Mann v Paterson Constructions Pty Ltd
[2018] VSCA 313
•22 November 2018
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S APCI 2018 0055
| PETER MANN | First applicant |
| and | |
| ANGELA MANN | Second applicant |
| v | |
| PATERSON CONSTRUCTIONS PTY LTD (ACN 135 579 770) | Respondent |
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| JUDGES: | KYROU, McLEISH and HARGRAVE JJA |
| WHERE HELD: | MELBOURNE |
| DATE OF HEARING: | 19 November 2018 |
| DATE OF JUDGMENT: | 22 November 2018 |
| MEDIUM NEUTRAL CITATION: | [2018] VSCA 313 |
| JUDGMENT APPEALED FROM: | Mann v Paterson Constructions Pty Ltd [2018] VSC 119 (Cavanough J) |
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PRACTICE AND PROCEDURE – Stay – Order of Victorian Civil and Administrative Tribunal requiring applicants to pay to respondent amount calculated on quantum meruit basis – Appeal to Trial Division dismissed – Further appeal to Court of Appeal dismissed – Application made to High Court for special leave to appeal – Application for stay pending hearing and determination of special leave application and any resultant appeal – Application granted on terms including that applicants pay $250,000 to respondent within 28 days.
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| APPEARANCES: | Counsel | Solicitors |
| For the Applicants | Mr T J Margetts QC with Mr A Roe | Telford Story & Associates |
| For the Respondent | Mr A J Laird | Kalus Kenny Intelex |
KYROU JA
McLEISH JA
HARGRAVE JA:
Introduction and summary
On 12 September 2018, this Court published its reasons for dismissing the applicants’ appeal against an order of a judge of the Trial Division which dismissed an appeal from an order made by the Victorian Civil and Administrative Tribunal (‘VCAT’).[1] On the same day, this Court made an order dismissing the appeal from the judge’s order and requiring the applicants to pay the respondent’s costs of the appeal.
[1]Mann v Paterson Constructions Pty Ltd [2018] VSCA 231 (‘Reasons’).
The dispute between the parties arose out of a major domestic building contract pursuant to which the respondent agreed to construct two double-storey townhouses on land owned by the applicants. The townhouses are known as units 1 and 2, 6 Langtree Court, Blackburn. The applicants live with their son in unit 2 and rent out unit 1.
After a lengthy hearing, VCAT found that: the applicants had repudiated the contract; the respondent had determined the contract by accepting the applicants’ repudiation; the respondent was entitled to relief on a quantum meruit basis; and that the relief should be quantified at $660,526.41, representing the value of the work performed by the respondent, less the sums already paid by the applicants and the cost of rectification of defects.[2] Included in that amount was the value of variations to the works that were orally requested by the applicants and performed by the respondent.
[2]Paterson Constructions Pty Ltd v Mann [2016] VCAT 2100 (‘VCAT decision’).
In reaching its decision, VCAT applied this Court’s decision in Sopov v Kane Constructions Pty Ltd (No 2).[3] Sopov held that the remedy of quantum meruit is available to a builder who accepts an owner’s repudiation of a building contract, and set out principles for quantifying the amount payable on a quantum meruit basis. VCAT also proceeded on the basis that s 38 of the Domestic Building Contracts Act 1995 (‘Act’) did not preclude the respondent from recovering the value of the variations as part of its quantum meruit claim.[4]
[3](2009) 24 VR 510 (‘Sopov’).
[4]Section 38 of the Act deals with variations requested by an owner and, in certain circumstances, prohibits a builder from recovering any money for variations where the builder does not comply with the written notice and other requirements set out in the section.
VCAT found that the respondent’s sole director and shareholder, Stephen Paterson, was a truthful witness but that the applicants were unsatisfactory and unreliable witnesses.[5] VCAT also found that the applicants had misled their financier, the Commonwealth Bank of Australia (‘CBA’) in 2014, by submitting a ‘false document’, namely a building contract with an inflated contract price, in order to obtain a higher building loan.[6]
[5]VCAT decision [49], [283].
[6]VCAT decision [17], [30]–[31], [40].
On appeal to the Trial Division, the judge held that VCAT had correctly applied the principles in Sopov and did not err in proceeding on the basis that s 38 of the Act did not preclude the respondent from recovering the value of the variations.[7] The judge allowed the appeal from VCAT’s order for the limited purpose of altering the amount payable by the applicants to the respondent to $652,534.41 due to a minor mathematical error in that order, and otherwise dismissed the appeal. We will refer to the amount of $652,534.41 as the ‘judgment debt’.
[7]Mann v Paterson Constructions Pty Ltd [2018] VSC 119.
The applicants applied to this Court for leave to appeal against the judge’s decision on four proposed grounds of appeal. Those grounds, and the decision of this Court in relation to them, were as follows.
Ground 1 contended that the judge erred in holding that VCAT had applied the correct legal principles in valuing the respondent’s work on a quantum meruit basis. The Court granted leave to appeal on this ground but dismissed the appeal.
Ground 2 contended that the appeal afforded this Court ‘a particularly good opportunity’ to reconsider the correctness of the long-established principle that a builder who accepts an owner’s repudiation of a building contract is entitled to sue the owner in quantum meruit. The Court refused leave to appeal on this ground on the basis that the applicants did not contend that this Court’s decision in Sopov and other decisions which applied that principle were plainly wrong. The Court went on to endorse certain observations made in Sopov which criticised the jurisprudential basis of the principle.[8]
[8]Reasons [97].
Grounds 3 and 4 contended that the judge erred in finding that s 38 of the Act did not prevent the respondent from recovering the value of the variations on a quantum meruit basis. The Court granted leave to appeal on these grounds but dismissed the appeal. In doing so, the Court considered in detail the proper construction of s 38.[9]
[9]Reasons [116]–[145].
The applicants have applied to the High Court for special leave to appeal against this Court’s decision. They rely on the following grounds:
(a)This Court erred in holding that the respondent was entitled to sue on a quantum meruit basis.
(b)In the alternative, if the respondent was entitled to sue on a quantum meruit basis, this Court erred in finding that the contract price did not operate as a ceiling to the amount claimable.
(c)This Court erred in its construction of s 38 of the Act.
In their reply to the respondent’s response to the application for special leave to appeal, the applicants stated that, in order to succeed on their first and second grounds of appeal, it would be necessary for the High Court to overturn Sopov and another decision.
