Despot v Registrar General

Judgment 1MEAGHER JA: On 20 February 2012 the appellant (Mr Despot) filed a notice of appeal from a judgment and orders made by Macready AJ on 15 April 2011 and entered on 5 May 2011. That notice of appeal was filed out of time: UCPR r 51.16. The appellant had previously filed a notice of intention to appeal on 27 May 2011. That notice was also filed out of time: UCPR r 51.8. On 22 December 2011 the appellant filed a summons seeking leave to appeal from the judgment and orders of Macready AJ. It is now common ground that as the appeal involves a matter at issue of more than $100,000, leave to appeal is not required. 2The appellant seeks an order extending the time for the filing and service of the notice of appeal to 21 February 2012. The making of that order is opposed by the respondents. The appellant seeks that order under UCPR r 51.9(1)(b) or alternatively under s 63 of the Civil Procedure Act 2005. In my view the power to make the order sought is provided by UCPR r 51.16(2) which permits the Court, in a case within UCPR r 51.16(1)(c), to extend the time for filing the notice of appeal "at any time". The present case falls within that paragraph because the notice of intention to appeal was filed and served out of time and the notice of appeal was not filed pursuant to leave. UCPR r 51.9(1) does not apply because the notice of intention to appeal was not filed and served in time. 3The application for the extension of time for filing the notice of appeal requires attention to factors which include whether the appeal has prospects of success, the length of and reason for the delay in filing the notice of appeal and the extent of any prejudice suffered by the respondents because of that delay: Jackamarra v Krakouer [1998] HCA 27; (1998) 195 CLR 516 at 520-521, 539-540; Tomko v Palasty (No. 2) [2007] NSWCA 369; (2007) 71 NSWLR 61 at [55]. Those factors are relevant to the ultimate question for the Court which is whether it is just in all the circumstances to grant the application to extend time. 4In order to address that question, it is necessary to have an understanding of the underlying proceedings and outcome before Macready AJ and the matters sought to be argued on appeal. 5In early 2007, Mr Despot arranged with the second respondent (Mr Maalouf) that the seventh respondent (Sky Constructions), a company controlled by Mr Maalouf, would undertake extensive renovation work on an apartment owned by Mr Despot. There were disputes as to the terms of that arrangement and as to whether, and if so when, a building contract bearing the date 16 July 2007, was signed by Mr Despot. Renovation work commenced in August 2007. In September 2007, Mr Despot signed a deed of security and indemnity in favour of Sky Constructions and a power of attorney in favour of Mr Maalouf. Initially he maintained that he did not sign either document. The deed secured to Sky Constructions amounts owing in respect of the building work. Each was dated 5 September 2007 and prepared by the fifth respondent (Mr Carbone), a solicitor retained by Mr Maalouf. 6The building work continued through to May 2008. During parts of this period Mr Despot was overseas. At the time the work commenced, Sky Constructions did not have a contractor licence under the Home Building Act 1989. It did not obtain that licence until March 2008. Also there was no contract of insurance in relation to the building work as required by s 94 of the Home Building Act. 7In April and May 2008, unbeknown to Mr Despot, Mr Maalouf, acting as his attorney, arranged for the sale of the property to the third respondent (Stelli). The sixth respondent (Mrs Azzi) was the sole director of that company. On 12 May 2008, Mr Maalouf executed a deed of settlement creating a discretionary trust, the trustee of which was Stelli and the objects of which were Mr Maalouf and his family. That deed was prepared by Mr Carbone. Contracts for sale of the property were exchanged on 16 May 2008. The contract was prepared by Mr Carbone on instructions of Mr Maalouf as attorney for the vendor, Mr Despot. 8The sale was completed on 3 July 2008. Of the amount due on settlement to the vendor, $502,540 was paid to discharge Mr Despot's mortgage to the St George Bank; $464,932 was paid to Sky Constructions in respect of the building work; $480,000 was financed by the vendor and a shortfall of $91,086 remained unpaid by Stelli. By October 2008 Stelli had repaid the $480,000 to Mr Maalouf. 9In his judgment delivered on 31 March 2011, Macready AJ summarised and dealt with Mr Despot's claims ([2011] NSWSC 273 at [40]) as follows: (1)There was no overarching fraudulent scheme on the part of Mr Maalouf to deceive Mr Despot and deprive him of his property. Stelli and Mrs Azzi did not enter into the contract for sale, or take a transfer of the property, with knowledge or notice of any such scheme. (2)Mr Maalouf owed no fiduciary duties to Mr Despot in exercising the power of attorney because the power of attorney was coupled with a security interest exercisable in favour of Sky Constructions. It followed that there was no knowing participation by Stelli or Mrs Azzi in any breaches of fiduciary duty by Mr Maalouf. (3)Mr Maalouf could not rely on the power of attorney to confer any benefit on him and acted without authority in directing on settlement that $464,932 be paid to Sky Constructions and in subsequently receiving and directing that $480,000 be paid to Sky Constructions. However, Stelli was entitled to rely on the apparent authority of Mr Maalouf as attorney to enter into the contract for sale and transfer title to the property. (4)Sky Constructions could not enforce the building contract and was not entitled to damages or to any other remedy under that contract. However, Sky Constructions remained entitled to recover for that work under a quantum meruit claim which he assessed at $316,874. That amount included a disputed allowance for scaffolding of $71,404. (5)The claims for negligence and misleading conduct against Mr Carbone failed. His client was Mr Maalouf and he owed no duty of care to Mr Despot as donor of the power of attorney. There was no reliance by Mr Despot on any conduct of Mr Carbone to support the claim under the Fair Trading Act 1987. 