Piety Developments Pty Ltd v Cumberland City Council

JUDGMENT

1. THE COURT: On 23 July 2024, the Court published its reasons for judgment and made orders in Piety Developments Pty Ltd v Cumberland City Council [2024] NSWCA 173 (J). Those reasons should be read in conjunction with these reasons for judgment.
2. The Court dismissed the appeal by Piety Developments Pty Ltd (Piety) and ordered it to pay the Cumberland City Council's (the Council) costs of the appeal. The Court also dismissed the Council's cross-appeal and ordered it to pay Piety's costs of the cross-appeal.
3. By a notice of motion filed on 6 August 2024, Piety now seeks an order restraining the Council from taking any action to rescind a Council resolution dated 3 November 2021 concerning the sale of the property the subject of the proceedings located at 13 John St, Lidcombe NSW 2141 (the Property).
4. Piety relies on an affidavit in support dated 6 August 2024 sworn by its instructing solicitor, Mr Moses El-Saj. Mr El-Saj deposes that Piety intends to seek special leave to appeal to the High Court of Australia from this Court's judgment and orders and that it proposes to file that application by 20 August 2024, being the last day for the making of any such application.
5. The Council opposes the motion. It relies on an affidavit dated 6 August 2024 by its instructing solicitor, Mr David Amentas. This affidavit is directed to the issue of the balance of convenience. We will summarise the parties' evidence later.
6. The motion was prompted by the fact that the Council proposes to deal with a rescission motion dated 3 November 2021 (rescission motion) at its meeting scheduled to take place at 6.30pm on 7 August 2024. Accordingly, there is a degree of urgency about the matter.
7. It is desirable to set out some relevant background facts.
8. Piety commenced the proceedings in the Court below on 9 February 2022. It alleged that the parties entered into a binding and enforceable agreement for the Council to sell the Property to Piety. The relief sought by Piety in the Court below included an order for specific performance of that alleged agreement.
9. Also on 9 February 2022, Piety sought and obtained an interim injunction restraining the Council from taking any action in respect of the rescission motion, which motion proposed the rescission of a resolution passed by majority earlier that day that accepted Piety's best and final offer to purchase and develop the Property (3 November 2021 resolution). Under that resolution the Council's General Manager was authorised to execute the necessary documents to give effect to the sale.
10. On 14 February 2022, the injunction was continued without admission as to liability and by consent of the parties until further order.
11. As noted at J[3], the appeal and the cross-appeal related to judgments and orders of Parker J which were reported as Piety Developments Pty Ltd v Cumberland City Council [2023] NSWSC 480 and Piety Developments Pty Ltd v Cumberland City Council (No 3) [2023] NSWSC 1627.
12. In the proceedings below, by a further amended summons filed on 12 December 2023, Piety sought the following relief: (1) a declaration that there is a binding agreement for the sale of the Property; (2) an order for specific performance of the alleged agreement; (3) damages and/or equitable compensation; and (4) costs.
13. On 15 December 2023, Parker J discharged the injunction as extended on 14 February 2022 (order 2) but ordered that this order be stayed for a period of five weeks from the date the Court published its reasons for judgment (order 4). Those reasons for judgment were published on 19 December 2023.
14. Piety filed and served its notice of appeal to this Court on 19 January 2024.
15. On 25 January 2024, by consent, this Court made an order which stayed order 2 dated 15 December 2023 until 6 February 2024.
16. By a motion filed on 2 February 2024 in this Court, Piety applied for a further extension of that stay order, which application was opposed by the Council.
17. On 5 February 2024, Gleeson JA extended the 15 December 2023 stay order pending the determination of the appeal (see Piety Developments Pty Ltd v Cumberland City Council [2024] NSWCA 18). His Honour determined that the appeal was at least arguable. On the balance of convenience, his Honour noted Piety's argument that, if the rescission motion was passed, this would cause it prejudice if it succeeded in the appeal because the Council could rely upon that event to oppose specific performance as an appropriate remedy.
18. His Honour also summarised the Council's grounds for opposition, including its contention that it had a statutory right, indeed, obligation, to allow the rescission motion to proceed, even if a binding and enforceable contract had been entered into and Piety could, if successful, recover damages.
19. Gleeson JA concluded (at [11]) that because the parties were "at issue as to the legal significance of any rescission motion for the relief sought by Piety on the appeal", it was appropriate to maintain the status quo pending determination of the appeal. Thus, his Honour granted a stay of the discharge of the interlocutory injunction pending the determination of the appeal.
20. That stay order was automatically discharged on 23 July 2024 when this Court published its reasons for judgment dismissing Piety's appeal and the Council's cross-appeal. Currently, there is no stay order in place.

Piety's motion

1. Piety's motion sought the following orders: (1) This motion be returnable instanter. (2) To the extent required, an order dispensing with the service requirements as contained in rule 18.4 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR). (3) Alternatively, an order that the time for service on the first respondent of the Notice of Motion and supporting affidavit of Mr Moses El-Saj sworn 6 August 2024 be abridged to 4:00pm on Tuesday 6 August 2024. (4) An order that the balance of this Notice of Motion be listed for hearing on Wednesday 7 August 2023 at a time convenient to the Court. (5) An order that the First Respondent be restrained, until further order of the Court, from taking any action to rescind the resolution of the Defendant dated 3 November 2021 concerning the sale of the property located at 13 John Street, Lidcombe NSW 2141. (6) Costs. (7) Such further or other orders as may be appropriate in the circumstances.