The operation of VCAT’s order has been stayed by a series of orders made by the Trial Division and this Court since 1 March 2017, all but the last of which were either consented to or not opposed by the respondent. The last order was made by this Court on 12 September 2018, upon publication of our reasons for granting leave to appeal and dismissing the appeal. That order expired on 10 October 2018. Each stay order recorded an undertaking by the applicants not to deal with, dispose of, further encumber or otherwise diminish their equity in either of the two units without the written consent of the respondent or until further order (‘Undertaking’).
The applicants now seek a stay of VCAT’s order as amended by the judge (‘VCAT’s amended order’) and this Court’s order dated 12 September 2018 pending the hearing and determination of their application to the High Court for special leave to appeal and the appeal, if special leave is granted. They have indicated their preparedness to renew the Undertaking.
On 20 April 2018, the respondent served a bankruptcy notice on the applicants in respect of the judgment debt. The applicants applied to the Federal Circuit Court for an order extending the time for compliance with the bankruptcy notice. That Court has made a number of interim orders granting such extensions. The time for compliance with the bankruptcy notice is now 6 December 2018 and the Federal Circuit Court proceeding is scheduled to be heard on that date.
For the reasons that follow, the application for a stay will be granted on terms including that the applicants pay to the respondent the amount of $250,000 on account of the judgment debt within 28 days.
Relevant legal principles
This Court has the power to stay the operation of its orders pending the hearing and determination of an application to the High Court for special leave to appeal.[10] A stay may be granted pursuant to r 66.16 of the Supreme Court (General Civil Procedure) Rules 2015 or this Court’s inherent jurisdiction.[11] The Court may stay the operation of an order wholly or in part and may do so on terms, such as the giving of an undertaking or the provision of security.[12]
[10]Jennings Construction Ltd v Burgundy Royale Investments Pty Ltd (No 1) (1986) 161 CLR 681, 684 (‘Jennings’).
[11]R v ICAC (No 2) [2015] VSCA 280 [8] (‘ICAC’).
[12]Alexander v Cambridge Credit Corporation Ltd (rec apptd) (1985) 2 NSWLR 685, 694–5.
In Jennings Construction Ltd v Burgundy Royale Investments Pty Ltd (No 1), Brennan J stated: ‘A stay to preserve the subject-matter of litigation pending an application for special leave to appeal is an extraordinary jurisdiction and exceptional circumstances must be shown before its exercise is warranted’.[13] He again emphasised the extraordinary nature of the jurisdiction in Edelsten v Ward (No 2), in which he stated:
[The jurisdiction] is one which can only be exercised in extraordinary circumstances. It is as well to emphasise that observation again lest the impression be created that, in the conduct of litigation, the orders of this Court are available to keep matters in status quo until the litigation is finally resolved. That is not the purpose of the inherent jurisdiction. Something quite exceptional must be shown before that jurisdiction is exercised.[14]
[13](1986) 161 CLR 681, 684.
[14](1988) 63 ALJR 346, 346. See also Federal Commissioner of Taxation v Myer Emporium Ltd (No 1) (1986) 160 CLR 220, 222 (‘Myer’); Petrotimor Companhia de Petroleos SARL v Commonwealth [2003] FCAFC 82 [16]–[24].
In Rahme v Commonwealth Bank of Australia, Deane J said:
Apart from the exceptional case in which special leave to appeal to this court has been actually granted, the final decision of the highest appellate court of a State or Territory is conclusive of the particular litigation. That being so, it is only in demonstrably exceptional circumstances, such as the immediate threat of the destruction of the subject matter of the litigation or of grave and irreparable damage being sustained, that an application to this court for interlocutory relief can be justified.[15]
[15](1993) 117 ALR 618, 620.
In Jennings, Brennan J stated that in exercising the extraordinary jurisdiction, the following factors are material to the High Court’s exercise of the discretion:
(a)whether there is a substantial prospect that special leave to appeal will be granted;
(b)whether the applicant has failed to take whatever steps are necessary to seek a stay from the court in which the matter is pending;
(c)whether the grant of a stay will cause loss to the respondent; and
(d)where the balance of convenience lies.[16]
[16]Jennings (1986) 161 CLR 681, 685.
The above factors, other than (b), are equally relevant to the exercise of this Court’s discretion to grant a stay of one of its orders which is the subject of an application to the High Court for special leave to appeal.[17]
[17]ICAC [2015] VSCA 280 [7]–[8], [10]; Hamersley Iron Pty Ltd v Lovell (No 2) (1998) 20 WAR 79, 85.
Many considerations may be relevant to the Court’s assessment of where the balance of convenience lies. They include the following:
(a) Whether, if a stay is not granted, there is a real risk that it will not be possible for a successful appellant to be restored substantially to its former position if the judgment against it is executed.[18]
(b) Whether, if a stay is not granted, there is a real risk that a successful appeal would be rendered nugatory.[19] That would be the case, for example, where due to the respondent’s financial state, there is no reasonable prospect of recovering moneys paid pursuant to the judgment at first instance.[20]
(c) Whether, if a stay is granted and either the application for special leave to appeal or any ensuing appeal is unsuccessful, there is a real risk that the respondent would be deprived of the fruits of its judgment.[21]
[18]Myer (1986) 160 CLR 220, 223.
[19]Myer (1986) 160 CLR 220, 222; Jennings (1986) 161 CLR 681, 683.
[20]Myer (1986) 160 CLR 220, 223–4.
[21]P Aker Flowerbulbs Pty Ltd v Coulter (2004) 140 FCR 410, 418 [39].
In Mercanti v Mercanti, Kiefel J stated that the first factor in Jennings ‘should not be understood as requiring that the prospects of success on the application for special leave be high’.[22] In granting an injunction in that case, she referred to the fact that injunctions in respect of the primary judgment had been in place for over three years and stated that it could not be said that the applicant’s prospects of success were ‘insubstantial’.[23] She noted that, following changes to its procedures relating to applications for special leave to appeal in 2016, the High Court is able to determine such applications more expeditiously.[24]
[22](2017) 340 ALR 225, 227 [11] (‘Mercanti’).
[23]Mercanti (2017) 340 ALR 225, 227–8, [8], [13].
[24]Mercanti (2017) 340 ALR 225, 227 [10].
In Rinehart v Welker,[25] the New South Wales Court of Appeal concluded that it was not in all cases an essential prerequisite for the grant of a stay that the court finds there are substantial prospects of success on the application for special leave to appeal. The Court observed that there may be cases, albeit rare, when the other factors material to the grant of a stay may be of such significance that a stay should be granted even if the court is unable to reach the view that the application has substantial prospects of success.[26]
[25](2012) 83 NSWLR 347 (‘Rinehart’).
