Dowker & Anor v Paoletti

[2015] HCATrans 145

[2015] HCATrans 145

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Adelaide  No A11 of 2015

B e t w e e n -

MARGARET LEE DOWKER

First Applicant

GREGORY JOHN BENNETT

Second Applicant

and

NICK PAOLETTI

Respondent

Application for stay

NETTLE J

TRANSCRIPT OF PROCEEDINGS

FROM CANBERRA BY VIDEO LINK TO ADELAIDE

ON MONDAY, 15 JUNE 2015, AT 2.15 PM

Copyright in the High Court of Australia

MS M.L. DOWKER appeared in person.

HIS HONOUR:   Ms Dowker, you appear for yourself and Mr Bennett?

MS DOWKER:   Yes, your Honour.

MR BENNETT:   Yes.

HIS HONOUR:   Is there an appearance for the respondent?

MS McFARLANE:   Ms Nina McFarlane, and Nick Paoletti will be here shortly, your Honour.

HIS HONOUR:   Thank you.  I am sorry, who are you – you said ‑ ‑ ‑

MS McFARLANE:   Nina McFarlane.

HIS HONOUR:   I beg your pardon?

MS McFARLANE:   Nina McFarlane.

HIS HONOUR:   Thank you.  Ms McFarlane, whom did you say would be here shortly?

MS McFARLANE:   Nick Paoletti.

HIS HONOUR:   Yes.  Ms McFarlane, could you let me know what your interest in this matter is please?

MS McFARLANE:   I am Nick Paoletti’s partner for the last 30 years.

HIS HONOUR:   Thank you.  And how far away do you think Mr Paoletti is?

MS McFARLANE:   He will only be a few minutes, your Honour, and I will be representing Paoletti.

HIS HONOUR:   Are you admitted to practice, Ms McFarlane?

MS McFARLANE:   I beg your pardon, your Honour?

HIS HONOUR:   Are you admitted to practice as a barrister and solicitor?

MS McFARLANE:   No, I am not, I am a McKenzie friend.

HIS HONOUR:   Yes, I see.  I will stand down for a few minutes until Mr Paoletti arrives.

AT 2.17 PM SHORT ADJOURNMENT

UPON RESUMING AT 2.26 PM:

MR N. PAOLETTI appeared in person.

HIS HONOUR:   Mr Paoletti.

MR PAOLETTI:   Yes, your Honour.

HIS HONOUR:   You appear for yourself in this matter?

MR PAOLETTI:   I have my partner with me at the same time.

HIS HONOUR:   She is there to advise you, as I understand it, but I take it you are appearing alone without legal representation.  Is that correct?

MR PAOLETTI:   Correct, your Honour.

HIS HONOUR:   Thank you.  You may take a seat.  Ms Dowker and Mr Bennett, I have read the papers which have been filed in support of your application for a stay of execution pending the hearing of your special leave application.  As I understand the position, what you are seeking is that the orders which were made by the Full Court dismissing your appeal from the District Court judge’s orders which revoked the stay on his previous orders for your vacation be stayed pending the hearing in this Court.  Is that the position?

MS DOWKER:   Yes, your Honour.

HIS HONOUR:   And that is put on the basis, as I understand it, that you dispute the judgment of the Full Court.  Is that correct?

MS DOWKER:   Yes, your Honour.

HIS HONOUR:   I also understand from an affidavit that was filed in support of your application that you have instituted another proceeding, started another action, in the Supreme Court seeking a rescission – that is the setting aside of the contract of sale of your home to Mr Paoletti.  Is that the position?

MS DOWKER:   That is right, your Honour.

HIS HONOUR:   Can you tell me how far that action has now proceeded please?

MS DOWKER:   Well, it has come to the High Court now.  We were told to – when we went to the Supreme Court on 6 May the judge gave us the opportunity to bring this matter further to the High Court.

HIS HONOUR:   That was Mr Justice Nicholson?

MS DOWKER:   Yes, your Honour.

HIS HONOUR:   He granted you a stay so you could come here.  But in addition to this proceeding I had understood that you have started another action against Mr Paoletti and the bank to set aside the sale of your home.  Is that so?

MS DOWKER:   We are about to, your Honour.

