Mason v Fraser
[2020] VSC 374
•1 April 2020
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
JUDICIAL REVIEW AND APPEALS LIST
S ECI 2020 01107
| JESSICA MASON AND DARREN MASON | Applicants |
| v | |
| CASSANDRA FRASER AND DARREN PETER FRASER | Respondents |
---
JUDGE: | Keith JR |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 1 April 2020 |
DATE OF JUDGMENT: | 1 April 2020 |
CASE MAY BE CITED AS: | Mason v Fraser |
MEDIUM NEUTRAL CITATION: | [2020] VSC 374 |
---
PRACTICE AND PROCEDURE – Appeal from decision of VCAT - Applicants seek stay of orders, pending determination of Supreme Court matter - Leave to appeal only granted if appeal has real prospect of success - Applicants assert they are still paying interest, therefore the respondents are secure – Applicants assert if they pay now, and are later successful on appeal, the respondents may not be able to pay - Respondents offered to hold funds in an account until matter resolved – Respondents further undertook not to commence bankruptcy proceedings until matter is resolved – Court not satisfied the respondents lacks the ability to repay damages were appeal to be successful - Offer of respondents to not commence bankruptcy does not relieve the Court of the need to balance the competing positions of the parties - COVID-19 has not prevented property transactions taking place, or financial institutions providing financial facilities - Applicants have not demonstrated the existence of special or exceptional circumstances – Applicants also need to establish an arguable ground of appeal - Application for stay ought not to be a forum to consider the substantive merits of the application for leave, or the appeal – Court satisfied the applicants have established an arguable ground of appeal - Appeal unlikely to be rendered nugatory - Application for stay dismissed.
---
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr AT Schlicht | Michelle Calvert-McCredie |
| The Respondents in person |
JUDICIAL REGISTRAR:
On 26 February 2020, the applicants, Jessica Mason and Darren Mason (‘the Masons’) filed in this Court a Notice of Appeal seeking leave to appeal pursuant to s 148 of the Victorian Civil and Administrative Act 1988 ( ‘VCAT Act’). The application is for leave to appeal from two orders of VCAT, the first dated 18 July 2019 and the second dated 28 January 2020. The orders were made in proceedings arising under the Building Act 1993.
The respondents, Cassandra Fraser and Darren Peter Fraser (‘the Frasers’) had purchased a property from the Masons in 2013. The property is a two-story house in Robbs Road West Footscray (‘the house’). Prior to 2013 the house had been renovated by the Masons. The VCAT proceedings concerned defects in the house and a claim for damages for breach of warranties implied into the contract of sale by s 137C of the Building Act 1993.
The order of VCAT dated 18 July 2019 required the Masons to pay the sum of $96,700 to the Frasers. The total amount claimed by the Frasers was in excess of $200,000.
When the VCAT decision and order were handed down on 18 July 2019, directions were given for further submissions on an issue relating to window flashings and on questions of interest and costs. On 28 January 2020 VCAT made a further order for an additional amount to be paid by the Masons of $27,608.09 and orders were made in relation to costs.
The total amount payable by the Masons under the orders of VCAT is some $124,308 (inclusive of interest to February 2020) plus costs. Interest continues to accrue.
The application for leave to appeal, including any extension of time, and the appeal if leave is granted, have now been listed for hearing in this Court on 4 March 2021. The Masons have made an application for a stay of the orders of VCAT pending the hearing and determination of the proceeding in March 2021.
By order of Daly AsJ dated 30 March 2020, the hearing and determination of the application for a stay has been referred to me. My order, dated 1 April 2020, provided the application for a stay would be determined on the papers after the exchange of affidavits and submissions.
The application for leave to appeal is made pursuant to s 148 of the VCAT Act. The appeal is limited to an appeal on a question of law. The leave to appeal may be granted only if the trial division of this Court is satisfied the appeal has a real prospect of success. There is an issue between the parties as to whether an extension of time is required for the appeal from the July 2019 order. The Masons submit the VCAT proceedings were not finally disposed of until the January 2020 order had been made. Without finally determining that question the terms of s 148 of the VCAT Act refer to ‘an order of the Tribunal in the proceeding.’
The proceeding in this Court is regulated by Supreme Court (Miscellaneous Civil Proceedings) Rules 2018 – Chapter II and Order 4, ‘Appeals from Tribunals’.
Rule 4.04 (3) provides the application for leave to appeal does not operate as a stay of proceedings unless the Court otherwise orders.
Rule 4.08 (10) provides the Court may, in a proper case, grant a stay of proceedings under the order of the tribunal.