[26]Rinehart (2012) 83 NSWLR 347, 358 [49].
In CPB Contractors Pty Ltd v JKC Australia LNG Pty Ltd (No 3), the Western Australian Court of Appeal accepted the observations in Rinehart but added the following qualification:
Nevertheless, whether an applicant demonstrates substantial prospects of a grant of special leave remains a matter of central significance in determining whether to grant a stay or injunction pending a special leave application. We note that the appellant did not point to any case in which a stay or injunction was granted notwithstanding a finding that the special leave application did not have substantial prospects.[27]
[27][2017] WASCA 132 [13].
In John Fairfax & Sons Ltd v Kelly (No 2),[28] the New South Wales Court of Appeal stated that it will normally grant a stay to permit an application for special leave to appeal to be made, and that the stay will endure until the application is made, the resultant appeal is determined, or the High Court itself otherwise orders. However, more recently, that Court has made plain that the approach of Brennan J in Jennings, and not that in Kelly, should be followed.[29]
[28](1987) 8 NSWLR 510, 512 (‘Kelly’).
[29]Rinehart (2012) 83 NSWLR 347, 351–8 [9]–[48]; Merton v Bank of Queensland Ltd [2013] NSWCA 159 [5]; Carnemollav Adelaide Bank Ltd [2013] NSWCA 166 [4]; Firebird Global Master Fund II Ltd v Republic of Nauru (No 2) [2014] NSWCA 375 [4].
Applicants’ evidence in support of a stay
In support of their application for a stay, the applicants rely on affidavits of the second applicant, Angela Mann, their solicitor, Michael Telford, and their accountant, Steven Vincini. The exhibits to those affidavits include:
(a)Joint statements of the applicants’ assets and liabilities as at 31 December 2016, 24 April 2018 and 1 October 2018.
(b)Tax returns for the 2016, 2017 and 2018 financial years for each of the applicants.
(c)Tax returns and financial statements for the 2016, 2017 and 2018 financial years for the applicants’ company, Master of the Amateurs (Australia) Pty Ltd (‘MAA’).
(d)Valuation reports dated 25 September 2018 for units 1 and 2, valuing them at $1.12 million and $1.17 million respectively.
(e)Correspondence from CBA to the applicants.
(f)Company search and title search relating to the respondent. The company search discloses that the respondent has issued 10 ordinary shares to Mr Paterson.The title search discloses that the respondent is the owner of unit 3, 5 Marian Court, Blackburn (‘Marian Court investment property’).
The joint statement of the applicants’ assets and liabilities as at 1 October 2018 recorded assets totalling $2,318,116, liabilities totalling $1,386,164 and net assets of $931,952. The assets comprised cash at bank totalling $885, the applicants’ interest in the two units at the above valuations, and their interest in MAA valued at $27,231. The liabilities comprised credit card debts totalling $6,345, an ‘Investment/Home Loan’ from CBA in the amount of $1,044,779 and unsecured personal loans totalling $335,040. The personal loans were described as ‘S.A. Mann, $95,040’, ‘LY Super Investments, $150,000’, ‘Taxi Clothing Pty Ltd, $50,000’, and ‘ARIX Super Loan (R & A Ashmore), $40,000’.
The 2018 tax return for the first applicant, Peter Mann, disclosed the following:
(a)The rental property (unit 1) made a loss of $20,284, 50 per cent of which was attributed to Mr Mann. Gross rental was $46,920 and expenses totalled $67,204. The expenses included interest of $41,687 paid to CBA and depreciation of $18,737. In his affidavit dated 15 November 2018, Mr Vincini explained that the interest amount of $41,687 was incorrect, as it ‘[i]nadvertently … included the full amount of the interest paid in the sum of $41,687 instead of the relevant half proportion thereof, in the sum of $20,844 which is referrable to the unit 1 investment property’.
(b)A lump sum superannuation payment of $223 was received from Colonial First State Super. A lump sum superannuation payment of $53,638 was received in 2017 from ‘Oasis Fund Mgt Ltd — Oasis Super Trust’. Superannuation income from ‘Oasis Super Master Trust’ was $7,836 in 2016 and $7,313 in 2017.
The 2018 tax return for Mrs Mann disclosed the following:
(a)Information relating to the rental property in the same terms as set out at [29(a)] above.
(b)A lump sum superannuation payment of $2,302 was received from Oasis Fund Management Ltd. A lump sum payment of $94,761 was received in 2017 from ‘Oasis Fund Mgt Ltd — Oasis Super Trust’. No income or lump sum superannuation payments were received in 2016.
The 2018 tax return and financial statements for MAA disclosed the following:
(a)MAA’s main business activity is ‘Golf coaching service’. It received income of $270,299, incurred expenses of $158,151 and made a profit of $112,148.
(b)MAA had accumulated tax losses of $753,711 as at 1 July 2017 and $641,563 as at 30 June 2018. The difference represents the profit of $112,148.
(c)MAA had total assets of $76,727. Current assets totalled $49,496 and comprised cash and bank savings of $8,624 and trade debtors of $40,872. Non-current assets comprising plant and equipment, office equipment and motor vehicles totalled $27,231. Liabilities totalled $674,913 including a liability of $670,676 described as ‘Loan — P & A Mann’. Liabilities exceeded assets by $598,186. Total equity was made up of issued and paid up capital of $12 and accumulated losses of $598,186. In his affidavit dated 15 November 2018, Mr Vincini explained that the loan of $670,676 from the applicants to MAA was not listed as an asset in the applicants’ 1 October 2018 joint statement of assets and liabilities because MAA ‘does not have the available funds to repay the loan’. However, Mr Vincini acknowledged that the loan was reduced by $110,479 in the 2018 financial year from the profit of $112,148 that MAA made in that year.
The correspondence from CBA to the applicants included the following emails:
(a)An email dated 19 January 2017 which stated that, based on the financial data provided to CBA, the bank ‘will not be able to offer any further financial assistance at the present time’.
(b)An email dated 27 March 2018 which stated that, based on the 2017 financial statements and tax returns for the applicants and MAA, ‘there is no further lending capacity for [the applicants] to top up [their] existing facility’.
