Hoy v Hurst-Meyers (No 4)
[2023] ACTSC 17
•3 February 2023
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | Hoy v Hurst-Meyers (No 4) |
Citation: | [2023] ACTSC 17 |
Hearing Date: | 19 January 2023, 3 February 2023 |
DecisionDate: | 3 February 2023 |
Reasons Date: | 6 February 2023 |
Before: | Loukas-Karlsson J |
Decision: | See [52] |
Catchwords: | CIVIL HEARING – JURISDICTION, PRACTICE AND PROCEDURE – conditions to attach to stay – consideration of state of evidence before the Court – consideration of need for conditions in light of impending sale of Queanbeyan property – balance of convenience – least onerous conditions – conditions generally in form sought by plaintiff made – leave granted for the defendants to seek to vary conditions on provision of admissible evidence |
Legislation Cited: | Jurisdiction of Courts (Cross-Vesting) Act 1987 (ACT) |
Cases Cited: | Hoy v Hurst-Meyers (No 3) [2023] ACTSC 6 |
Parties: | Gavin Robert Hoy (Plaintiff) Ralph George Noel Nancy Hurst-Meyers (First Defendant) RHM Industries Pty Ltd (Second Defendant) |
Representation: | Counsel A Costin (Plaintiff) Self-represented (Defendants) |
| Solicitors Elringtons Lawyers (Plaintiff) Self-represented (Defendants) | |
File Number: | SC 383 of 2019 |
LOUKAS-KARLSSON J:
Introduction
1․On 20 January 2023, following an urgent hearing before me on 19 January 2023, I made orders staying the orders of Elkaim J made on 30 March 2019 in the substantive proceeding. The reasons for the granting of the stay are explained in my earlier judgment: Hoy v Hurst-Meyers (No 3) [2023] ACTSC 6 (Stay Reasons).
2․That judgment referred to the defendants as the applicants and the plaintiff as the respondent to the application. These reasons will adopt the same course for convenience. These reasons should be read in conjunction with the Stay Reasons and do not repeat various background matters.
3․As I outlined in the Stay Reasons, the granting of the stay would be subject to condition(s) to ensure that the respondent did not suffer prejudice as a result of the stay. In particular, I referred to the case of McLean Tecnic v Digi-Tech; Kalifair v Digi-Tech [2002] NSWCA 383; 55 NSWLR 737 at [28] where the Court stated:
A successful party is prima facie entitled to the fruits of his judgment. He is entitled to be protected, as far as practicable, from the risk that if the appeal fails assets which earlier were available to satisfy the judgment will no longer be available for that purpose. The Court will endeavour to see that a stay does not cause that kind of prejudice to a judgment creditor. An appellant may be required to provide appropriate security as the price of a stay which may make the judgment creditor a secured creditor. Otherwise a requirement for security is only intended to protect the status quo, that is the existing value of the judgment and not to improve the position of the judgment creditor by increasing that value.
4․Similar remarks apply to this case. The respondent is entitled, as far as is practicable, to security in a form that will protect the respondent’s rights if the appeal is unsuccessful. At the time of publishing my reasons in the Stay Judgment it appeared to be agreed between the parties that conditions should be imposed, with some disagreement as to the precise form they should take. I note that at that point in time the Court had not received submissions as to which set of proposed conditions was preferable.
5․In light of that matter, I granted leave for the parties to provide my chambers with written submissions. Both the applicants and the respondent provided written submissions and I provided leave for further submissions to be provided addressing some further matters arising from those submissions. The applicants and respondent provided submissions in relation to those matters on 1 February 2023.
6․As I will explain later in these reasons, it became apparent from the submissions that there was now disagreement between the parties as to whether there should be any conditions attached to the stay order. In particular, the applicants submitted in writing that there should be, in effect, no conditions attached to the stay (as they submit that the status quo adequately protects the respondent). In particular, the applicants submitted that an extant caveat over an Adelaide property was adequate to protect the respondent’s interest. I do not accept that submission which is contrary to the position taken before the Court in the seeking of the original stay order. It is clear that the respondent is entitled to be protected in a manner that is practicable. For reasons I will come to, I am not satisfied that the existing caveat is sufficient to protect the respondent’s interest.