Procedural History
The orders made on 1 April 2020 included directions for affidavits and submissions to be filed in relation to the stay application, with an indication the Court would determine the application on the papers.
On behalf of the Masons, submissions and affidavits were filed on 15 April 2020. The Masons also relied on an affidavit of their solicitor sworn on 10 March 2020.
On behalf of the Frasers, submissions and an affidavit were filed on 29 April 2020.
An affidavit in reply, and submissions in reply were then filed on 6 May 2020 on behalf of the Masons.
On 12 May 2020, a further document by way of submissions was filed on behalf of the Frasers. The document sought leave to rely on the further submissions on the basis the documents filed by the Masons on 6 May raised new matters.
On 13 May 2020, the solicitors for the Masons approached the Court by email to seek leave to respond to the submissions filed on 12 May. On 14 May, the Court indicated by email that submissions by way of reply would be received.
On 20 May 2020, the submissions in reply to the 12 May document were filed by the Masons.
I have received each of the affidavits for the purposes of this application and considered the material relied on by the parties. I now deliver my decision on the stay application.
Submissions as to Financial Circumstances
The submissions for the Masons filed on 15 April 2020 at [24] to [27] address the risk that if they paid the amount of the judgment but were successful in the appeal the Frasers would not be in a financial position to then re-pay the amount received by them.
The submissions for the Masons at [21] to [23] and the affidavit of Darren Mason indicate their own financial position has been prejudiced as a result of the COVID-19 pandemic. Mr Masons’ employment has been affected such that his income has been reduced. A business operated by Mrs Mason involving the importation and sale of horse floats has experienced a severe downturn. The Masons have previously gained income from farm stay arrangements to host families from Japan and China but that income is no longer available. An investment property owned by the Masons in Queensland does not generate income at present and the view is the market value has declined so that any sale would compound their financial difficulties.
The affidavit of Darren Mason sets out the nature of the payments and financial obligations that have been deferred or re-arranged as a result of COVID-19 stay at home directives and the impact of loss of income. The affidavit referred to an investment property in Queensland and suggested its value had declined and it was no longer generating income.
The submissions for the Masons at [29] place emphasis on the fact interest continues to accrue on the amount payable under the VCAT orders and to that extent the Frasers are protected. Of course the accrual of interest is a protection to the Frasers only if the Masons remain able to pay the amount of the judgment and all of the interest and costs that will be payable after determination of the appeal is known. The protection is also limited to the amount of interest, which may or may not be accruing at the same rate as interest incurred by the Frasers on borrowed funds. There is also a concern as to the ability to perform the rectification work for which the VCAT judgment is intended to be compensation.
The position as to the financial status for the respective parties is disputed by the Frasers. As to their own financial position,[1] the Frasers respond at [43] to [47] of the submissions filed on 29 April 2020. The Frasers submit there is no proper basis for the submission made by the Masons in terms ‘It is clear that the Respondents do not have the ability to repay the amount awarded in the event of a successful appeal. Rather, they would be using it to complete the works of the house.’[2]
[1]The affidavit of Cassandra Fraser filed on 29 April 2020 provides evidence at [9] and [10].
[2]Masons submissions 15 April 2020 at [26].
The Frasers have indicated in their submissions they are prepared to undertake to hold any payment from the Masons in an interest bearing account until the proceeding is concluded.[3]
[3]Frasers submissions 29 April 2020 at [43] and the affidavit of Cassandra Fraser at [10].
As to the financial position of the Masons, the question of the risk of bankruptcy is addressed by the Frasers and for their part the Frasers undertake not to issue a bankruptcy notice while the proceeding is pending.[4] In relation to the risk of bankruptcy, reference should also be made to the power in the bankruptcy court to extend time for compliance with a bankruptcy notice.[5]
[4]Frasers submissions 29 April 2020 at [41] and the affidavit of Cassandra Fraser at [8].
[5]Bankruptcy Act 1966 (Cth) section 41(6C) – and see Gangemi v Osborne [2008] VSCA 221 at [11].
The Frasers have addressed the fact the Masons own an investment property in Queensland[6] and submit the ability to realise the investment property is a factor against the grant of a stay. Some of the facts surrounding that property are the subject of evidence. The affidavit of Cassandra Fraser describes the property and purchase details[7] and exhibits relevant documents.
[6]Frasers submissions 29 April 2020 at [42].
[7]Affidavit of Cassandra Fraser at [5] to [7] and exhibits.