(c) An email dated 1 October 2018 which relevantly stated:
Further to our meeting today and review of the following documents:
· 2018 personal tax returns for both [of the applicants]
· 2018 [MAA] Tax returns and financial Statements
I can confirm that we cannot provide any further borrowings from the bank based on your current income and liabilities
Even if you were to sell the investment property unit 1, 6 Langtree Ct Blackburn, and the sale proceeds closed current investment home loan 558563590
Still no further home loan borrowings would be approved
During the hearing of the application for a stay, the Bench observed that the applications for loans which were the subject of the correspondence from CBA were not before the Court to enable it to determine the nature and quantum of the loans sought and the details of the information in support of the applications that had been provided to CBA. Senior counsel for the applicants informed us from the Bar table that no application form was in existence in respect of the last of the three applications. This was said to be because the details had been provided by the applicants orally during a meeting with a CBA officer who entered those details directly on to a computer program and did not print out a copy to give to them. Senior counsel said that the loan that was sought was for the amount of the judgment debt.
In her affidavit dated 4 October 2018, Mrs Mann stated that, although the applicants have net assets of approximately $931,952, they do not have the available funds to pay the judgment debt. She said that, in the light of CBA’s email dated 1 October 2018, ‘it would be necessary for [the applicants] to sell both units 1 and 2 to pay the amount of the [judgment debt]’. She added that the applicants would suffer irreparable detriment if they sold the units to pay the judgment debt and the High Court subsequently granted them special leave to appeal and allowed their appeal.
In her affidavit dated 30 October 2018, Mrs Mann stated that the joint statements of the applicants’ assets and liabilities are true and correct. However, apart from stating in her affidavit of 4 October 2018 that the current rental for unit 1 was $3,910 per calendar month, Mrs Mann did not say anything in either of her affidavits about the applicants’ income and expenses. In particular, Mrs Mann did not disclose the applicants’ legal costs of this proceeding or how those costs have been funded.
Respondent’s evidence in opposition to a stay
In opposition to the applicants’ application for a stay, the respondent relies on affidavits of Mr Paterson, its accountant, George Dimitropoulos, and a mortgage broker, Andrew Kostanski. The exhibits to those affidavits include:
(a)A bank statement from ANZ Bank which disclosed that, as at 7 November 2018, the respondent had a credit balance of $15,510.95 in a savings account.[30]
[30]The respondent carries on its construction business and holds its bank accounts and the Marian Court investment property as trustee for the Paterson Family Trust.
(b)A bank statement from Westpac Bank which disclosed that, as at 5 November 2018, Mr Paterson had a debit balance of $35,383.07 in a credit card account.
(c)Financial statements for the respondent for the 2018 financial year which disclosed that the respondent received income of $3,256,304.97, incurred expenses of $2,586,002.80 and made a profit of $670,302.17.
(d)Financial statements for the respondent for the 2017 financial year which disclosed that the respondent received income of $27,272.73, incurred expenses of $556,214.23 and made a loss of $528,941.50.
(e)Tax returns for Mr Paterson for the 2014, 2015, 2016 and 2017 financial years. These showed that Mr Paterson received distributions from the respondent as trustee of the Paterson Family Trust, amounting to $58,273 in 2014 and $36,090 in 2015. No distributions were made to him in 2016 or 2017.
(f)Internal CBA documents relating to the applicants’ application for a building loan application in 2014. The documents contain financial information relating to the applicants, including the following:
(i) statements that the applicants have ‘Superannuation’ of $400,000 and ‘contents’ of $150,000;
(ii) a statement that the applicants are directors and shareholders of Peter Mann Productions Pty Ltd, which ‘receives management fees from [MAA]’; and
(iii) a statement that the applicants’ ‘living expenses (which include utilities, education, clothing, food, health care, transportation [and] other expenses) are $2200 per month’.
Neither Mr Paterson nor Mr Dimitropoulos exhibited any tax returns for the respondent or the Paterson Family Trust.
In his affidavit dated 8 November 2018, Mr Paterson relevantly stated:
(a)The respondent has incurred legal costs in excess of $960,900, of which $75,273 remains outstanding.
(b)Mrs Paterson earns a gross annual salary of $42,500. The weekly living expenses for Mr Paterson, Mrs Paterson and their three dependent children, excluding interest repayments, are approximately $3,000 to $3,200.
(c)As the only cash funds that the family has is the amount of $15,510.95 in the respondent’s savings account, Mr Paterson relies on borrowings from friends and family ‘to keep going during this time’. Currently, there is an outstanding loan of $495,000 from his brother-in-law and a loan of $80,000 from a family friend. The first loan incurs interest of 5.38 per cent per annum and requires monthly repayments of $2,129.25 while the second loan incurs interest of 6.53 per cent per annum and requires monthly repayments of $435. The first loan is approximately $10,000 in arrears and the second loan is approximately $870 in arrears.
(d)The only land that the respondent owns is the Marian Court investment property. In May 2018, it was valued at $1.6 million. The respondent used this property as security to raise funds to finance the litigation with the applicants. It obtained a mortgage loan from a third tier financier, La Trobe Financial, whose balance as at 31 October 2018 was $986,108.18. Minimum monthly interest payments on the loan are $5,190.
(e)Mr Paterson and his wife have used their family home at 80 Haslams Track, Warrandyte as security for a home loan from La Trobe Financial. That loan had a balance of $963,835.43 as at 31 October 2018. Monthly repayments on the loan are $5,935.
(f)Mr Paterson services the Westpac Bank credit card by paying the minimum monthly repayment of $708 at an interest rate of 20.24 per cent per annum.
(g)Total monthly loan obligations are approximately $14,397.25.
(h)The respondent is currently between projects and has no ability to earn an income until a project in Nanawading reaches base stage on approximately 20 December 2018 and a project in Hawthorn East commences on approximately 1 February 2019.
(i)If the applicants pay the judgment debt and the High Court subsequently grants them special leave to appeal and their appeal is successful, the respondent would be in a financial position to repay the judgment debt.
(j)However, the respondent ‘now has extremely pressing liquidity needs due to the ongoing litigation pressed by the applicants (and the cost thereof) and the need to fund the respondent’s business and [Mr Paterson’s] family’s living expenses moving forward’. These pressing liquidity needs mean that, unless the applicants pay the judgment debt, the respondent will have to sell the Marian Court investment property. Such a sale ‘may seriously jeopardise the respondent’s ability to obtain its current level of domestic building insurance going forward and therefore the respondent’s ability to keep building and expanding on its business opportunities’.
In his affidavit dated 8 November 2018, Mr Dimitropoulos relevantly stated:
(a)As at 31 October 2018, the respondent had net assets of $525,348.82. There will be an outstanding GST liability of approximately $123,238 once the respondent’s business activity statements are lodged.