10Of the proceeds of sale received on settlement of $944,932 ($464,932 plus $480,000), Mr Maalouf was ordered to account to Mr Despot for $628,057.13 (ie $480,000 plus $148,057.13). The latter amount was the difference between the amount paid to Sky Constructions from the proceeds of sale ($464,932) and the amount to which it was entitled by way of quantum meruit ($316,874). An order was made for specific performance of the contract for sale with the result that Stelli remained liable to Mr Despot for the balance of the purchase price of $91,086. 11By its notice of appeal and written submissions filed in support of that notice Mr Despot argues that Macready AJ erred in three respects. First, he erred in not concluding that Mr Maalouf owed fiduciary duties to Mr Despot, that he had breached those duties and that Sky Constructions, Stelli and Mrs Azzi had knowingly assisted Mr Maalouf to breach his fiduciary duty in relation to the sale of the property. Secondly, it is said that he erred in failing to hold that Mr Carbone had breached a tortious duty of care to Mr Despot and contravened s 42 of the Fair Trading Act. Finally, it is said that he erred in allowing in the quantum meruit claim, an amount for scaffolding of $71,404. 12In the notice of appeal and in written submissions, Mr Despot also contends that Macready AJ erred in failing to hold that Mr Carbone knowingly assisted Mr Maalouf to breach his fiduciary duty to Mr Despot. There is an issue between the relevant parties as to whether any such claim was made against Mr Carbone by the first amended statement of claim or argued before the primary judge. 13The positions taken by the respondents to the application for the extension of time vary. Mr Maalouf and Sky Constructions do not say that they have or will suffer prejudice by reason of the delay in filing the notice of appeal. They argue that the period of delay between May 2011 and February 2012 has not been satisfactorily explained. They also argue that the injustice which would be suffered by Mr Despot if his application was refused would not be significant. This is so, they say, because the difference between the outcome before Macready AJ and the outcome sought on appeal is that there would be judgment against Mr Maalouf for the full amount he received on settlement. That represents an additional amount of $316,874. At the same time Mr Despot concedes that he would be liable to Sky Constructions for its quantum meruit claim of $316,874 less the disputed scaffolding amount of $71,404. Thus it is said that the difference in monetary terms between the overall result obtained and the result sought is only $71,404. 14Stelli and Mrs Azzi also do not say that they have or will suffer prejudice by reason of the delay in filing the notice of appeal. They have, however, filed a motion seeking security for costs of the appeal and maintain that they will incur significant costs in the appeal, both directly and by reason of an obligation to indemnify St George Bank in respect of any costs it might incur. They do not suggest that those costs constitute prejudice occasioned by reason of any delay of the appellant. In oral argument they also accepted that Mr Despot had provided a sufficient explanation for his delay in filing the appeal and that the appeal raises arguable issues of fact and law in respect of the claims against them. 15Mr Carbone opposes the grant of the extension of time on the basis that the appeal, in so far as it concerns him, is bound to fail. He does not point to any prejudice suffered by reason of the delay but does say that the explanation proffered for that delay is not sufficient. 16In the light of these different positions and the concessions made in argument, I will first address the question of delay, then Mr Maalouf's argument as to the amount in issue and finally Mr Carbone's argument that the appeal, in so far as it concerns him, is futile. 17In the period to mid-July 2011 the solicitors who had acted for Mr Despot in the proceedings did not prepare and file a notice of appeal although they had indicated to Mr Despot that they would do so. There is a suggestion in the evidence that at some stage Mr Despot was given advice that his prospects on appeal were not good. Nevertheless his solicitors had filed a notice of intention to appeal, albeit out of time, and were proceeding with the filing of a notice of appeal. In late July, Mr Despot sought the assistance of a friend and retired solicitor in prosecuting the appeal and arrangements were made for that person to assist the solicitors and to have access to their files. After a short time he withdrew that assistance and it became necessary to find other solicitors. That process was delayed by Mr Despot's financial position and inability to raise sufficient moneys to pay the outstanding fees owed to his former solicitors and secure the retainer of new solicitors and counsel. During this period Mr Despot made attempts to sell a property owned by him at Darlinghurst. His financial position was not assisted by the non-payment by Mr Maalouf of the judgment sum of $628,057 plus interest or the non-payment by Stelli of the sum of $91,086. In December 2011 Mr Despot's current solicitor was retained. Junior counsel was also retained and on 22 December 2011 the summons seeking leave to appeal was filed. In February 2012 new junior counsel was briefed and shortly thereafter the notice of appeal was filed. On 30 April 2012, Mr Despot's written submissions on the appeal were filed. 