7․However, in light of the emergence of that disagreement it became clear to me that it would be expedient to hear from the parties orally and the matter was listed before me on 3 February 2023. At the conclusion of that hearing, I made orders broadly in the form sought by the respondent. I also granted leave for the applicants to seek to vary those conditions if they could provide sworn evidence in support of the valuations they claimed for assets they hold. I will outline the reasons for making those orders later in these reasons.
8․There is one further matter to note, namely that the applicants, who continue to be self-represented by Mr Hurst-Meyers, annexed to both sets of their written submissions some documentary material. Leave had not been granted for that to occur and the material was not in the form of affidavit evidence.
9․An objection was made by the respondent by email as to the Court considering that material. I have looked at the relevant material. In my view, the material is not in a form that is suitable to support the submissions of the applicants. In particular, the documentary material is not annexed to or explained in any affidavit nor is the providence of the documents fully explained. In the result, I have determined that the documentary material will not be treated as evidence on the application.
10․I will, however, provide an opportunity for the applicants to request that the matter be relisted to seek to vary the conditions I will impose on the grant of the stay in particular ways. That is because I have formed the view that were the applicants able to establish, by way of admissible evidence and supporting documentation, their submissions in relation to the value of assets they claim to possess, that less onerous conditions may be sufficient to protect the respondent’s interest. Indeed, as I will come to, the respondent expressly noted in oral submissions that there is no in-principle issue with the sale of the Queanbeyan property going ahead, rather the concern (on the part of the respondent) is whether that sale is arms-length.
11․Noting the relevant test addresses what is practicable, the conditions should be the least onerous possible conditions that will protect the judgment creditor’s interest. Leave will therefore be granted to the applicants to be able to re-list the proceeding if they wish to vary the conditions. I will address this matter later in these reasons.
12․I interpolate to note that I have considered, and ultimately rejected, the possibility of giving further leave to the parties to file and serve affidavit evidence to the issue along with further written submissions. The reason I have not adopted the course is that it appears that the applicants have taken or are taking steps to sell one of their properties, having entered a contract for sale on 18 January 2023. That contract was not disclosed to the Court or to the respondent at the time of the original stay hearing. As I will explain below, I have accepted the respondent’s submissions, at least for the purposes of this judgment, that there is a possible risk that the respondent will be placed in a worse position as a result of the stay order if conditions are not imposed such that they will prevent the sale of the property.
13․I am further of the view that the timetable outlined above would be of a not insignificant duration. In particular, there may need to be some form of expert valuation of the relevant property. That is not a simple task. In circumstances where it is anticipated that the appeal will be heard in the first half of this year, significant delay in the settling of the conditions to attach to the stay is undesirable to say the least. Rather, the balance of convenience favours the setting of, in effect, interim conditions, with leave granted to the applicants to seek to re-list the matter if they wish to vary the conditions to permit, for example, the sale of the Queanbeyan property.
Submissions
Material Assets of the Applicants
14․The precise state of the applicants’ assets is not presently clear to the Court, nor does it appear entirely clear to the respondent. At the minimum, as the submissions of the parties have revealed, there is a gulf between the parties as to the value of the applicants’ assets. That, of course, is a critical matter as the conditions should be the minimum imposition on the applicants necessary to provide the respondent with security.
15․It appears from the submissions, however, that there is no dispute that the applicants collectively own (albeit subject to mortgages or other charges in uncertain amounts) the following properties:
(a)A property in Queanbeyan;
(b)A half-share of a property in Fisher (the other half is held by the spouse of the first applicant); and
(c)A property in Adelaide.
16․The property in Adelaide appears from the submissions to have been purchased for around $670,000 in 2016. The applicants claim it is now worth in the order of $2 million to $3 million. The respondent has submitted that this purported valuation is based on a subdivision that has not occurred, but do not advance a different present value. The respondent has submitted that there is already a different registered judgment debt owed to another person charged to the property and a mortgage.
17․In relation to the Queanbeyan property, there is again no evidence of a present valuation. The respondents have submitted that the property is subject to a first registered mortgage and there are unpaid rates and local charges levied by the Queanbeyan-Palerang Council in a sum “exceeding $40,000”.
