Fu v Bondi Junction Prime Pty Ltd

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FEDERAL COURT OF AUSTRALIA

Fu v Bondi Junction Prime Pty Ltd [2024] FCA 1222    

File number(s): NSD 1442 of 2024
Judgment of: GOODMAN J
Date of judgment: 22 October 2024
Catchwords: PRACTICE AND PROCEDURE – application for stay of orders made by the Federal Circuit and Family Court of Australia (Division 2) pending an appeal from those orders – stay granted subject to condition and until further order   
Legislation:

Competition and Consumer Act 2010 (Cth), sch 2, ss 4, 18

Federal Court of Australia Act 1975 (Cth), s 29

Federal Court Rules 2011 (Cth), r 36.08

Conveyancing Act1919 (NSW), s 55
Cases cited:

Alexander v Cambridge Credit Corporation Ltd (1985) 2 NSWLR 685

Bethell v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2021] FCA 756

Dubow v Fitness First (Australia) Pty Ltd [2010] FCA 660

Flight Centre Ltd v Australian Competition & Consumer Commission [2014] FCA 658

Fu v Bondi Junction Prime Pty Ltd [2024] FedCFamC2G 513

Fu v Bondi Junction Prime Pty Ltd [2024] FedCFamC2G 979

Redbubble Ltd v Hells Angels Motorcycle Corporation (Australia) Pty Limited [2022] FCA 1039; (2022) 168 IPR 74
Division: General Division
Registry: New South Wales
National Practice Area: Commercial and Corporations
Sub-area: Regulator and Consumer Protection
Number of paragraphs: 27
Date of hearing: 21 October 2024
Counsel for the Appellant: Mr J M Ireland KC
Solicitor for the Appellant: DC Balog & Associates
Counsel for the First Respondent: Mr D K Smith
Solicitor for the First Respondent: StevensVuaran Lawyers
Solicitor for the Second Respondent: No appearance by the second respondent

ORDERS

NSD 1442 of 2024
BETWEEN:

CHAU BIN FU

Appellant
AND:

BONDI JUNCTION PRIME PTY LIMITED

First Respondent

PARK COAST REALTY PTY LTD

Second Respondent

ORDER MADE BY:

GOODMAN J

DATE OF ORDER:

22 OCTOBER 2024

THE COURT ORDERS THAT:

1.On the condition that by 30 October 2024, the appellant pays into either:

(1)an interest bearing account in the name of and operated jointly by the solicitor for the appellant and the solicitor for the first respondent; or

(2)the Federal Court of Australia’s Litigants Fund,

the sum of $56,000, the operation and enforcement of orders 1 to 7 and 9 made on 2 October 2024 by the Federal Circuit and Family Court of Australia (Division 2) in Fu v Bondi Junction Prime Pty Ltd [2024] FedCFamC2G 979 be stayed, until the determination of the appeal in this proceeding (NSD1442 of 2024), or until further earlier order.

2.Costs be reserved.

Note:   Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.


REASONS FOR JUDGMENT

GOODMAN J

A.       INTRODUCTION

  1. The appellant, Mr Fu, seeks the continuation of a stay of certain orders made by the primary judge on 2 October 2024 in the Federal Circuit and Family Court of Australia (Division 2) Fu v Bondi Junction Prime Pty Ltd [2024] FedCFamC2G 979 (PJ2). Those orders gave effect to the primary judge’s reasoning in Fu v Bondi Junction Prime Pty Ltd [2024] FedCFamC2G 513

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Details
Case
[2024] FCA 1222
Decision Date

CaseChat Overview and Summary

In the matter of Fu v Bondi Junction Prime Pty Ltd, the appellant, Mr Fu, sought a stay of orders made by the Federal Circuit and Family Court of Australia (Division 2) pending an appeal from those orders. The primary judge had dismissed Mr Fu’s claim for the setting aside of a contract for the purchase of an apartment on the basis that he had entered into the contract due to misleading or deceptive conduct by the respondents, Bondi Junction Prime Pty Ltd and Park Coast Realty Pty Ltd. The primary judge had found that the respondents had represented that the apartment building would comprise 11 floors, which was misleading or deceptive in the absence of proof that they had reasonable grounds for making that representation. The primary judge had held that the respondents had reasonable grounds for making the representation, and thus Mr Fu's claim failed. The primary judge also granted relief to the respondents on their cross-claim.

