Cwalina v Rose
[2024] VSCA 253
•18 October 2024
| SUPREME COURT OF VICTORIA COURT OF APPEAL |
| S EAPCI 2024 0120 |
| PIOTR MACIEJ CWALINA | First applicant |
| and | |
| ZOFIA BOZENA MAJAK | Second applicant |
| v | |
| ALAN WESLEY ROSE | Respondent |
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| JUDGES: | MACAULAY JA and J FORREST AJA |
| WHERE HELD: | Melbourne |
| DATE OF HEARING: | 18 October 2024 |
| DATE OF ORDERS: | 18 October 2024 |
| DATE OF REASONS: | 28 October 2024 |
| MEDIUM NEUTRAL CITATION: | [2024] VSCA 253 |
| JUDGMENT APPEALED FROM: | [2023] VSC 721 (Tsalamandris J) |
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PRACTICE AND PROCEDURE – Injunctions – Applicants applied for injunction to restrain settlement of sale of property sold pursuant to court order – Application made at eleventh hour, after extensive delay – Applicants’ prospects of success on appeal poor – Substantial prejudice to respondent and bona fide purchaser for value if injunction granted – Application for injunction refused.
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| Counsel | |||
| Applicants: | Not applicable | ||
| Respondent: | Mr B Petrie with Mr J McNicol Smith | ||
Solicitors | |||
| Applicants: | In person | ||
| Respondent: | Byrnes Legal | ||
MACAULAY JA
J FORREST AJA:
Introduction and summary
Mr Cwalina and Ms Majak (the applicants) brought an urgent oral application seeking an injunction to restrain the settlement of the sale of property on Monday 21 October 2024. The application was made in conjunction with the filing, on the morning of Friday 18 October 2024, of an application for an extension of time within which to make an application for leave to appeal a decision made in the Trial Division of this Court.
The papers were served on the respondent, Mr Rose, and the Court was convened on Friday afternoon. After hearing from the parties, we refused the application for an injunction and otherwise adjourned the application for an extension of time within which to file an application for leave to appeal.
These are our reasons for doing so. In summary, we were not satisfied that the applicants’ prospective appeal had sufficient prospects of success to warrant the granting of an injunction, having regard to the balance of convenience and the likelihood that damages would be an adequate remedy in the event that the appeal is allowed.
Trial Division decision
After a trial for three days in August 2023, on 5 December 2023, Tsalamandris J gave judgment for Mr Rose, ordering the subdivision and partition of two lots of land — ‘1 Geofrey Street’ and ‘17 Helen Street’ — that he co-owned with Mr Cwalina. On each lot was a house. The critical issue at trial was whether a settlement agreement made between Mr Rose and Mr Cwalina pertaining to the division of interests in relation to the properties remained in force, and whether it should be specifically performed. Contrary to Mr Cwalina’s case, the judge found that Mr Rose had not repudiated the agreement; that it had not been terminated; and that it should be specifically performed.[1]
[1]Rose v Cwalina [2023] VSC 721, [243], [245] (Tsalamandris J) (‘Reasons’).
In orders made on 18 December 2023 to give effect to her judgment, the judge ordered the subdivision and partition of the properties, and that Mr Cwalina pay out a bank loan and pay contributions to solicitors and valuers to enable the subdivision and partition to take place. Upon the subdivision and partition, Mr Rose was to take 1 Geofrey Street and Mr Cwalina was to take 17 Helen Street. The judge further ordered that, in the event that Mr Cwalina did not comply with those orders, they should be vacated and, instead, the two lots be sold subject to the supervision of the Court.
In September 2023 — between the hearing in August and the judgment in December — the judge made an interlocutory injunction restraining Mr Cwalina, Mr Rose and Ms Majak from entering, occupying or taking possession of the two premises. That injunction was extended from time to time until judgment was handed down. At that point, the injunction was made final. It was to expire on the date that the land was partitioned or, alternatively, on the settlement of a judicial sale of the relevant property.
On 31 January 2024, upon proof that Mr Cwalina had failed to comply with the subdivision and partition orders, the judge vacated those orders and made further orders providing for judicial sale of the properties. The further orders included machinery orders that empowered Mr Rose to do things in Mr Cwalina’s name to effect those sales. The orders provided that the sales be carried out by public auction.