18․The applicants have separately, according to the submissions of the parties, entered into a contract for sale of the Queanbeyan property to a Mr Poole. The date of the contract was 18 January 2023, the day before the hearing of the stay application in this Court and two days before the Federal Court hearing. The contract has not been produced in an unredacted form to the respondent or the Court. In oral submissions, counsel for the applicants submitted that the sale price was $900,000 and that after the discharge of the mortgage (and possibly the other debts) the remaining equity would be in the order of $540,000). As noted above, there was no evidence advanced supporting these figures. It is clear, however, that if established by evidence, the $540,000 in equity would more than cover the judgment debt, interest and cost orders.
19․The property in Fisher appears to be the first applicant’s family home, with a half-share owned by his former spouse. There is no clear evidence before me as to the value of this property, but the respondent submitted that it is subject to a mortgage but “presumably has some equity”. This judgment will proceed on the basis that there is at least some equity in the Fisher property.
20․While the Fisher property is the only property in the ACT, it is clear that I have the power to order a charge over the interstate properties through the operation of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (ACT); Jurisdiction of Courts (Cross-Vesting) Act 1987 (NSW); Jurisdiction of Courts (Cross-Vesting) Act 1987 (SA). Accordingly, there is no question the Court has the power to make the orders.
Proposed conditions to attach to the stay
21․In initial written submissions, the respondent sought conditions in the form of imposing a charge on a property in Fisher and otherwise restricting the applicants from disposing of their assets except to pay expenses (including legal expenses). The conditions as originally proposed also expressly permitted the applicants to sell the property in Queanbeyan on the condition that the judgment debt and interest was to be paid to the respondent “simultaneously with completion of the sale” and an amount of $150,000 be paid into court as security.
22․The respondent initially submitted that these proposed conditions would ensure that the respondent’s interest would be protected while providing flexibility for the applicants to complete the sale of the property. The respondent noted, in the original submissions, its concerns regarding otherwise charging the Queanbeyan property – namely that the charge would affect the beneficial interest of Mr Poole.
23․As noted in the Stay Judgment the applicants had originally submitted that some form of caveat should be ordered in relation to a Queanbeyan property to a fixed amount (in the order of $200,000 plus various matters). In written submissions, the applicants resiled from this position and submitted that the following conditions be imposed:
The applicants are permitted to sell or mortgage their asserts not under a current caveat and are permitted to secure financing for the Appeal & FCA matters with their assets.
The respondent is restrained from further damaging the financial position of the applicants …
24․It was submitted by the applicants that to do otherwise would broadly affect their ability to conduct the appeal and that there was no need for any other conditions.
25․The applicants, in particular, submitted that the respondent had an existing caveat over the Adelaide property, and this was sufficient to satisfy to protect the respondent’s interest in the event the appeal is not successful. As such, the applicants broadly submitted that the balance of convenience favoured the making of their proposed orders.
26․As I noted above, the applicants claimed the Adelaide property is worth in the order of $2 million to $3 million. It is trite to note that if established that value would be sufficient to provide security to the respondent. The basis for that valuation was contained in the annexed material. I have already explained why I have not treated that material as evidence on the application.
27․In response to those matters, and noting that the respondent’s submissions had not discussed the Adelaide property, I invited the parties to provide further written submissions. I was also concerned in relation to a proposed condition that money be paid to the respondent from the sale in circumstances where the judgment debt had been stayed.
28․By further submissions, the respondent submitted that he now had concerns regarding permitting the sale of the Queanbeyan property to take place as the respondent has not seen the contract and Mr Poole (the prospective purchaser) is a personal friend of the first applicant (and had given evidence at the substantive hearing before Elkaim J). The respondent noted that the basis of the original proposal regarding the sale (that a certain amount of proceeds be paid to the respondent) was based on submissions the applicants had made to the Federal Court.
29․The respondent noted that the applicants had now resiled from that position and that, had the respondent been aware of that fact as at the date of the original submissions, the proposed requirement on the sale would have been for the relevant sum to have been paid into Court. It is clear, in my view, that where the judgment orders were stayed, that would be the appropriate course were the sale to go ahead.