HIS HONOUR:   You have not yet ‑ ‑ ‑

MS DOWKER:   …..the unconscionable sale of the property and also seeking taking action against Mr Paoletti for compensation.  And also we are applying for a Mareva injunction because Mr Paoletti states that he is – may go bankrupt, cannot afford two mortgages.  Whilst we are seeking to reclaim our property, in the Court we are applying for a Mareva injunction.

HIS HONOUR:   Yes, I see.  But you have not yet begun that action.  Is that the position?

MS DOWKER:   I have got the paperwork all ready to file it, yes.

HIS HONOUR:   All right.  Do you have legal assistance in relation to that action or you are doing it by yourselves?

MS DOWKER:   No, your Honour, I am afraid we have to do it on our own.  We cannot afford lawyers, and I have sought a lot of legal help, and even the free legal help, they will not – cannot assist us because they say it is too complicated and it is far above their knowledge a lot of it.  So we have just had to battle on ourselves and find out what we can, where we can, and proceed the way we are.

HIS HONOUR:   Now, looking at the Full Court’s judgment, it appears that you entered into some sort of oral arrangement with Mr Paoletti when you sold the home to him that he would give you a lease of at least two years.  Is that correct?

MS DOWKER:   He told us verbally before that that we had unconditional rent there, do not worry about banks and mortgages and evictions any more, get on with your life and live it how you want to and be happy.  That is his words.  And he also said I have got no problems with your animals.  And then about – it was about a month after the sale, on 28 May the sale was, 26 June we were first contacted by these property managers, an introduction letter, and then it was two weeks again after that, 9 July, when they actually came to our place with the contract, tenancy contract, to sign it.  And there had been little or no contact in‑between and we were not advised when to start paying rent.  There was no contact or anything up until then.

HIS HONOUR:   Yes, thank you.  Mr Paoletti, is there anything that you want to say in relation to this application?

MR PAOLETTI:   Yes, your Honour, I would like Nina to be able to have her say ‑ ‑ ‑

HIS HONOUR:   No, she cannot do that, she can only advise you.  She is not admitted to practice.  If you wish to consult with her, you may.

MR PAOLETTI:   I do, your Honour.

MS McFARLANE:   May I speak though, your Honour?

HIS HONOUR:   No, no, you can speak to your partner, by all means.

MS McFARLANE:   Okay.

MR PAOLETTI:   I am not allowed to have a McKenzie lawyer, your Honour?

HIS HONOUR:   You can have a lawyer if you wish, or Ms McFarlane can advise you and you can speak for yourself; it is your choice.

MR PAOLETTI:   Your Honour, when the property was actually for sale, the asking price for the property was $200,000 or less and there was a pleading in the advertisement for someone to actually give the current tenants an opportunity to be able to stay, and when I discussed that with the tenants to be, the only thing that was actually said there, your Honour, was the opportunity was…..as per having a tenancy agreement.  And the particular property manager that was put into the contract to start off with, so his name was actually in the contract, everything was actually in the contract.

And the tenancy, I gave two weeks rent‑free period for the tenants because at the time I thought they were in a very, very difficult situation and I wanted to try and help them.  I paid for all of their expenses.  I paid an extra $8000 over the top of the asking price.  I paid for all of their expenses.

HIS HONOUR:   Yes.

MR PAOLETTI:   The tenants were not in a position to actually sell themselves, your Honour.  There was a second party that represented them, it was their lawyer, and the dealings were done through their lawyer and the bank because the bank wanted nothing to do with the tenants ‑ and the bank’s lawyers, your Honour.

HIS HONOUR:   You have given notice to the tenants to vacate the premises, as I understand it.  Am I correct?

MR PAOLETTI:   Sorry, your Honour?

HIS HONOUR:   You have given notice to the tenants to vacate the premises?

MR PAOLETTI:   Absolutely, your Honour, because ‑ ‑ ‑

HIS HONOUR:   How quickly are you seeking access to the premises?

MR PAOLETTI:   Zero, your Honour.

HIS HONOUR:   Have you put the property up for sale yet?

MR PAOLETTI:   No, no, your Honour.  We have been waiting 12 months.

HIS HONOUR:   It would take some time to do that, I assume.