(b)Mr Paterson has advised him that the respondent has signed a building contract to construct a double-storey townhouse in Nunawading for $750,000 and is shortly to sign another contract for $2.9 million to construct a house in Hawthorn East.
(c)In his experience as an accountant for many builders, building projects require significant working capital because builders have to perform work and incur costs towards progress stages in advance of being eligible to claim the staged progress payments under the building contract.
(d)Mr Paterson has informed him that, in relation to the Nunawading project, the respondent will need approximately $85,000 over and above the deposit to fund to the completion of base stage, when the first progress payment is due and, in relation to the Hawthorn East project, the respondent will need $290,000 over and above the deposit to progress that project to the completion of the base stage. Mr Dimitropoulos estimates that the respondent will need to maintain a float of at least $100,000 to cover both projects in case of any payment delays or disputes.
(e)The respondent has heavily relied on its equity in the Marian Court investment property to obtain domestic building insurance to cover the value of its projects.
(f)From a practical perspective, unless the applicants pay the judgment debt, the respondent will have to sell the Marian Court investment property in order to provide the necessary working capital to: fund its new projects, including to support its operations in case of payment delays; continue to pay its legal fees in defending the applicants’ ongoing appeals; and meet its GST liabilities when due. If the Marian Court investment property is sold, ‘the respondent would be deprived of an important asset that it uses to back its business’. The loss of this asset ‘may make it extremely difficult for the respondent to secure domestic building warranty insurance at the … levels it requires going forward (as that insurance is renewed and assessed on a yearly basis)’. Without such insurance, the respondent would not be able to trade and therefore the loss of the Marian Court investment property ‘would have a detrimental impact on the respondent’s business’.
In his affidavit dated 7 November 2018, Mr Kostanski stated that he had reviewed the financial position of the applicants as disclosed in the affidavits of Mrs Mann and the affidavit of Mr Vincini dated 30 October 2018 and expressed the following opinions:
(a)If the applicants sold unit 1 for $1.12 million, they would be left with unit 2 as a completely unencumbered asset and surplus funds above the mortgage amount of $1,044,779. Unit 2 could then be used as security to raise funds.
(b)If the applicants borrowed the amount of the judgment debt ($652,534.41), that would represent a loan to value ratio of 55.8 per cent of the valuation of $1.17 million for unit 2.
(c)In his experience, he would be surprised if a first tier lender would not, in the normal course, lend the applicants that sum of money based on a debt-equity ratio of 55.8 per cent. In any event, a second tier lender would ‘certainly be inclined to provide the applicants with funding of $652,534.41 against an unencumbered Unit 2’ because:
(i)the loan to value ratio would be low;
(ii)the applicants’ nominal income would be higher without the drain on their expenses of the cost of the investment property (unit 1);
(iii)any new loan would not cause the applicants undue hardship;
(iv)the applicants would still have available to them an acceptable exit strategy — namely, the sale of unit 2 and the purchase of an unencumbered property for about $500,000 — in the event of some unforeseen future hardship; and
(v)the applicants’ level of debt will be reduced from $1,044,779 to $652,534.41, reducing their liability to the lender by $392,245 without materially affecting the lender’s loan to value ratio or risk.
(d)Mrs Mann’s assertion that the applicants would need to sell both units 1 and 2 to pay the judgment debt is not correct.
Applicants’ submissions
The applicants submitted that, on balance, the factors outlined by Brennan J in Jennings, set out at [20] above, favour the granting of a stay.
In respect of the first factor, the applicants contended that their prospects of being granted special leave to appeal on their first ground of appeal are ‘unusually strong’. That was so, they argued, because their application raises a long-standing question of law of general public importance, namely, whether quantum meruit should be available as an alternative remedy to contractual damages where repudiation of a contract is accepted by an innocent party. Further, they argued, the availability of quantum meruit in such circumstances was the subject of criticism in Sopov, and this Court endorsed that criticism in its reasons.
In respect of their second ground of appeal, the applicants submitted that the view in Sopov and other cases, that the contract price does not impose a ceiling on the amount recoverable on a quantum meruit basis, has been the subject of criticism, is inconsistent with the position in the United Kingdom,[31] and has not been the subject of any conclusive High Court authority. In respect of their third ground of appeal, the applicants described the proper construction of s 38 of the Act as having ‘practical significance’.
[31]The applicants referred to Taylor v Motability Finance Ltd [2004] EWHC 2619 (Comm) (4 October 2004) [26].
In oral submissions, senior counsel for the applicants described their prospects of obtaining special leave to appeal as ‘high’ in respect of their first ground, but conceded that the same could not be said for the second and third grounds.
Senior counsel clarified that it was not the applicants’ contention that, if they succeed on all grounds before the High Court, they would be absolved from any further liability to the respondent. Rather, he accepted that, on a best case scenario, the proceeding would be remitted to VCAT to determine the respondent’s entitlement to damages for breach of the building contract. Senior counsel provided to the Court a single-page document titled ‘Summary in Relation to the Builder’s Contractual Claim’ which quantified that claim at no more than $252,810.51, excluding interest and any costs liability. Senior counsel submitted that, on any remitter hearing before VCAT, the applicants would argue that some components of the amount of $252,810.51 should be discounted, such that VCAT’s ultimate assessment of damages will be less than that amount. He also contended that the respondent’s entitlement to interest may not arise until that ultimate assessment is made.
In respect of the third factor in Jennings, the applicants submitted that the only prejudice to the respondent arising from a stay would be a delay in receiving the judgment debt, which would be compensated for by the respondent’s entitlement to interest on the judgment debt. They contended that, in the interim, the renewal of their Undertaking would adequately protect the respondent’s interests.
In respect of the fourth factor in Jennings, the applicants submitted that the balance of convenience significantly favours a stay for the following reasons:
(a)They will suffer significant and irremediable detriment if the stay is not ordered and they are required to pay the judgment debt because, for the reasons set out in Mrs Mann’s affidavit dated 4 October 2018, they would be forced to sell their investment property (unit 1) and their family home (unit 2). Accordingly, if they are successful in their application for special leave and any ensuing appeal in the High Court, they could not be restored to their former position of owning both units.[32]
(b)There is a material prospect that if the applicants succeed in the application for special leave and in any ensuing appeal, the respondent may not be in a position to repay the judgment debt and there is therefore a risk that any such appeal would be rendered nugatory. The respondent’s ability to repay the judgment debt was in doubt due to its status as a proprietary company with an issued share capital of $10, and the fact that the Marian Court investment property is subject to a mortgage.