30․The respondent also submitted that the caveat over the Adelaide property was not sufficient to protect his interests. I accept that submission, a caveat does not operate as a charge and would not provide proof of the respondent’s interest in the property. The respondent further submitted that the Adelaide property was not a suitable object of a charge as there was not sufficient evidence as to its value. I accept that submission.
31․Ultimately, the respondent submitted that the conditions should be those contained in the respondent’s original written submissions (except the respondent no longer pressed the proposed exception to permit the sale of the Queanbeyan property to proceed).
32․The respondent submitted that were the Court minded to permit the sale of the Queanbeyan property to proceed the monies should be paid into Court as security.
33․The applicants largely repeated the substance of their earlier submissions that there was no need for any further conditions to be made. Orally, counsel for the applicants also noted a couple of matters in response to the proposed conditions. In particular, counsel submitted that any conditions imposed would frustrate the contract and would prevent the applicants from prosecuting their appeal as they would not be able to access funds. I will address these matters later in these reasons.
Consideration
34․The Court has some difficulty in that the evidentiary material as to the value of the applicants’ assets and the quantum of any debts is non-existent. It may well be that the applicants have enough equity in any one of the Fisher property, the Adelaide property or the Queanbeyan property to secure the judgment amount (plus costs and interests). This is especially so if the applicants can substantiate the submission from the bar table, that the Queanbeyan property has $540,000 in equity remaining after any debts are discharged. In contrast, and noting that the precise nature of the applicants’ various debts is not clear on the material before me, it is similarly possible that the applicants do not have sufficient equity in all three combined to meet the judgment debt once the existing mortgages and charges are discharged.
35․The Court is also in a position where concerns have been raised in relation to the proposed sale of the Queanbeyan property (a matter that had not been disclosed to the Court as at the original stay hearing). In my view, the respondent’s concerns are valid, especially as the respondent has not seen the contract of sale (which is similarly not before the Court).
36․Balanced against that matter, however, is that I do not consider it convenient (in any way) to frustrate the sale of that property, especially if that sale is on terms that would permit sufficient funds to be paid into Court as security.
37․Indeed, if there were sufficient equity in the Queanbeyan property that would be released on the sale, and those funds were then paid into Court that alone would be sufficient to provide the respondent with the necessary security. In the result, the applicants would then be free to otherwise deal with their remaining property and assets free from any encumbrance. After all, conditions of a stay must not place the respondent in a better position than before the stay was granted.
38․Similarly, as noted by the respondent the “Adelaide property would have been the respondent’s preferred security, as the respondent understands that this is where at least part of the … contribution under the partnership agreement was paid”. Again, it would perhaps have been convenient to charge that property to permit the applicants to dispose of the Queanbeyan property as they clearly desire.
39․However, as the Court does not have a clear picture as to the value of those properties, there is a clear risk in my view that the impending transfer of the Queanbeyan property could leave the respondent in a worse position than had the stay not been granted. That would be antithetical to the basis on which the applicants advanced their case before me at the hearing of the stay application (and according to the submissions of the respondent contrary to how the applicants are advancing their case in the Federal Court proceeding). It would also be contrary to the test the Court is required to apply in this case: Digi-Tech at [28].
40․In my view it is necessary for the Court to impose conditions in similar terms to that first advanced by the respondent (without the provision permitting the sale of the Queanbeyan property). That approach will ensure that the assets of the applicants are not dissipated in advance of the hearing of the appeal, such that the respondent will not be placed in a worse position than had the stay not been granted.
41․In relation to the balance of convenience, I note that as the appeal is presently anticipated to occur in around three months, the conditions are not as onerous as they would be had the period of time been longer. I also note that the conditions, expressly permit the applicants to pay their usual expenses, including legal costs. The order will not, in any way, prevent the applicants from engaging legal representation.
42․There is one key difference in the order I will make, however, in relation to how the assets can be used. The original proposed condition was that “the applicants must not … [deal with or dispose of their assets] except for … paying expenses incurred in the ordinary course of business, including legal expenses incurred in prosecuting the appeal” (my emphasis). I note that the condition was framed as “including” the legal expenses of the appeal, and may well extend to other legal costs, relevantly in the Federal Court proceedings.