The legal issues before the court were whether the primary judge had erred in concluding that the respondents had reasonable grounds for their representation about the number of floors in the apartment building and whether the primary judge had misapplied the provisions of the Conveyancing Act 1919 (NSW) in refusing to order the return of the deposit paid by Mr Fu. The court considered the appeal grounds submitted by Mr Fu, including that the primary judge had erred in finding that the evidence of one of the respondents' directors was sufficient to discharge the onus of proof placed on the respondents.

The court found that there was a rational prospect of success of the appeal, particularly in relation to the primary judge's assessment of the evidence of the respondents' director regarding the sufficiency of the grounds for the representation about the number of floors in the building. The court also considered that the balance of convenience favoured granting the stay, as there was a risk that the respondents might dissipate the deposit funds if the stay was not granted. Therefore, the court granted the stay on the condition that Mr Fu pay a specified sum into an interest-bearing account or the Federal Court of Australia's Litigants Fund by a certain date.

The effect of the orders is that the operation and enforcement of the primary judge's orders are stayed until the determination of the appeal, or until further order. Costs were reserved.

Orders

Orders of the court

1. On the condition that by 30 October 2024, the appellant pays into either:

(1) an interest bearing account in the name of and operated jointly by the solicitor for the appellant and the solicitor for the first respondent; or

(2) the Federal Court of Australia’s Litigants Fund,

the sum of $56,000, the operation and enforcement of orders 1 to 7 and 9 made on 2 October 2024 by the Federal Circuit and Family Court of Australia (Division 2) in Fu v Bondi Junction Prime Pty Ltd [2024] FedCFamC2G 979 be stayed, until the determination of the appeal in this proceeding (NSD1442 of 2024), or until further earlier order.

2. Costs be reserved.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

References in these reasons for judgment to paragraphs of PJ1 are to such paragraphs as they exist following corrections made to PJ1 by the primary judge on 26 September 2024.B. BACKGROUND The background described below is taken from PJ1. On 3 June 2015, Mr Fu entered into a contract with the first respondent (BJP) – a company developing land in Bondi Junction that was to include an apartment building – for the purchase of an apartment “off the plan” in that building. Mr Fu entered into the contract at an event hosted by BJP which he attended with his wife (Ms Mao) and others. Representatives of BJP and of the second respondent – Park Coast Realty Pty Ltd (PCR), a real estate agent engaged by BJP for the marketing and sale of the apartments in the proposed apartment building – were present, including Mr Felix Milgrom, one of two directors of BJP heading the development project. Upon entry into the contract and in accordance with its terms, Mr Fu paid a deposit of $160,000, representing 10 per cent of the purchase price, which was placed into an interest bearing account operated by BJP’s then solicitors. Mr Fu contended before the primary judge that he entered into the contract by reason of various representations made to him, including representations to the effect that the apartment would be a penthouse and on the eleventh and uppermost floor of the proposed apartment building. Subsequently, Mr Fu learnt that the proposed apartment building would have a twelfth floor. He declined to complete the contract, and commenced the proceeding below. In that proceeding, Mr Fu sought orders for the setting aside of the contract and for the return of the deposit on the basis that his entry into the contract was the product of misleading or deceptive conduct by BJP and PCR, in contravention of s 18 of the Australian Consumer Law (ACL), being schedule 2 to the Competition and Consumer Act 2010 (Cth). Alternative relief was sought pursuant s 55(2A) of the Conveyancing Act1919 (NSW). BJP brought a cross-claim pursuant to which it sought relief based upon the contract including for the retention of the deposit and for losses caused by Mr Fu’s failure to complete the contract. The primary judge dismissed Mr Fu’s claim and upheld BJP’s cross-claim. Her Honour did not accept that various oral representations – including that the apartment would be a “penthouse”, on the uppermost floor of the apartment building – had been made. However, the primary judge found that in all of the circumstances, including contemporaneous documentation, BJP and PCR had represented that the apartment building, when constructed by BJP, would comprise 11 floors of apartments (PJ1 [111] and [112]). It was common ground that such a representation was as to a future matter, which was misleading or deceptive absent proof that BJP and PCR had reasonable grounds for making it, by dint of the operation of s 4 of the ACL. The primary judge was persuaded that BJP and PCR did have such reasonable grounds primarily on the basis of evidence given by Mr Milgrom and various contemporaneous documents (PJ1 [123] to [128]).

