Brown v A E P Belgium SA [2004] VSC 255

2. This is an application by the plaintiffs by summons dated 17 June 2004 for the continuation of a stay of the orders made and the judgment given by Member Clothier of the Victorian Civil and Administrative Tribunal ("VCAT") on 2 June 2004. On that occasion, Member Clothier ordered, amongst other things:

(1) The landlords (being the defendants in this proceeding) are entitled to a possession order.

(2) The tenant (being the first plaintiff in this proceeding) must vacate rented premises by 16 June 2004.

(3) ...

(4) The issue of a warrant of possession is postponed until 16 June 2004.

8. By an originating motion filed on 17 June 2004, the plaintiffs sought leave to appeal against Member Clothier's orders. On that same day, Byrne J, sitting in the Practice Court, granted a stay on the VCAT orders until 4.15 pm on 22 June 2004 or further order. His Honour did so on an ex parte application brought by the plaintiffs. He also did so upon an undertaking being given in the following terms:

"The plaintiffs undertake to pay by 12 pm on 18 June 2004 to the defendants mesne profits at current rates, being a sum equal to the rent which fell due on 12 June 2004."

12. On 22 June 2004, the plaintiffs filed a summons seeking leave to appeal pursuant to s.148 of the Victorian Civil and Administrative Tribunal Act 1998. That summons is returnable before a Master of this Court on 12 July 2004.

15. Briefly stated, the facts relevant to this dispute are as follows. The second plaintiff is the registered proprietor of a property situated at 25 London Bridge Road, Portsea. The second plaintiff granted a mortgage of the premises, dated 27 June 2003, to the defendants to secure payment of a debt of some $1.6 million owed by the second plaintiff and another person to the defendants. The second plaintiff defaulted under the mortgage in failing to pay an instalment due on 31 December 2003. On 12 February 2004 the defendants obtained judgment in this Court for the amount of the debt then outstanding, which was some $1.1 million. That judgment debt remains unsatisfied.

18. The defendants gave notice to the second plaintiff under s.76 of the Transfer of Land Act 1958. The debt was not paid within the time prescribed in the notice and accordingly the defendants became entitled to exercise their power to sell the mortgaged premises. On 23 March 2004 the defendants, through their agent, attempted to take possession of the premises by changing the locks. Those locks were subsequently changed back by somebody acting on behalf of one or other of the plaintiffs. On that same date, the defendants were informed for the first time, by a solicitor, that the first plaintiff claimed to be a tenant of the premises, and on that same day the defendants were provided with a copy of what purported to be a residential tenancy agreement dated 5 August 2002, for a period of two years commencing on 12 August 2002 and ending on 15 August 2004.

21. Thereafter, the defendants served on the first plaintiff a notice of entry into possession of the mortgaged land, under s.78 of the Transfer of Land Act, and subsequently served other notices attempting to take possession of the premises. As I have already indicated, VCAT Member Clothier found in favour of the defendants. It is not necessary for me for present purposes to go into any detail as to the reasons for decision of the VCAT Member.

24. There is no real dispute between the parties as to the relevant principles which govern such an application for a stay. I accept that the Court has inherent jurisdiction and the principles that govern the exercise of that jurisdiction are well established. I accept that it is an extraordinary jurisdiction and exceptional circumstances must be shown before its exercise is warranted. There have been many cases considering the grant or refusal of a stay pending an application for the grant of leave or special leave, as the case may be. As Hayne J commented in the decision in Patrick Stevedores Operations No.2 Pty Ltd v Maritime Union of Australia (No. 3)[1], all the decisions must be read in the light of the circumstances of the individual cases. Nothing that is said in them is to be read as identifying immutable principles which fetter the court's discretion to grant a stay. The jurisdiction is ample. The relevant question which falls for decision is whether it should be exercised in this case.

27. Mr Pizer, who appeared on behalf of the defendants, helpfully referred me to a decision which is not dissimilar to this decision, being a decision of Gillard J of this Court in Scandi Pty Ltd v Wright[2]. In that case, Gillard J faced the same question that I face today, namely, whether to grant a stay of orders of VCAT giving possession of rented properties governed by the Residential Tenancies Act 1997. His Honour posed three questions which he found relevant to the consideration of whether to grant a stay. The questions are: (1) Is there a substantial prospect that leave to appeal would be granted? (2) What effects would the grant or refusal of the stay have? (3) Where lies the balance of convenience?