MR PAOLETTI:   Well, at this particular stage, your Honour, I mean, we have been around and around the mulberry bush…..times where the tenants were supposed to have already left, but there has been continuous appealing to get to this point over things that I completely disagree with because we have things here all in writing.  I cannot understand how the tenants can be making up other stories outside of things they have actually signed.

HIS HONOUR:   Thank you, you may have a seat.  Ms Dowker, Mr Bennett, is there anything that you wish to say in response to what Mr Paoletti has put?

MS DOWKER:   Yes, your Honour.  First off, we have been told we were the sellers.  We had nothing to do with the sale.  We were just the vendors on the piece of paper, but we had no say in anything.  The bank and the bank’s lawyers made all the calls, made all the conditions, and we were induced into this sale by Mr Paoletti with false and misleading statements that we could continue to stay on and rent and there would be no problem with our animals and he has just used our animals as an excuse for eviction because he has run out of other options.  And we have not made anything up.

We are fighting for our rights.  We are fighting to reclaim our property back because it was an unconscionable sale.  It was the bank’s duty to sell our property for as much as they could and their excuse was we just wanted rid of it, and I have got that in writing.  And this is not the duty of the bank to do this, and we are challenging this and other things in the Court about the bank’s conduct of sale for the property and we were just misled into this.

We were at the time very ill.  We could not cope to move.  We were offered 23,000 by the bank to be packed up and moved, including 8000.....and he had only said 12 months.  We would have probably had to accept the offer because we could not have been in that situation another 12 months to pack up and move without help.  And we had no help, we had no money, and the bank were quite aware of our situation, this is why they offered the help to be packed up and moved, because we got nothing at all out of the sale of the property at all, and everything we have worked for is in this property, including our super and our payout.  We have got absolutely nothing now.

We were just misled by Mr Paoletti, and there was lack of contact.  That is the whole problem.  He failed to come around in that three weeks after he made contact with us to say he would buy the property, and he only lives two streets away, to come over and meet us to discuss everything…..done by a licensed builder so he would know what the property was…..things about the property…..animals.  We could have told him what he wanted to know.

He left it the day before settlement and he knocked on the door and came in the house with…..laughing and said, I had better stick my head in the door to say I have seen the place before I go and sign for it, and it was a quick five minutes through the house, 10 minutes around out on the property out the back, and as he was going he said, I have got no problem

with your animals and just get on with your lives and do not worry any more, just go on living here how you were.  Forget about evictions and things.

HIS HONOUR:   Yes.

MS DOWKER:   They were his words.  There has been lack of communication because after that we did not hear anything until this property manager has contacted us on 26 June.  We did not – were not given a date to start paying rent.  We did not know when we had to start paying rent, so we assumed when we thought the three weeks was up to start paying rent and apparently, according to the contract they had made two weeks after that they had put us in arrears with the rent and we were not advised of this.  We have been accused of being in arrears with the rent – tenancy…..and it has just been lack of contact, basically, the whole thing, right the way through.

Even now…..Paoletti, when was the last time he made contact, and he said over 12 months, and the judge was sort of taken back by it, because Mr Paoletti did not want to get involved with us, to know us, all he wanted – he saw it was an opportunity to get a $300,000 property for 200,000, to get rid of us, lead us into rental – get rid of us as soon as he got the property and to either go on renting it at a higher price or sell it and make a profit.  And there was no agreement made other than the $250 a week for rent.  It has never been discussed that the rent would change.  There is nothing in the lease to say the rent would increase, and there was nothing verbally said the rent would be increased.  And now, in the last 12 months, we do not even have a rental contract, but we have still been paying the rent and the water, and I believe we are $250 in front with the rent and $167 in credit with the water.

HIS HONOUR:   Thank you.

MS DOWKER:   And we – for us to be forced out of our home now ‑ I am supposed to be in hospital having major spinal surgery and my condition is deteriorating daily and I have been told by the doctors and the neurosurgeon two weeks ago that if I do not have surgery soon it may be irreparable as the damage to the nerves in the base of my spine will not be able to be repaired.  I could get gangrene in my…..my life and keep putting it on hold because of Mr Paoletti trying to evict us continually, fighting this ‑ ‑ ‑

HIS HONOUR:   Thank you, Ms Dowker.