(c)It can be expected that the application for special leave to appeal will be determined relatively swiftly.
[32]The applicants relied on Myer (1986) 160 CLR 220, 223; Brown v AEP Belgium SA [2004] VSC 255 [11]–[15]; Anderson v Tisher Liner & Co [2016] VSC 319 [14].
In oral submissions, senior counsel for the applicants contended that, if this Court does not grant a stay, the applicants will not be able to comply with the bankruptcy notice by paying the judgment debt. It was submitted that it was likely that the respondent would then commence bankruptcy proceedings against the applicants which might result in sequestration orders being made against them prior to the hearing of the application for special leave to appeal. According to senior counsel, the making of sequestration orders may lead to the trustee in bankruptcy electing not to continue with the application for special leave to appeal pursuant to s 60(2) of the Bankruptcy Act 1966 (Cth). It followed, so it was said, that in the absence of a stay, there was a real risk that the High Court proceeding would be rendered nugatory.
Senior counsel relied on Saville v Hallmarc Construction Pty Ltd,[33] in which this Court granted a stay in relation to costs orders made by the Trial Division pending the determination of an appeal to this Court in circumstances where the evidence indicated that the absence of a stay would significantly disrupt the applicant’s business and result in his bankruptcy. In that case, the Court referred to authority in support of the proposition that the prospect of bankruptcy in respect of a judgment debt may constitute special circumstances for the purposes of an application for a stay.
[33][2015] VSCA 144 (‘Saville’).
Senior counsel submitted that a refusal of a stay by this Court would not result in the payment of any part of the judgment debt in the short term because, given the time of year, any auction of the units could not take place until mid-February 2019 at the earliest, with settlement being completed at least 60 days later. By then, so it was said, the application for special leave to appeal would have been determined.
In response to observations from the Bench that the applicants’ affidavit material did not provide any details of legal costs paid to date by the applicants and any outstanding legal costs, senior counsel informed the Court that he was acting for the applicants on a pro bono basis. He also stated that: a junior counsel had rendered accounts and had been paid but had not rendered any further account ‘for over a year’; another junior counsel had agreed to cap his fees at $15,000; and the instructing solicitor had not rendered any account since the VCAT proceeding and has deferred a decision on what, if any, further fees to charge the applicants until the final outcome of the proceedings.
Senior counsel submitted that the respondent’s affidavit material was not sufficiently probative to enable the Court to conclude that the respondent would suffer irreparable prejudice if a stay is granted. He contended that the respondent’s assertion that it would be required to sell the Marian Court investment property to alleviate its liquidity problems should not be accepted because, due to the lead time required to sell the property, the sale proceeds would not be received until April 2019 at the earliest. Senior counsel also submitted that the respondent’s assertion that such a sale would jeopardise the respondent’s ability to obtain domestic building insurance and its capacity to trade was not supported by evidence of the amount of insurance and the security requirements of its insurer, and thus could not be accepted by the Court.
Senior counsel also noted that, notwithstanding the respondent’s assertion that it is suffering financial hardship, the respondent’s financial statements indicate that, in the 2018 financial year, it spent approximately $150,000 on new motor vehicles and reduced Mr Paterson’s beneficiary loan to the Paterson Family Trust from $1,272,455.71 to $623,424.40.
In response to enquiries from the Bench as to whether the applicants were in a position to make a part payment of the judgment debt as a condition of this Court granting a stay, senior counsel for the applicants informed the Court that the applicants were prepared to pay $100,000 within 30 days by borrowing that amount from friends or family. Senior counsel also informed the Court that the applicants were prepared to provide the following undertakings in addition to the Undertaking:
(a) an undertaking to apply to the High Court for expedition of the hearing of the application for special leave to appeal; and
(b)an undertaking to grant to the respondent a second mortgage over units 1 and 2, subject to CBA’s consent.
Respondent’s submissions
The respondent submitted that the applicants had not established that there are exceptional circumstances that warrant this Court exercising its discretion to grant a stay. It addressed the factors in Jennings as follows.
Regarding the first factor in Jennings, the respondent submitted that the applicants’ prospects of special leave being granted were not unusually strong. It contended that there are powerful arguments that militate against the grant of special leave in this case, namely that: the applicants’ proposed appeal is not a suitable vehicle for the agitation of their grounds of appeal; this Court’s decision is not attended with sufficient doubt to warrant the grant of special leave; this Court interpreted s 38 of the Act in a fair, sensible and workable manner that is consistent with principles of statutory interpretation and cannot be said to be clearly mistaken; and it is not in the interests of the administration of justice that the High Court grant the applicants special leave to appeal.
Regarding the third factor in Jennings, the respondent submitted that, if a stay is granted, it will be forced to sell the Marian Court investment property to fund the continuing litigation and its ongoing building projects. It contended that the sale of the Marian Court investment property would impact the respondent’s ability to obtain domestic building insurance in the future, without which the respondent cannot conduct its business. It argued that, in circumstances where the respondent will lose its investment property and have its ongoing ability to trade impacted, it would be inappropriate for this Court to take the extraordinary and exceptional step of granting a stay to the applicants.
The respondent submitted that it would not be adequately protected by orders for interest and renewal of the applicants’ Undertaking. This was said to be because of deficiencies in the applicants’ affidavit material concerning their financial position — including their failure to disclose details of the legal costs they have incurred in the proceeding — and the large quantum of the applicants’ indebtedness to the respondent. The respondent noted that the judgment debt and the respondent’s legal costs[34] total more than $1.5 million, costs orders were made in favour of the respondent in this Court and in the Trial Division, and VCAT has yet to hear the parties on the question of the costs of the trial.
[34]See [38(a)] above.
Regarding the fourth factor in Jennings, the respondent submitted that insufficient affidavit material has been put before this Court to support the applicants’ assertion that they will have to sell one or both of the units. In particular, it contended that there has been no disclosure of the instructions that the applicants provided to Mr Vincini for the preparation of financial documents or to CBA in relation to recent applications for finance, no affidavit material from CBA and no evidence of any genuine attempt by the applicants to obtain finance to pay the judgment debt from a lender other than CBA, whom VCAT found that the applicants had misled.[35] The respondent also relied on the opinions of Mr Kostanski set out at [40] above.
[35]See [5] above.