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

The effect of orders 8 and 10 is to stay the operation of the declaration made on 6 June 2024 and orders 1 to 7 and 9 made on 2 October 2024. The primary judge’s reasoning for the making of the stay orders is set out at PJ2 [97] to [100], as follows:Consideration97The Draft Notice of Appeal articulates five grounds. I will not refer to all of them. Ground 3 contends an error in concluding that the evidence of one of the two directors of the first respondent at the relevant time, Mr Milgrom, was sufficient to discharge the onus of proof placed on the respondents that the representations made to the applicant were made on reasonable grounds. Ground 4 contends that Mr Milgrom’s evidence that “developers amended plans constantly” did not justify the respondent’s decision to add a twelfth floor to the building.98Noting the low threshold of arguable case, I consider it is arguable that, had I not found the evidence of Mr Milgrom sufficient to discharge the onus on the respondents, the result may well have been different. I find that there is some rational prospect of success of the appeal such as to warrant a stay of the orders until determination of the appeal.99I accept the submissions of the applicant that in circumstances where the first respondent is a single purpose company, and that it is no longer trading, there is no evidence that it has any assets except for the disputed deposit. Absent the stay, should the first respondent receive the funds which are in Mr St Leon’s trust account, there is no impediment to it dissipating those funds should it so wish.100 The balance of convenience leans in favour of granting the stay. On 14 October 2024, Mr Fu filed a notice of appeal in this Court. The grounds of appeal are as follows:1.The primary judge erred by failing to find that the Respondents represented in trade or commerce to the Appellant prior to the execution by him of the Contract for Sale of Land dated 3 June 2015 that the apartment that he was purchasing would be located on the top floor of the proposed apartment building.2.The primary judge having found at paragraph [114] of her Honour’s reasons for judgment published on 6 June 2024 (Reasons 1) that the Respondents represented to the Appellant that the apartment building that he was purchasing “off the plan” when constructed by the First Respondent would “comprise of” (sic) 11 floors of apartments erred in law by holding that the Respondents had discharged the onus of proof placed upon them pursuant to S.4 of the Australian Consumer Law (ACL) to establish that the representations found to have been made by them being were made on reasonable grounds and that their conduct was misleading or deceptive.3.In the event that her Honour the primary judge had found, as it is respectfully submitted she ought to have found, that it was represented by the Respondents to the Appellant in trade or commerce that the apartment he was purchasing “off the plan” would be located on the top floor of the proposed apartment building, then her Honour ought to have held that the Respondents had not discharged the onus of proof placed upon them pursuant to S.4 of the ACL to establish that the representations made by them being were made on reasonable grounds and that their conduct was misleading or deceptive.4.The primary judge erred in concluding that the evidence of Mr Milsom, one of the directors of the First Respondent, was sufficient to discharge the onus of proof placed upon the Respondents to show that the representations made to the Appellant were made on reasonable grounds.5.The primary judge erred in concluding at paragraph [128] of Reasons 1 that the circumstances established by the Respondents concerning their decision to add a twelfth floor to the building was justified on the basis of Mr Milgrom’s evidence that “developers amend plans constantly” and that this assertion somehow constituted or contributed to reasonable grounds for the purposes of S.4 of the ACL.6.Acting upon the errors of the primary judge identified in appeal grounds 1 to 5 above, her Honour misapplied the provisions of S.55(2A) of the Conveyancing Act 1919 (NSW) in refusing to order the return to the Appellant of the deposit paid by him under the Contract.7.In the orders made and the reasons for judgment published by the primary judge on 2 October 2024 (Reasons 2) her Honour erred in concluding at [47] that it was too late for the Appellant to submit that the First Respondent/Cross Claimant had not proved its entitlement to damages for a sum of $27,780 by way of additional agent’s sale commission.8.Her Honour at paragraph [48] of Reasons 2 erred in holding that the First Respondent had established an entitlement to damages for a sum of $27,780 by way of additional agent’s sale commission.(The references to paragraphs 114 and 128 of PJ1 should be references to paragraphs 112 and 126 in view of the corrections made to PJ1 by the primary judge.)C. THE PRESENT APPLICATION