In the submissions in reply filed by the Masons on 6 May 2020, there is no challenge to the evidence of Mrs Fraser in relation to the Queensland property. The submission is while the Masons do not have the capability of ‘coming up with the money’ there is said to be ‘adequate security of assets to satisfy a judgment debt in the event the appeal is not successful.’[8] The affidavit of Darren Mason sworn on 6 May 2020 does address the purchase of the Queensland property in 2019 and explains the purchase was funded by mortgage over their principal place of residence.
[8]Masons submissions in reply 6 May 2020 at [17].
The further submissions in response filed by the Frasers on 12 May 2020 were filed on the basis the Masons had raised new matters in their reply of 6 May and the affidavit of 6 May. I grant leave to the Frasers to rely on the further submission. I do so on the basis the additional affidavit of Darren Mason does introduce additional evidence concerning the investment property, its acquisition and the funding arrangements. There is no reason to prevent the Frasers from making submissions on that new material. The further submissions from the Frasers address several topics, and in relation to financial circumstances make submissions as to their own position[9] and the Masons’, particularly in response to the affidavit of Darren Mason of 6 May 2020.[10]
[9]Frasers further submissions 12 May 2020 at [4] and [5].
[10]Ibid, at [6].
The Court granted leave to the Masons to reply to the Frasers’ further submissions. The Masons filed the further reply on 20 May 2020. In relation to the Queensland investment property and the financial position of the Masons the submission is the Masons do not have the capacity to raise funds to meet the VCAT orders.[11] The Masons submit the submissions for the Frasers that they possess capacity to satisfy the judgment debt is based ono an incorrect view of the facts and invites an incorrect inference.[12]
[11]Masons further reply 20 May 2020 at [11] to [14].
[12]Ibid, at [11] particularly (a) and (b).
There is insufficient evidence to conclude the submission put by the Masons of ‘adequate security of assets’[13] can be made out. There has been no disclosure of the full financial circumstances, or evidence of financial arrangements, mortgage terms and any questions of priority (if any) between financiers or other creditors. I do not consider such full disclosure is required in all cases for an application for a stay of execution. However, in this case the Masons have submitted an adequacy of asset security but have not provided evidence other than the statements of Darren Mason himself by affidavit.
[13]Masons reply 6 May 2020 at [17] and further reply 20 May 2020 at [14].
The undertaking by the Frasers to retain any amounts paid to them until the determination of this proceeding is to be afforded the weight acknowledged in the case relied on by the Frasers.[14] My consideration of the financial circumstances and the competing risks addressed by the submissions for the parties is such that I do not consider the Masons have established the stay should be granted.
[14]Gangemi v Osborne [2008] VSCA 221.
The evidence from the Masons does not go so far as to establish their existing financial commitments are such as described in the submissions on their behalf.[15] In fact their submissions appear to recognise there is ‘adequate security of assets’ to satisfy a judgment debt.[16] The submissions for the Frasers include an apparent open offer to accept a first ranking charge of the Queensland property.[17] The further response by the Masons[18] consists of assertion and conclusion, but does not descend into particularity. The Masons assert the existence of adequate security of assets, but do not provide any security or comfort to show the amounts due to the Frasers are secured in the event the decision of VCAT is upheld in whole or in part.
[15]Masons submissions 15 April 2020 at [21] [22] and [23].
[16]Masons submissions 6 May 2020 at [17] and 20 May 2020 at [14].
[17]Frasers submissions in reply 12 May 2020 at [5].
[18]Masons submission in further reply 20 May 2020 at [10].
The asserted risk a successful appeal would be rendered nugatory is not, in my view, made out. The financial circumstances of the Frasers do not support a conclusion that any funds paid to them would not be available after the appeal if the Masons are successful. There are assets, including the property the subject of the building work. I do not accept the Frasers would be unable to re-pay the amount. In addition the undertaking provided by the Frasers provides additional security to support this conclusion.
The financial difficulty advanced by the Masons must, in my view, be balanced by the recognition the Frasers are entitled to the benefit of the orders in their favour. The financial circumstances of the Masons may be the subject of pressure from a number of directions, not only the obligation to pay funds to the Frasers.[19] I do not consider the circumstances justify the risk to the Frasers that the financial position may change and that the enforcement of the orders be made more difficult or that there is a loss of financial priority or advantage. From the prospect of the Frasers, the prospect the appeal is unsuccessful must be given some weight and their position as a creditor should not be prejudiced by a change to their existing entitlements. The undertaking to not commence bankruptcy proceedings is acknowledged, but does not relieve the Court of the need to balance the competing positions and advantages and disadvantages for both sides.
[19]The affidavit of Darren Mason sworn 15 April 2020 describes the financial distress and impact of COVID-19.