The respondent argued that, in any event, whether the applicants can be restored to the position they are presently in if they are granted special leave and succeed in their appeal to the High Court is a discretionary, not a decisive factor in this Court’s exercise of its discretion to grant a stay.[36] According to the respondent, even if the applicants were required to sell their investment property if a stay is not granted, this does not warrant a stay in circumstances where the respondent would be exposed to exactly the same prejudice — that is, being required to sell its investment property — if a stay is granted. This was particularly so due to the impact that such a sale would have on the respondent’s business.
[36]The respondent relied on Johnson v Cressy [2009] VSCA 123 [50]; Palmer v Permanent Custodians Ltd [2009] VSCA 164 [58]–[63]; Cellante v G Kallis Industries Pty Ltd [1991] 2 VR 653, 655; Maher v Commonwealth Bank of Australia [2008] VSCA 122 [23].
The respondent submitted that the balance of convenience also militates against the grant of a stay for the following additional reasons:
(a)The findings of VCAT were such that the applicants will owe a significant sum to the respondent, even if they are successful in their special leave application and any ensuing appeal to the High Court.
(b)As a consequence of the factual findings made by VCAT, the applicants do not have clean hands.[37]
(c)The applicants’ conduct has had a very significant impact on Mr Paterson, who is the sole owner and operator of the respondent, and his family.
(d)The applicants have had the benefit of living in unit 2 and renting out unit 1 and have enjoyed significant capital appreciation since 2015, while the respondent has suffered due to the applicants’ failure to pay for the oral variations that they requested.
(e)The respondent has sufficient assets to repay the judgment debt if it is ordered to do so by the High Court.
[37]See [5] above.
In oral submissions, counsel for the respondent took issue with the applicants’ calculations of the respondent’s contractual damages in the document titled ‘Summary in Relation to the Builder’s Contractual Claim’. He contended that, having regard to VCAT’s acceptance of the respondent’s expert evidence on quantum, it was likely that, on any remitter to VCAT, it would assess the respondent’s damages at a sum well in excess of $252,810.51.
Counsel submitted that the information exhibited to the affidavits of Mrs Mann and Mr Vincini did not provide a full and frank representation of their income, expenses, assets and liabilities. He also submitted that, having regard to the fact that the respondent had previously requested details of the legal costs incurred by the applicants and had pointed out that the applicants’ affidavit material did not disclose the nature of the loan application to CBA, the Court should not rely on any statements made by the applicants’ senior counsel from the Bar table about these matters. According to counsel, in the light of the adverse credit findings that VCAT made about the applicants and the extensive deficiencies in their affidavit material, this Court could not safely conclude that the applicants are unable to pay the judgment debt.
Counsel emphasised that the applicants’ affidavit material and written submissions did not assert that a refusal of a stay by this Court would lead to their bankruptcy. This was said not to be surprising, as the applicants have a surplus of assets over liabilities and could avoid bankruptcy by proving their solvency or by selling unit 1 and using their equity in unit 2 to borrow funds to meet the judgment debt.
Counsel contended that Saville can be distinguished on the basis that there was no evidence that the respondent in that case would be prejudiced by the granting of a stay.
Counsel submitted from the Bar table, after obtaining instructions, that the reduction in Mr Paterson’s beneficiary loan from $1,272,455.71 to $623,424.40 represented a balancing accounting entry — rather than a cash payment — principally to reflect the fact that the Marian Court investment property had been completed and its value had increased from $752,787.78 to $1,600,000. He also stated that the respondent had acquired a new motor vehicle worth approximately $150,000, subject to finance.
The Bench asked counsel whether the respondent was prepared to suggest any terms which the Court could impose as conditions of granting a stay, if the Court does not accept the respondent’s submission that no stay should be granted. In response, counsel stated that, in that event, ‘as an absolute bare minimum’, the Court should order the applicants to pay to the respondent, prior to Christmas, $252,810.51 together with interest from the date of VCAT’s order. Counsel accepted that, if such an order were made, the respondent would need to undertake to consent to any necessary extension of time for compliance with the bankruptcy notice, and not to take any further steps in relation to it, until the hearing and determination of the application for special leave to appeal.
Decision
It is evident from the parties’ evidence and submissions that the applicants will suffer some prejudice if a stay is not granted and that the respondent will suffer some prejudice if a stay is granted. For the reasons that follow, we have determined that, in the unusual circumstances of this case, the interests of justice require that a stay be granted but only on terms that help to ameliorate the prejudice to the respondent.
Turning to the factors in Jennings, it is not necessary for us to discuss in detail the applicants’ prospects of obtaining special leave to appeal. This is because the applicants have conceded that, even if they are entirely successful before the High Court, the proceeding will have to be remitted to VCAT to assess the damages payable by them to the respondent for breach of contract. Whether the amount assessed by VCAT is $252,810.51 or some lesser or higher amount, as contended by the applicants and the respondent respectively, it is likely that the applicants will be required to pay a not insignificant sum to the respondent.
In relation to the applicants’ prospects of obtaining special leave to appeal, it suffices for us to say that, in our opinion, they are not insubstantial in relation to the applicants’ first ground but they are more doubtful in relation to the second and especially the third ground.
As for the third factor in Jennings, on the basis of the respondent’s evidence, we are satisfied that the granting of a stay would cause it prejudice which cannot be remedied by an award of interest. While the applicants have raised some legitimate questions about the respondent’s evidence, it is sufficiently clear from that evidence that the applicants’ failure to pay the judgment debt has resulted in liquidity problems for the respondent and financial hardship for Mr Paterson and his family. Self-evidently, a small family business which is deprived of income of $652,534.41 and is forced to bear legal costs in excess of $960,900 will suffer considerable financial strain.
We accept the uncontested and objectively credible evidence of Mr Paterson and Mr Dimitropoulos that the granting of a stay will have an adverse impact on the respondent’s ability to fund domestic building insurance and its ability to trade. We are also satisfied on the basis of that evidence that, in the absence of payment by the applicants of a substantial part of the judgment debt, the respondent may be forced to sell the Marian Court investment property in order to fund the respondent’s ongoing business activities.
The fourth factor in Jennings, the balance of convenience, is of critical importance to the outcome of the application for a stay. As we have already stated, both parties have demonstrated that they will suffer some prejudice depending on whether a stay is granted or refused.