Mr Cwalina did not seek to appeal the judge’s orders to the Court of Appeal. Instead, he sought a stay of the orders in the High Court, which was refused on 18 April 2024.[2] He also sought special leave to appeal in the High Court. Special leave was refused on 6 June 2024.[3]
[2]Cwalina v Rose [2024] HCASJ 16.
[3]Cwalina v Rose [2024] HCASL 153.
Meanwhile, both lots of land were offered for sale at public auction in April 2024. 1 Geofrey Street was sold for the reserve price and settlement of that sale occurred on 20 June 2024. 17 Helen Street was passed in at public auction on 27 April 2024. Subsequently, the Helen Street property was sold by private treaty on 16 July 2024 for the reserve price of $1.15 million. That contract became unconditional on 1 August 2024 and settlement of the sale is due on 21 October 2024.
Both Mr Cwalina and Mr Rose issued summonses in the Trial Division during August and September 2024. Richards J dismissed the first of Mr Cwalina’s summons on the footing that it impermissibly sought to re-open the orders made by Tsalamandris J on 31 January 2024. Otherwise, Richards J accepted an apology on the part of Mr Rose for selling the Helen Street property by private treaty when the orders made by Tsalamandris J only permitted sale by public auction. As the sale by private treaty was effected subsequent to a failed public auction and was at the reserve price, Richards J held that the private sale was nonetheless consistent with the ‘spirit’ of the 31 January 2024 orders, and made orders varying the original orders so as to regularise what had occurred.[4]
[4]See, generally, an account of the chronology and orders set out in ‘Other Matters’ of the order by Richards J made on 23 September 2024.
The application
On the eve of the settlement of the sale of 17 Helen Street — that is, on Friday 18 October 2024 — Mr Cwalina and Ms Majak filed a number of documents in this Court[5] seeking:
[5]The applicants filed: Application for Leave to Appeal; Applicants’ Written Case; Applicants List of Authorities; Application for Extension of Time; Applicants’ submissions (for extension of time); Affidavit of Mr Cwalina affirmed 15 October 2024.
(a)an extension of time within which to appeal:
(i)the restraining orders made in September 2023 and thereafter;
(ii)the judgment of Tsalamandris J on 5 December 2023; and
(iii)the orders made on 31 January 2024 vacating the partition and subdivision orders and ordering judicial sale of the properties; and
(b)orders, pursuant to the appeal, in substance:
(i)declaring the injunctions against the applicants accessing 17 Helen Street a nullity;
(ii)setting aside the order for judicial sale of the properties and the costs orders made below;
(iii)restraining Mr Rose from selling 17 Helen Street or executing any transfer documents, or dealing with any of the contents of the property, until the determination of the application for leave to appeal and the appeal; and
(iv)ordering a retrial of the ‘consolidated matter’ between the applicants and respondent.
As stated, the applicants are Mr Cwalina and Ms Majak.[6] The respondent is Mr Rose. None of them live in Victoria.[7]
[6]Ms Majak’s interest in the application appears to be limited to her interest in personal belongings kept at 17 Helen Street. We were informed that she is an undischarged bankrupt. She has no registered proprietary interest in either of the properties the subject of the orders for judicial sale.
[7]Mr Cwalina’s address is in Warszawa, Poland; Ms Majak’s address is in Wamberal, New South Wales; and Mr Rose’s address is in Surrey Hills, New South Wales. It is understood that he currently resides in Ireland.
On 18 October 2024, the applicants appeared by video-link and Mr Rose was represented by counsel. The only matter of urgency on that day concerned the sale of 17 Helen Street, which was due to be settled on Monday 21 October. Otherwise, the application for an extension of time within which to file an application for leave to appeal could be dealt with at a later date, allowing proper time for service of documents upon Mr Rose, and the filing of responsive documents.[8] At the commencement of the oral hearing, the Court sought and obtained the applicants’ agreement that the hearing was to be confined to the question of whether there should be any order made to restrain Mr Rose from settling the sale of 17 Helen Street on Monday 21 October 2024.
[8]It is also to be noted that, presently, the Prothonotary is pursuing Mr Cwalina for charges of contempt of court arising from alleged breaches of the injunctions made in September 2023. A trial for those charges has been scheduled for a date in November 2024.
