.  I have said before that the jurisdiction to grant a stay is not to be regarded as confined by the particular statements that may be made from time to time in disposing of particular applications.  Nevertheless, the various questions mentioned by Justice Brennan in Jennings Construction Limitedv Burgundy Royale Investments Pty Ltd (1986) 161 CLR 681, particularly at 685, are questions of a kind that it will ordinarily be necessary to address in this connection.

For the purposes of disposing of the present application I am prepared to assume, without deciding, that a stay, or similar order, is required in this matter to preserve the subject matter of the litigation.  There may be a real and lively question whether the applicant has failed to take whatever steps are necessary to seek a stay from the court in which the matter was pending.  At least at first sight, it would seem to me to be insufficient to pray in aid the application that was made to a single judge of the Supreme Court.  Ordinarily, at least, it would seem to me to be necessary that application be made to the intermediate Court of Appeal rather than to a single judge, save on direction by that intermediate court.  Moreover, there may be real and lively questions about whether granting a stay would cause loss to the respondent of a kind which would weigh the balance of convenience between the parties against the applicant.  Those are all questions which, as I say, I do not decide.

In the end it is sufficient for me to conclude, as I do, that there are insufficient prospects that special leave to appeal would be granted on the amended bases now advanced to warrant granting the orders which the applicant seeks.  The application is, therefore, dismissed.

MR COOK:   I seek costs, your Honour.

HIS HONOUR:   Yes.  Can you resist costs, Mr Fitzgibbon?

MR FITZGIBBON:   I do not wish to be heard on that, your Honour.

HIS HONOUR:   Yes, application dismissed with costs and I will certify for the attendance of counsel.  I will adjourn.

AT 11.04 AM THE MATTER WAS CONCLUDED