The need for the applicant to demonstrate the existence of special or exceptional circumstances for a stay has been affirmed recently.[20] Such a requirement was not in dispute between the parties before me. The applicants addressed the special circumstances of the risk the appeal would be rendered nugatory and the impact of the COVID-19 pandemic both as to their particular financial circumstances and generally as to the ability to raise finance or fund the payment required by the orders. I have dealt with the submission as to whether the appeal might be rendered nugatory. I do not consider that to be the case.
[20]ASEA 1 Pty Ltd Rudyard Pty Ltd [2020] VSCA 122, [13].
As to the impact of COVID-19, it is not established there is such an impact as to prevent the Masons from realising assets or arranging finance to meet the payments due to the Frasers. There is uncertainty as to how long the impact of COVID-19 will remain and no specific evidence was given on such matters. Taking judicial notice of public information, it might be assumed it could well extend beyond the time for hearing of this appeal. On that assumption, I consider the factors to favour the refusal of the stay, rather than the grant of a stay. The economy of Australia has not reached a stage where property transactions cannot occur, or where financial institutions are not providing financial facilities. The cost and risk associated with such decisions properly remains with the Masons in my opinion.
The Masons may prefer to not have to choose whether to sell the Queensland property, even if at a loss, or whether to extend financial facilities, but these circumstances do not amount to special or exceptional circumstances. The circumstances might be regarded as the common or anticipated difficulties facing a litigant the subject of orders of this nature. The addition of the COVID—19 pandemic impact does not elevate such difficulties to special or exceptional circumstances.
For these reasons I refuse the grant of a stay on the grounds the Masons have not established the power to order a stay should be exercised, as they have not demonstrated the existence of special or exceptional circumstances. The Frasers are entitled to the benefit of the VCAT orders and the circumstances relied on by the Masons do not satisfy me that such benefit should be postponed. The appeal will not be rendered nugatory if the Masons are successful on any or all of the proposed grounds.
That conclusion is sufficient to dispose of the application. However I turn to deal with the merits of the grounds of appeal and the submissions addressed on that aspect of the application.
Merits of Appeal
It is necessary for an applicant for a stay of execution to establish at least an arguable ground of appeal. This is necessary to avoid the situation that a stay might prevent a party from enjoying the benefits of the judgment where the appeal is hopeless, or is an abuse of process. The Court is not concerned to determine the outcome of the appeal. The merits of the appeal may be addressed to allow the Court to be satisfied the appeal is brought for proper purpose and there is at least an arguable ground of appeal.[21] In such a case the stay would not be granted.
[21]Neate v Thoroughbred International Marketing Pty Ltd [2012] VSCA 65; 34 VR 318 at [8] and Maher v Commonwealth Bank [2008] VSCA 122.
The submissions for the Masons[22] refer to Ground 6.2.5, which concerns a denial of natural justice in relation to the window flashing issue dealt with by VCAT at the further hearings in January 2020. The second order of the Tribunal awarded an amount of $13,071.80 in respect of the window flashings. In response, the Frasers dispute aspects of the history of the conduct of the Tribunal proceeding and submit the ground is not reasonably arguable.[23]
[22]Masons submissions 15 April 2020 [9] and reply 6 May 2020 at [6] to [13].
[23]Frasers submissions 29 April 2020 at [9] to 14].
The judgment for $96,700 was summarised by the Tribunal under the several claims described as follows:
a.Storm water connection - $26,000
b.Down pipes - $3,750
c.Water proofing - $29,700
d.Sealing external cladding - $24,250
e.Balcony water proofing - $9,000
f.Electrical wiring - $4,000
The written submissions for the Masons deal with the merits of the appeal in relation to several of the claims being storm water,[24] down pipes[25] and electrical wiring.[26] Each of them is dealt with in detail in the submissions for the Frasers.[27]
[24]Masons submissions 15 April 2020 at paragraph [13] - ground of appeal 6.2.3.
[25]Ibid, at [14].
[26]Ibid, at [15].
[27]Frasers submissions 29 April 2020 at [15] to [30].
The grounds of appeal include a question of law as to when the time for a claim for breach of warranty should have commenced.[28] That ground of course applies to the whole of the judgment of VCAT. The Frasers have responded to this ground of appeal and submit it is not reasonably arguable.[29]
[28]Masons submissions 15 April 2020 at paragraph [16].
[29]Frasers submissions 29 April 2020 at [26] to [30].
Also as to the merits, it is necessary to mention the extension of time argument. The Masons submit no extension of time is required as the appeal was commenced within 28 days of the January 2020 order of VCAT, which they say is the final order.[30] The Frasers submit it is clear an extension of time is required to appeal from the 2019 order and further submit there is little or no prospect of an extension being granted.[31]
[30]Masons submissions in reply 6 May 2020 at [2] and [3] and further reply 20 May 2020 at [8].