The relevant principles are those that apply for any injunctive relief, adapted to the circumstances of an appeal or, in this case, an application for leave to appeal which, in turn, requires the grant of an extension of time. First, the onus is upon the applicant to make out a prima facie case for relief. Then, the Court must consider whether the inconvenience that the applicant would likely suffer if the injunction is refused outweighs or is outweighed by the inconvenience or injury that the respondent would suffer if the injunction is granted. An injunction would ordinarily be refused if damages are likely to be an adequate remedy for any injury that the applicant may suffer if the injunction is refused.[9]
[9]Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618; [1968] HCA 1; Australian Broadcasting Commission v O’Neill (2006) 227 CLR 57; [2006] HCA 46.
For present purposes, the relevant relief that the applicants seek is the setting aside of the order for judicial sale. The injunction is sought to preserve (some of) the subject matter of that order for sale, namely, the property at 17 Helen Street. The applicants’ pathway to success more broadly involves, first, obtaining an extension of time within which to file an application for leave to appeal; secondly, obtaining leave to appeal and succeeding on the appeal; and, thirdly, succeeding on the appeal in such a way as this Court sets aside the order for sale of 17 Helen Street.
Do the applicants have a sufficient likelihood of success to justify the grant of an injunction to prevent the settlement of the sale?
In our view, the answer to that question is, patently, no.
Delay
As stated, the applicants need to obtain an extension of time within which to file their application for leave to appeal. To do so, they must explain and overcome their delay in bringing the application between 31 January 2024 (when the critical orders were made) and 18 October 2024. The same consideration applies to whether the injunction they now seek should be granted.
Not only is the delay inordinate but it is significant that rather than applying for leave to appeal to this Court from the decision of Tsalamandris J, the applicants have pursued a variety of different measures, including separate applications to the High Court for a stay of orders and for special leave to appeal, and various processes in the Trial Division of this Court seeking to reagitate the judge’s orders.
Regarding the applications to the High Court, the applicants knew on 18 April 2024 that their stay application was refused and, on 6 June 2024, that their special leave application was refused. On 17 May 2024, Tsalamandris J’s associate replied to an email from Mr Cwalina, which sought to have the judge’s orders revoked, by advising him to address his matters to the Court of Appeal. He did not do so.
Significantly, Mr Cwalina was informed by Mr Rose’s solicitor on July 2024 that 17 Helen Street had been sold. If not then, he was later advised that the contract was to be settled on 21 October 2024.
There is simply no adequate explanation for the applicants’ inordinate delay in bringing this application, both for leave to appeal and to restrain the settlement of the sale of 17 Helen Street. Indeed, the applicants have elected to pursue different courses when they could and should have brought an application for leave to appeal to this Court within time. Instead, they have sought to mount this application at the eleventh hour, if not later.
Prima facie case
Next, to the extent that we can understand them, the grounds of appeal appear to be weak in the extreme. According to the proposed notice of appeal there are four grounds:
(a)that the decision of the trial judge was affected by misrepresentation of facts and law amounting to unconscionable conduct, which led to perverting the course of justice;
(b)that the applicants were denied procedural fairness;
(c)that the trial judge was biased; and
(d)that the judgment was affected by substantial miscarriage of justice.
Lying behind those grounds are a plethora of assertions (none of which appear to be directed towards bias) which contend that the Court had no jurisdiction to make the restraining orders; that the order for judicial sale on 31 January 2024 was made on the basis of hearsay evidence which the applicants had no proper opportunity to meet; that the order for judicial sale was without jurisdiction; that Ms Majak was improperly removed as a party to the proceeding; and that there are constitutional issues to be determined.
Both in the written submissions, and in oral argument before us, the applicants — and particularly Mr Cwalina — focused on the alleged errors made by the judge in ordering the injunctions to restrain the parties from accessing the properties pending partition or sale. According to Mr Cwalina, those orders were responsible for, or at least influential, in the grant of the orders for sale of the properties.
On their face, none of the applicants’ grounds have obvious force, and some are difficult to understand. As stated, the critical dispute at trial was whether or not Mr Rose had repudiated the agreement. That issue seemed to turn on a question of fact about which the judge heard evidence from both parties and resolved in favour of Mr Rose.
Balance of convenience
The delay in making this application has prejudiced Mr Rose. To begin with, his counsel, familiar with the matter, was unavailable to appear on the urgent application. He had to urgently retain the services of alternative counsel who had to analyse the material and appear late the same afternoon to address the application. All of this is the doing of the applicants.