This is an application pursuant to rule 8.07.2 of the High Court Rules 2004 for a stay of execution pending the hearing and determination of an application for special leave to appeal from the judgment and orders of the Full Court of the Supreme Court of South Australia (Kourakis CJ and Stanley and Parker JJ) which was given on 13 April 2015. The Full Court dismissed an appeal by the applicants against orders of a judge of the District Court that they give vacant possession of the respondent’s property of which the applicants were in possession as lessees.

The District Court judge had found that the applicants breached the lease by allowing dogs indoors in breach of an earlier order; by refusing the respondent’s agent lawful access to the property for the purposes of inspection; and by failing to pay rent timeously.  The Full Court held that the judge did not err in finding that the applicants had breached the order not to allow dogs indoors; that the rent and water charges had not been paid timeously or, at that stage, at all; and further that the applicants had refused to allow the respondent access to the premises for the purposes of inspection.

The District Court and the Full Court’s judgments were each without prejudice to the applicants’ right to bring a further proceeding alleging that they had been induced by misleading and deceptive conduct to sell the property to the respondent and to take a lease back for a period of at least 24 months; and it appears from the affidavit filed in support of the application and from what I have been told this afternoon by the first‑named applicant that it is intended to institute some such proceeding.  But it has not yet been instituted.

The present application for stay is, thus, put solely on the basis that it is necessary to preserve the subject‑matter of the appeal and that because of the applicants’ very serious health problems and straightened economic circumstances they would be especially prejudiced by being required to vacate their home.

The factors material to the exercise of this Court’s discretion to grant a stay of execution pending an application for special leave to appeal are relatively well established.  They include, first, whether there is a substantial prospect of success; secondly, whether the applicants have done what they could to procure a stay from the court below; thirdly, whether the grant of the stay would cause loss to the respondent and, fourthly, the balance of convenience:  Jennings Constructions Ltd v Burgundy Royale Investments Pty Ltd[No 1] (1986) 161 CLR 681 at 685 per Brennan J.

As at present advised, I consider that the chances of the applicants succeeding in their application for special leave to appeal are not particularly good.  The grounds of appeal do no more than repeat the essence of the argument which they advanced before the Full Court and stress the applicants’ serious states of ill‑health and straightened economic circumstances.  There is no identification of any error in the Full Court’s reasoning other than a forceful asseveration of dissatisfaction with the Full Court’s conclusion.

There is no dispute that the applicants have done what they could to procure a stay from the court below.  On 6 May 2015, Nicholson J granted a stay for a period of 28 days from 5 May 2015 in order to afford the applicants the opportunity to make this application.  There is also no direct evidence that the respondent would suffer a significant loss if a stay were granted, although there are some inculcations implicit in the material that that might be the case.  But, significantly, Nicholson J noted in his reasons for judgment that he was satisfied that the respondent had been considerably vexed by the applicants’ consistent failure to pay rent over time and by their serious failures to comply with the terms of the tenancy over a very lengthy period.

More significantly, however, even on the applicants’ own case, at least as it is recorded in the Full Court’s reasons for judgment, the applicants’ agreement with the respondent went no further than that they could remain in possession as tenants for at least 24 months from the date of 9 July 2013.  It therefore appears that they have now been in possession for almost the whole of the time upon which they agreed.  Thus, even if the applicants were successful in their application for special leave to appeal, and succeeded in the appeal, they would still be required to vacate the property.

So to say is not to overlook that the first‑named applicant has deposed in her affidavit in support of this application that the applicants intend to institute a further proceeding in which they will seek rescission of their sale of the property to the respondent, and it may be assumed that if they succeed in that new proceeding they would be entitled to retain possession.  But it is significant that even now, months after the Full Court’s determination, that proceeding has not yet begun.  And, thus, as was earlier noticed, the grounds of this application for stay are limited to preserving the subject matter of the application for special leave to appeal against the Full Court’s orders.  There is nothing to suggest that a stay has been sought to preserve the subject matter of the new rescission proceeding when, and if, it is commenced, and it is therefore not a relevant consideration for the purposes of this application.

On the basis of what is relevant, given what appear to be the applicants’ limited prospects of success on appeal, and given that even if successful on appeal they would still be required to vacate the premises, I am not persuaded that it is appropriate to grant a stay.  Accordingly, the application for stay is refused.  The Court will adjourn.

AT 2.48 PM THE MATTER WAS CONCLUDED