[31]Frasers submissions 29 April 2020 at [31] to [35] and submission in response 12 May 2020 at [3].
The notice of appeal indicates in the orders sought that if the Masons are successful on the appeal there would be an award of $9,000 for balcony waterproofing. The Frasers have relied on the item of balcony waterproofing to submit that some amount is payable even if the appeal is otherwise successful and submit there is no basis to stay payment of that amount.[32]
[32]Ibid, at [51].
The submissions of the parties concerning the merits of the grounds of appeal extend to submissions about the absence of evidence and questions of onus.
The absence of the VCAT transcript from the evidence before the Court on this stay application is one aspect of these submissions.[33] The orders made for this matter to proceed to trial include a direction that the transcript be filed by 28 May 2020.[34]
[33]Frasers Submissions 29 April 2020 at [10] to [13].
[34]Order dated 1 April 2020 at clause 4.
The Frasers submit the submissions for the Masons should be supported by evidence.[35]
[35]Frasers Submissions 29 April 2020 at [14].
In response the Masons observe no affidavit material has been filed by the Frasers as to the merits of the appeal, and no contradictory evidence has been put forward.[36]
[36]Masons reply 6 May 2020 at [6] to [12].
The Frasers respond the onus of demonstrating grounds for the stay is on the Masons.[37]
[37]Frasers Response 12 May 2020 at [2] with authority cited – footnote 1.
The authorities relied on by the Frasers as to the submission that the onus is on the Masons as applicants are not in dispute. Clearly, the onus is on the Masons. There is no submission on behalf of the Masons to the contrary.
The principles regarding the grant of a stay have been summarised in a recent decision of the Court of Appeal.[38] The Court there expressed the issue as ‘a stay should not be granted unless the applicant for the stay has demonstrated that it has at least an arguable ground of appeal.’[39]
[38]ASEA 1 Pty Ltd Rudyard Pty Ltd [2020] VSCA 122 delivered 13 May 2020 – paragraphs [12] to [15].
[39][2020] VSCA 122 at [14].
The submissions about the evidence or the lack of evidence illustrate that the determination of an application for a stay ought not be a forum for consideration of the substantive merits of the application for leave, or of the appeal. I consider the submissions directed to disputed evidence to assist, rather than hinder, the determination that there is a reasonably arguable ground of appeal.
I am satisfied the applicant has established there is at least an arguable ground of appeal. I observe the submissions for the Frasers[40] have been expressed in terms of the need to establish there are ‘reasonably arguable’ grounds for an appeal – in that the applicant must satisfy the Court the appeal enjoys ‘reasonable prospects of success.’ In support the submissions refer to Maher v Commonwealth Bank,[41] Neate v Thoroughbred International Marketing Pty Ltd[42] and Seifert v Chaudhary.[43] To the extent there is thought to be any difference between the test as stated by the two sets of submissions, I find the Masons have established reasonable prospects of success, sufficient to conclude the stay should not be refused on the ground the appeal lacks merit.
[40]Submissions dated 29 April 2020 at [7] and throughout the analysis of grounds at [8] to [35].
[41][2008] VSCA 122.
[42][2012] VSCA 65.
[43][2012] VSCA 17.
I would add I accept the submission for the Frasers that there is at least an amount of $9,000 of the orders not the subject of a ground of appeal and will remain payable whatever the outcome of the appeal. It may be the case there could be amounts to be offset if the appeal is substantially successful, but even if a stay were justified it would be a partial stay and not a complete stay of the orders.
Conclusion
The COVID-19 pandemic and its consequences raise difficulties for both parties. I have considered the evidence and submissions for the Masons but have come to the view the circumstances do not justify a stay of execution of the VCAT orders. The Court is required to balance the risks and hardship to the parties and I consider the Frasers are entitled to the benefit of the VCAT orders. The undertakings given by the Frasers offer some degree of protection to the Masons. There may be other means by which the Frasers can be secured or afforded some protection against not being able to recover the amounts due if the appeal is unsuccessful. As I have explained earlier in these reasons, I consider the Masons are sufficiently protected by the undertakings in the event the appeal is successful or partly successful.
My preliminary view is the costs of the stay application should be reserved and considered in light of the outcome of the appeal. I will allow the parties to make submissions to the contrary or to provide their consent to such an order within 14 days of the provision of these reasons.
ORDERS
Application for stay is dismissed.
Subject to any further submissions, costs of the application are reserved
0
5
0