Additionally, during the period of that delay, Mr Rose has sold 1 Geofrey Street and settled it. It appears, from the affidavit of Mr Byrnes, that a great deal of work was required to sell and settle 1 Geofrey Street. In other words, part of the subject matter of the dispute at trial has already been dealt with pursuant to the Court’s orders, without intervention. Any remedy undoing the order for judicial sale of one of the properties is likely to affect the integrity of the relief granted.
Further, the interests of a bona fide purchaser for value — a third party — are now relevant. Ms Schneider has paid a deposit and obtained bank finance with which to settle the sale of 17 Helen Street. No attempt was made to serve papers on Ms Schneider. Plainly, she should have the opportunity to be heard on this matter. Except in rare circumstances (which do not exist here), a court would not interfere with the rights of a third party unless that party had a fair opportunity to be heard. The lack of opportunity for Ms Schneider to be heard lies squarely at the feet of the applicants, who have not only delayed in bringing the application but have failed to notify her of it.
Any interruption in the settlement of the sale of 17 Helen Street would not only affect the interests of Ms Schneider, but it would expose Mr Rose (as a vendor of the property) to the risk of forfeiture of the deposit or damages for breach of contract, and/or the loss of the sale, in addition to the throwing away of substantial costs incurred to date and the incurring of further costs. Mr Rose stands to lose the benefit of a determination made in his favour that resolves a long-standing dispute.
Finally, there is no suggestion that the 17 Helen Street house has special importance to either of the applicants apart from its contents (which were the subject of orders made by Richards J on 23 September 2024). Neither has deposed to any such significance. Mr Cwalina has been absent from Australia since 2009. Ms Majak resides in New South Wales. Orally, Mr Cwalina suggested that the house at 17 Helen Street was to be his ‘retirement’ property. In view of his long absence from Australia and the lack of any admissible evidence as to the significance of 17 Helen Street, we are not prepared to assign much weight to that assertion made in submissions.
As to the contents of the property, Mr Cwalina was informed by letter (by Mr Byrnes) as early as 21 August 2024 that he should contact the real estate agent to arrange for the removal of his and Ms Majak’s belongings from the property. Because of the injunction, they were not permitted to enter the property. On 23 September 2024, Richards J ordered that they make arrangements with the agent by 7 October 2024, failing which Mr Rose was authorised to make arrangements to remove the contents to ready the house for settlement. Neither applicant did so. Mr Rose granted a 48-hour extension. From 9 October onwards, the applicants continued to debate their obligations but, in any event, made no arrangement with the agent as ordered.
The vendors, of course, are obliged to give ‘vacant possession’ at settlement. At the oral hearing before us, the applicants maintained that their failure to remove their belongings was the fault of others: such as the agent, the removalists, and insurance companies. Their explanations were unpersuasive.
Decision
The only matter for decision was whether to restrain the settlement of the sale of 17 Helen Street on 21 October 2024. In summary, the important circumstances are these:
(a)to commence a process to obtain the relief of setting aside the sale the applicants first require an extension of time;
(b)the applicants’ explanation for 10 months of delay in bringing their application is extremely weak;
(c)the applicants’ proposed grounds of appeal do not point to good prospects of success, although we could not conclude that none are arguable;
(d)the judgment sought to be set aside has been partially performed;
(e)the purchaser of the property at 17 Helen Street, who has a beneficial interest in it, had not been notified of the application;
(f)the applicants did not produce any evidence of any special reason for needing to retain this particular property — neither live in it, and Mr Cwalina has been absent from Australia for 16 years;
(g)if an injunction was granted, Mr Rose as vendor will be exposed to the prospect of being in default under the contract of sale and liable to damages and, potentially, the loss of the sale; and
(h)Mr Rose stands to lose the benefit of a judicial determination in his favour.
Taking into account the hurdle of delay, which the applicants must overcome in order to commence an appeal, and the lack of any obvious merit in their proposed grounds of appeal, overall, we regard their prospects of obtaining final relief as poor. Considering all the circumstances, the balance of convenience weighs against granting an injunction. Further, on the evidence, it appears that damages would likely be an adequate remedy should the judge have made an error in granting judicial sale.
For these reasons, the applicants’ application for an injunction was refused.
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