There is a real risk that, if a stay is not granted, the applicants will have to sell unit 1. They may also have to sell unit 2 which, as we have already stated, is their family home. Although Mr Kostanski’s evidence is that the applicants could fund the judgment debt by selling only unit 1, it does not appear that he has taken into account the fact that the applicants rely on the rental income to meet their interest obligations and that that income will not be available once unit 1 is sold. There is also a possibility that the applicants may become bankrupt prior to the hearing of the application for special leave to appeal. Given that Mrs Mann’s evidence is that the applicants have net assets of approximately $931,952 (before taking into account the judgment debt), that possibility seems unlikely.[38]
[38]We note that the risk of bankruptcy was not referred to in Mrs Mann’s affidavits or the applicants’ written submissions. It was only raised in oral submissions without prior notice to the respondent and without supporting evidence.
As against the prejudice to the applicants from a refusal of a stay, there is a real risk that if a stay is granted, the respondent will have to sell the Marian Court investment property, which sale will adversely affect its business.
On balance, we have determined that it would not be in the interests of justice for this Court to grant an unconditional stay for the following reasons.
First, we have serious concerns about the completeness and reliability of the applicants’ evidence. As we have already discussed, the applicants did not disclose how they have funded their legal costs, or their ongoing exposure to such costs. It was entirely unsatisfactory for information about these matters to be provided by counsel from the Bar table. Further, the applicants did not disclose any details of the superannuation accounts which were the source of lump sum or income payments in the 2016, 2017 and 2018 financial years. The applicants have also failed to disclose details of the nature and terms of the significant unsecured loans that are listed in their joint statements of assets and liabilities.
Another major omission in the applicants’ evidence is their living expenses. They have not explained how they are able to meet their living expenses from the limited income they have disclosed. Nor have they explained how they can provide loan capital to MAA to enable it to conduct annual amateur golfing tournaments, often at a loss. The applicants have also not provided any details of any bank account into which their income is deposited and from which their expenses are paid.
It is particularly significant that the applicants have not given a full account of their dealings with CBA about further borrowings and have not explained why they have not approached other financiers, particularly second and third tier financiers whose lending criteria are more flexible than first tier financiers. By way of contrast, Mr Paterson has explained in his affidavit dated 8 November 2018 that his family and the respondent obtained finance from a third tier financier, La Trobe Financial, when they were unable to obtain adequate finance from the major banks.
In the light of the deficiencies in the applicants’ evidence to which we have referred, we are unable properly to assess the applicants’ income, expenses, assets or liabilities. Accordingly, we are unable to accurately quantify the extent of any prejudice to them that would arise if we refuse their application for a stay.
Secondly, faced with the choice whether the applicants should have to sell unit 1 or the respondent should have to sell the Marian Court investment property, the balance of convenience lies heavily in favour of the respondent. This is because the genesis of the financial difficulties of the parties was the applicants’ wrongful repudiation of the building contract and the respondent’s financial difficulties have been caused by the applicants’ failure to pay any part of the judgment debt. They have failed to do so notwithstanding that the respondent’s claim against them has been upheld by VCAT, the Trial Division and this Court. Also, as submitted by the respondent, the applicants have had the benefit of the respondent’s work in constructing the units, which the respondent financed by paying suppliers and contractors.
Further, although the applicants have known since VCAT made its order on 12 December 2016 that they have a substantial financial obligation to the respondent, and must have known that there was a risk that their various appeals may not succeed, there is no evidence that they took any steps to place themselves in a position to be able to meet the judgment debt. Although it was entirely foreseeable that the applicants may find themselves in their present financial predicament, there is no evidence that they have been proactive in seeking to ameliorate their position.
Thirdly, having regard to the respondent’s evidence, including its ongoing projects, its substantial equity in the Marian Court investment property, and the significant profit it made in the 2018 financial year, we are satisfied on the balance of probabilities that it would be able to repay the judgment debt if it were required to do so. It is true that, if the applicants sell unit 1, they may not be able to re-acquire it if the judgment debt is repaid. However, that is one of the unfortunate consequences of the applicants being the losing parties in this hard-fought litigation.
Fourthly, the circumstances of this case are very different to those in the case of Saville, upon which the applicants relied. In that case, there was cogent evidence that the applicant would suffer potentially irreversible financial harm if a stay were not granted and there was no evidence that the respondent would suffer any prejudice if a stay were granted. Further, the appeal in that case had already been heard and judgment had been reserved, so that the duration of the stay would be limited.
Fifthly, we have taken into account that VCAT’s amended order has been the subject of various stay orders since 1 March 2017. However, the respondent has provided a satisfactory explanation for opposing any further stay, namely the liquidity problems which have been caused by the applicants’ failure to pay any part of the judgment debt.
Notwithstanding the above considerations, we have also determined that, due to the prejudice to the applicants to which we have referred at [74] above, it would not be in the interests of justice for a stay to be refused. In our opinion, despite our reservations about the applicants’ evidence, that prejudice is sufficiently exceptional to warrant the exercise of this Court’s extraordinary jurisdiction to grant a stay.
However, as an unconditional stay would cause severe prejudice to the respondent, in whose favour we have found the balance of convenience lies, the most appropriate order in all the circumstances is a stay on terms which ameliorate that prejudice. The key term will be that the stay is conditional upon the applicants paying to the respondent, within 28 days, an amount which is substantial but much less than the judgment debt.
In our opinion, such a conditional stay is the best means of protecting the interests of both parties pending the hearing and determination of the application for special leave to appeal. The interests of the applicants will be protected because the condition that they pay a lower amount will significantly increase the prospects of them being able to fund such an amount without having to sell their home and possibly even unit 1. The interests of the respondent will be protected because if the amount is paid, the respondent will receive funding within 28 days, rather than having to wait until April 2019, and the need to sell the Marian Court investment property will be reduced.
In determining the amount to be paid by the applicants to the respondent, we have considered the amount of $100,000 suggested by the applicants and the amount of $252,810.51 plus interest suggested by the respondent.[39] Although the applicants submitted that the amount of damages to be assessed by VCAT in the event that they are successful before the High Court will be less than $252,810.51, that submission is speculative and fails to make any allowance for interest and costs. Moreover, the respondent contends that the amount of $252,810.51 is too low in any event. We have also considered the evidence regarding the liquidity problems of the applicants and the liquidity needs of the respondent.
[39]See [54], [67] above.
Of necessity, in determining the amount to be paid by the applicants, we have had to adopt a broad brush approach which seeks to be as fair as possible to both parties. In all the circumstances, we have decided to fix that amount at $250,000.
The other terms of the stay order will reflect the undertakings which the parties, in their submissions, stated that they are prepared to give.[40]
[40]See [54], [67] above.
Conclusion
For the above reasons, we will make an order granting the applicants a conditional stay. We will hear from the parties on the precise terms of the order.
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