31. I turn to consider each of those matters in the context of the facts before me. On the limited arguments before me, I have some doubts as to the likelihood of the plaintiffs succeeding on at least three of the proposed grounds of appeal. In relation to paragraph (c) of the proposed notice of appeal, I am not in a position to form an opinion as to the prospects of success on that ground, for several reasons. Firstly, the underlying facts are disputed on the affidavit material before me. Secondly, although reasons for decision have been requested from VCAT, they have not yet been provided. Those reasons for decision may shed light on the matter the subject of that ground of appeal, namely, the considerations or matters that were taken into account by the VCAT Member. I accept the submissions of Mr Pizer that VCAT need not provide reasons for decision in this particular case, given the relevant rules, but I am told that reasons have recently been requested from VCAT and there has been no indication from VCAT as to whether or not they will be provided. Certainly there has been, I am informed, no indication that reasons will not be provided. In the decision of Scandi, Gillard J formed the opinion that he was not persuaded on the arguments to date that the person in the tenant's position had reasonable prospects of obtaining leave to appeal. However, he noted that in considering the prospects on leave to appeal, one had to also bear in mind the other relevant factors, namely, balance of convenience and the effect of granting or not granting a stay.

34. For similar reasons, although, as I have already said, I have some doubts about the prospects of success, I cannot say that the plaintiffs' prospects are so hopeless as to not get them over what is not a terribly high threshold in this particular case. The reason why I say it is not a high threshold in this particular case is that, in my opinion, the balance of convenience overwhelmingly favours the grant of a stay.

38. It seems to me that the effect of granting a stay in this case - and I indicate that I would only grant a stay on the condition that rent continue to be paid to the defendants - would be that the first plaintiff will continue to occupy the premises and the defendants will continue to receive rent. I would only propose to order the stay at this stage until the hearing and determination of the leave application.

41. True it is that if a stay is granted the defendants may effectively be prevented from selling the property until mid-August, but there is no evidence before me that there is any particular prejudice that would flow to the defendants from not being able to sell the property or put the property on the market in mid-June, as opposed to mid-August. For example, unlike in some other cases, there is no evidence that this is an ideal market in which to sell, or that the defendants have a prospective purchaser who is available to purchase the property at the moment but may be lost if there is a delay of a month or two. Secondly, there is no evidence before me of any possible shortfall from the secured property, and in any event there is no evidence before me that the rent would not be sufficient to cover the default interest under the mortgage, assuming that there were a shortfall.

44. On the other hand, if I do not grant a stay, the defendants can take immediate possession and take steps to sell, and the first plaintiff would be required to leave the premises forthwith. True it is that the lease is only until mid-August, and I accept Mr Pizer's submissions that, come mid-August, the first plaintiff is going to have to remove his possessions and pay removal costs and so on, but he is still entitled to quiet enjoyment until then if his appeal is ultimately successful.

47. The plaintiffs have not acted as expeditiously as they could have since the VCAT decision on 2 June 2004. I accept that there is much force in what Mr Pizer said in his submissions about the delays. That said, the plaintiffs have acted within the time limits under the rules, albeit on the last possible day, and indeed the application to the Master was only initiated after I indicated yesterday that sending this matter off to the Environment and Planning List (as the plaintiffs intended to do) was not appropriate and that the leave application should be sent off to the Master.

50. Be that as it may, in my opinion, and with some reluctance, I believe that the balance of convenience does favour the first plaintiff being entitled to remain in the premises.

54. I note that the application for leave to appeal has been listed for 12 July 2004 before the Master. Whilst I have contemplated whether to require that that matter be dealt with perhaps next week or at a more expeditious time, it seems to me that may not be practicable, at least for the following reasons. The VCAT reasons for decision have not been provided and the time for providing them, if they are going to be provided, has not expired, if indeed the VCAT Member thinks that he is operating under the 14-day limit. I do not give any weight to the fact that senior counsel is unavailable before 12 July 2004, but I am mindful of the fact that the Court vacation, and the limited availability of Masters, may mean that 12 July 2004 is not an unreasonable time for hearing the application.

57. Before I finally pronounce orders I will hear the parties on the exact wording. What I am minded to do is to require two undertakings from the plaintiffs as a condition of extending the stay. The first will be that rent continue to be paid, and, Mr Pizer, I would like to hear from you as to exactly how you would like that undertaking formulated. Secondly, I require an undertaking that the plaintiffs will prosecute the application for leave and, in the event that leave is granted, any appeal, expeditiously. Upon those undertakings being formulated and offered to the Court, I propose to stay the orders of Member Clothier until the hearing and determination of the application for leave or further order. I propose to grant liberty to apply, and in particular, if the plaintiffs are dragging their heels at any stage on the application for leave, I would expect that liberty to apply could be invoked. I would propose to reserve costs. I will hear from the parties as to the exact formulation of those undertakings and orders.

63. HER HONOUR: I am happy to have the parties put forward a minute of proposed orders, which will come to my associate. I do not require you to come back unless you find some insoluble problem. I certainly will require undertakings. As foreshadowed, I am prepared to require the undertakings to be from both plaintiffs, but if the defendants only require it from one plaintiff and that plaintiff is prepared to give it, I am perfectly happy with that. I will require, either by an undertaking or by an order, expedition. I will grant the stay until the hearing and determination of the application for leave or further order. There will be liberty and there will be costs reserved. I will leave it to counsel to prepare a minute of orders.

[1] (1998) 72 ALJR 869 at 870-1.

[2] [2000] VSC 149.