43․In my view, however, for the avoidance of any possible doubt, I will also include reference to legal expenses incurred in any proceeding relating to bankruptcy or winding-up of the applicants in the Federal Court of Australia or the Federal Circuit and Family Court of Australia. It is not desirable to cause the applicants to have any doubt that they can retain legal representatives in either the appeal matter or their hearings before the federal courts.
44․I note that counsel for the respondent at the oral hearing did not seek to be heard against that amendment to the proposed condition.
45․I will also provide the applicants with the opportunity to request to relist the matter to seek to vary those conditions. That leave will be limited to circumstances where the applicants seek to vary the condition to either:
(a)permit the sale of the Queanbeyan property; and/or
(b)to vary the conditions to charge the Adelaide property rather than the Fisher property.
46․While not wanting to be prescriptive in the matter, to seek a variation to the conditions, it seems to me that at a minimum the applicants would need to provide evidence to both the Court and the respondent regarding the present value of the Queanbeyan and Adelaide property, any other mortgages or other debts related to those properties and the current price in the contract for sale of the property.
47․In my view, this approach will ensure that the contract will not be immediately frustrated, although I accept that if the applicants do not bring such an application or provide the required evidence the contract for sale will invariably be frustrated by my order. That is, in my view, a relevant consideration. It is clear that the order at least has the capacity to cause some inconvenience to the applicants. That inconvenience is, however, tempered by the leave I have granted to the applicants which will permit them to adjust the conditions to permit the sale to proceed.
48․That leave, along with the amendment to the conditions to expressly include the legal expenses in the other proceedings will address the two primary concerns raised by counsel for the applicants.
49․I had originally been minded to permit the parties to re-list the matter with five days’ notice. On hearing from counsel for the applicants, and noting the settlement period of 42 days, it is preferable that the period be three days. This will better balance the interests of the applicants and the respondent. I note, for the self-represented applicants’ benefit, that if evidence is provided of a sale price for the Queanbeyan property that would ensure that sufficient funds could be paid into Court, then it will be open for the applicants to seek to discharge the other conditions once those funds are paid into court.
50․I note at the oral hearing that counsel for the respondent submitted that the respondent had no issue with the sale proceeding if it was for market value (nor, with respect, could the respondent have any such issue). The central issue was the lack of material both before the Court and sent to the respondent as to the contractual sale price.
51․At the hearing I indicated that costs would be reserved. On review, that view has remained unchanged. If there is any application to vary the conditions (and that application is opposed) it seems sensible in my view for costs in relation to the conditions to be addressed globally following an outcome to that application. There is no utility in making the parties advance two applications in relation to costs if that eventuates.
Orders
52․For the reasons outlined above, I made the following orders (and reserved the question of costs) on 3 February 2023:
(a)Subject to further order or direction:
(i)The estate of Ralph George Hurst-Meyers (also known as Ralph George Noel Nancy Hurst-Meyers) in 35 Maranboy Street, Fisher, being Fisher Section 29 Block 7, is charged with payment of the judgment debt (including interest under r 1620 of the Court Procedures Rules 2001 (ACT)) and costs ordered by Elkaim J on 30 March 2022.
(ii)The defendants must not by themselves, their servants or agents sell, charge, mortgage or otherwise deal with or dispose of or cause or permit to be sold, charged, mortgaged or otherwise dealt with or disposed of, all or any of their assets whether held beneficially or otherwise except for the purpose of paying expenses incurred in the ordinary course of business, including legal expenses incurred in prosecuting the appeal, or any litigation between these parties in the Federal Court of Australia or the Federal Circuit and Family Court of Australia.
(b)Subject to further order or direction the defendants have liberty to apply on 3 days’ notice to vary the conditions referred to at order (a)(i) and (a)(ii) on the following conditions:
(i)Any such application is limited to proposing alternative conditions relating to permitting the sale of the Queanbeyan property or substituting a different property for the charge property in (a)(i).
(ii)Any such application is to be supported by affidavit evidence and supporting documentation.
| I certify that the preceding fifty-two [52] numbered paragraphs are a true copy of the Reasons for Judgment of her Honour Justice Loukas-Karlsson Associate: Andrew Ray Date: 6 February 2023 |
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