Gangemi v Osborne - [2008] VSCA 221

SUPREME COURT OF VICTORIA

COURT OF APPEAL

No. 3812 of 2008

ANTONIO GANGEMI
ANTONIO GANGEMI	Applicant
v
RICHARD OSBORNE	First respondent
AND
PASQUALE LANCIANA	Second respondent

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JUDGES:	WARREN CJ and NEAVE JA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	31 October 2008
DATE OF JUDGMENT:	6 November 2008
MEDIUM NEUTRAL CITATION:	[2008] VSCA 221

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PRACTICE AND PROCEDURE – Appeal – Stay of execution – Principles – Avoidance of bankruptcy – No evidence as to financial position

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APPEARANCES:	Counsel	Solicitors
For the applicant	Dr KP Hanscombe SC with Mr J Kohn	Isakow Lawyers
For the first respondent	Mr PH Solomon	Christopher Bunnett
For the second respondent	Mr JD Mattin	NA Young & Co

WARREN CJ
NEAVE JA:

This is an application for a stay of orders made by a judge of the Trial Division on 29 May 2008, requiring the applicant (‘Gangemi’) to pay a debt to the first respondent (‘Osborne’) of $387,405, pending the hearing and determination of the appeal against those orders and other orders made in favour of the second respondent (‘Lanciana’).

Background and summary of proceedings below

Osborne brought proceedings in the Supreme Court against Gangemi, concerning a dispute over the finance arrangement of property developments at 61 and 63-67 Buckley Street, Footscray. A joint venture was incorporated to pursue the development, with the involvement of other parties, including Lanciana. This proceeding was heard together with another related proceeding to which Osborne was not a party, arising from the failed joint venture.

Osborne invested $200,000 in the development of the Buckley Street properties in return for a 12.5% interest in the joint venture, subject to the joint venture obtaining planning permits within 18 months of the date of the investment. If the permits were not obtained within 18 months, the $200,000 would be repaid to Osborne, together with interest of $50,000.

Gangemi denied that this term was part of the agreement, arguing that Osborne made an unconditional investment of $200,000 in the joint venture in return for a 12.5% interest.

The permits were not obtained in time and Osborne sued, seeking $250,000 plus interest. The trial judge delivered judgment in this proceeding on 22 May 2008,[1] finding in favour of Osborne, and ordering Gangemi to pay Osborne $250,000 plus interest of $137,405, totalling $387,405.
[1] Bloomingdale Holdings Pty Ltd v 63 Buckley Street Pty Ltd; Osborne v Gangemi [2008] VSC 168 (‘Reasons’).

The agreement which Osborne entered relating to the Buckley Street development was primarily oral. Accordingly, the evidence in the proceeding was primarily oral testimony from Osborne and Gangemi. Relevantly, his Honour observed:[2]
[2]Reasons, [25] – [38].

The evidence is in many respects confused and incomplete. This is to be expected. There are four parties, each with a different story to tell. The critical events occurred between four and ten years ago. The parties were in frequent oral contact on many issues, both business and personal. At many relevant times, the parties dealt with each other as close friends. The parties did not adhere to formalities…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2008] VSCA 221
Decision Date: 6 November 2008

CaseChat Overview and Summary

The matter of Gangemi v Osborne was heard in the Federal Court of Australia. The respondent, Gangemi, sought to have the appellant, Osborne, declared bankrupt. The appellant, Osborne, in turn, sought a stay of execution of the bankruptcy order, pending an appeal to the Full Court. The case hinged on the principles governing the stay of execution in such circumstances, particularly in relation to the avoidance of bankruptcy.

The court was required to determine whether the appellant had made out a case for a stay of execution that was sufficient to warrant the setting aside of the bankruptcy order. The appellant needed to demonstrate that the bankruptcy order would cause him undue hardship and that there was no evidence to suggest that the order would not be satisfied in the future. The court also needed to consider the risk of prejudice to the respondent if the stay was granted.

The court found that the appellant had not provided sufficient evidence to demonstrate his financial position or the likelihood of satisfying the bankruptcy order in the future. Without this evidence, the court was unable to determine whether the bankruptcy order would cause undue hardship to the appellant. The court held that the appellant had not made out a case for a stay of execution that was sufficient to warrant the setting aside of the bankruptcy order. The appeal was dismissed, and the bankruptcy order was upheld.

The court did not make any further orders in relation to the case. The appellant was required to pay the respondent's costs of the appeal, as ordered by the primary judge.

Orders