18On 30 August 2011, Mr Despot wrote to the solicitors for the respondents advising that he still intended to appeal and that the main reason he had not done so was because he was in dispute with his former solicitors and unable to obtain the release of his files. In December 2011 the respondents received a draft notice of appeal. Although the notice of appeal filed in February 2012 reformulates the grounds of appeal, the only respect in which it is suggested that the reformulation involved a material change was to include a ground alleging error in failing to find knowing assistance on the part of Mr Carbone. 19Although there were delays in filing the notice of intention to appeal and then in filing the notice of appeal, Mr Despot's explanation for those delays is sufficient to justify an extension of time in the absence of prejudice to the respondents and any other countervailing considerations. 20Mr Maalouf's argument that there is not a sufficient amount at stake in the appeal involving him and Sky Constructions to warrant an extension of time against them should be rejected. It does not take account of any difference in the likelihood of Mr Despot recovering amounts from Mr Maalouf rather than Sky Constructions. Nor does it address any consequential costs orders which might be made, if the appeal is successful, in a proceeding which occupied over two weeks in hearing days. These matters suggest that any monetary assessment of what is at stake in the appeal involving Mr Maalouf and Sky Constructions is significantly in excess of $71,404. 21The respondents have Mr Despot's written submissions on appeal and, with the exception of Mr Carbone, do not argue that he does not have a fairly arguable case on appeal. In these circumstances, there being no other countervailing considerations in relation to those respondents, the interests of justice dictate that Mr Despot should have an extension of time to appeal against them. It remains necessary to consider whether the position of Mr Carbone is any different. 22He argues that the proposed appeal against him has no prospects of success for four reasons. First, he says that no claim against him for knowing participation was pleaded or argued before Macready AJ. That is contested by Mr Despot. It is not necessary or appropriate that I deal with this issue on this application. For the reasons which follow I am satisfied that Mr Despot's appeal from the express findings of the primary judge on the claims for negligence and under the Fair Trading Act is not hopeless and that it would not be futile to extend the time for an appeal against Mr Carbone in respect of those matters. Whether Mr Despot is entitled to press this additional ground of appeal on the basis that this claim was pleaded or argued below will need to be addressed as part of his appeal. It may be necessary when dealing with that argument to consider in more detail whether such a case was argued before the primary judge. 23The second reason given is that no challenge is made by Mr Despot to the finding by the primary judge that Mr Carbone did not owe a duty of care to Mr Despot. I do not agree. Whilst ground 15 of the notice of appeal could be expressed more clearly, it raises as a ground of appeal that the primary judge erred in failing to find that Mr Carbone acted in breach of duty. Such a finding requires that there be a duty and a finding of breach. Mr Despot's written submissions in support of the appeal identify circumstances said to give rise to the duty and the respects in which it is said to have been breached. 24Thirdly, Mr Carbone submits that in relation to the claim for misleading and deceptive conduct, there is no challenge to the findings of fact made by the primary judge: [2011] NSWSC 273 at [302]. In response, Mr Despot says that his case is not contradicted by or dependent on those findings. Mr Despot's written submissions on the appeal argue that he suffered loss by reason of Stelli acting upon misleading and deceptive conduct of Mr Carbone as to his authority to give directions on behalf of Mr Despot. The findings made by the primary judge do not mean that such a case must fail. 25Finally, Mr Carbone says that the orders made by Macready AJ fully recompense Mr Despot and leave no room for any argument that he suffered loss and damage by reason of any breach of duty or conduct on Mr Carbone's part. In response, Mr Despot maintains that the damage which he has suffered includes the costs or liability for costs incurred in prosecuting the proceedings (being his costs and those of other parties) as well as any moneys which may not be recoverable from Mr Maalouf or Sky Constructions or Stelli. Each of these is an arguable head of loss. 26The matters relied upon by Mr Carbone do not justify the conclusion that the appeal against him is hopeless. It is appropriate therefore to extend the time for filing the notice of appeal against all respondents to 21 February 2012. 27I propose to reserve the costs of this application. Mr Reynolds SC, who appeared for Mr Despot, requested that I do so. He wishes to argue, in the context of the determination of the appeal, that any delay in the filing of the notice of appeal was due to his client's impecunious position, which in turn was the result of the conduct of Mr Maalouf and Sky Constructions. There is no opposition by any of the respondents to the making of this order. 28There is one other matter to which reference should be made. In support of the application for the extension of time, Mr Despot argued that an aspect of the prejudice which he would suffer if time were not extended was that he would be prevented from appealing against the costs order made by the primary judge. I have not taken this matter into account when addressing whether time should be extended because the grounds of appeal do not include that the primary judge erred in exercising his discretion as to costs. Although the relief sought on appeal includes an order setting aside the costs orders made by the primary judge, that relief is sought only in the event that the appeal is otherwise successful.