The parties' evidence on the motion summarised

1. Large parts of Mr El-Saj's affidavit summarised the history of the proceedings both below and on appeal.
2. Mr El-Saj also deposed that: 1. On 23 July 2024, he caused correspondence to be sent to the respondent's solicitors (McCabes) proposing an order extending the stay order granted by Gleeson JA until 21 August 2024, being the day that is immediately after the 28th day after the appeal judgment was handed down. 2. On 24 July 2024, he received an email from McCabes advising that the Council did not agree to the proposed order. 3. On 29 July 2024, he received further correspondence from McCabes detailing the reasons why the Council did not agree to the proposed order. 4. On 31 July 2024, he caused correspondence to be sent to McCabes in relation to the proposed order. 5. On 2 August 2024, he downloaded from Council's website a published agenda for the Council meeting set to take place at 6:30pm on Wednesday 7 August 2024. Mr El-Saj stated that part of the Council's order of business for the meeting was dealing with the 3 November 2021 rescission motion.
3. As mentioned, the Council relied on an affidavit by Mr Amentas. He confirmed that the Council was scheduled to conduct a meeting on 7 August 2024.
4. It is desirable to set out the following extracts from Mr Amentas' affidavit concerning the question of the balance of convenience: 25. On 16 August 2024 the Council will enter 'caretaker period' as a result of the upcoming Council election due to take place on 14 September 2024. 26. I am instructed that: a. following the Council election on 14 September 2024, the newly formed Council is unlikely to be declared for a period of approximately 3 weeks; and b. whilst the Council does not know when the first Council meeting following the 14 September 2024 election will be scheduled, it is likely the first meeting of the newly formed Council will not occur until November or December of 2024. 27. In the event that Council cannot hear the Rescission Motion on 7 August 2024, the Rescission Motion may not be heard until November or December 2024 at the earliest. 28. Council remains prejudiced by its inability to hear the rescission motion as: a. the rescission motion remains outstanding for 2.5 years; b. the 3 November 2021 resolution remains in limbo until the Rescission Motion is determined; c. in the event the Rescission Motion fails, Council will have been prejudiced by the ongoing delay and injunctive orders preventing determining the Recission (sic) Motion, which will have the effect of reducing the benefit offered by Piety. 29. If the relief sought by Piety is granted and the Council is prevented from hearing the Rescission Motion at the upcoming Council meeting on 7 August 2024, the Council could foreseeably be prevented from determining the Rescission Motion until at least mid-2025, subject to the filing and determination of the appeal brought by Piety. 30. In these circumstances the Rescission motion will have taken over 3 years to have been heard."

(a) The relevant principles summarised

1. Piety contended in both its written and oral submissions that its motion should be considered with reference to the principles established in Jennings Construction Ltd v Burgundy Royale Investments Pty Ltd (1986) 161 CLR 681 at 684; [1986] HCA 84. Those principles were recently summarised by Kirk JA in 123 259 932 Pty Ltd v Cessnock City Council (No 2) [2023] NSWCA 89 at [2]-[4]: It was held in Rinehart v Welker (2012) 83 NSWLR 347; [2012] NSWCA 1 that this Court, when considering whether to stay its own orders pending the determination of an application for special leave to the High Court, should apply the principles applied by the High Court itself in resolving such applications. The most commonly quoted statement of principle in that regard is by Brennan J in Jennings Construction Ltd v Burgundy Royale Investments Pty Ltd (No 1) (1986) 161 CLR 681 at 684-685; [1986] HCA 84: 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. If an order for a stay is made, the respondent is kept out of the benefit of the order of the court in which the matter is pending until the hearing of the application for special leave to appeal. … In exercising the extraordinary jurisdiction to stay, the following factors are material to the exercise of this Court's discretion. In each case when the Court is satisfied that a stay is required to preserve the subject-matter of the litigation, it is relevant to consider: first, whether there is a substantial prospect that special leave to appeal will be granted; secondly, whether the applicant has failed to take whatever steps are necessary to seek a stay from the court in which the matter is pending; thirdly, whether the grant of a stay will cause loss to the respondent; and fourthly, where the balance of convenience lies. Of the four factors, the second is a factor peculiar to consideration by the High Court and is not relevant in this Court. The third factor can be seen as an element of the fourth. The relevant factors identified by Brennan J, thus, are whether there is a substantial prospect that special leave to appeal will be granted and where the balance of convenience lies. The prospects question relates to obtaining special leave, not the prospects of an appeal succeeding if special leave was to be granted: note Gerah Imports Pty Ltd v Duke Group Ltd (1994) 68 ALJR 196 at 197; [1994] HCA 3 per Dawson J. These factors are not to be applied in a mechanical way: note Rinehart v Welker at [49]. Nor are they exhaustive: Obeid v R (2016) 90 ALJR 447; [2016] HCA 9 at [14] per Gageler J. As explained below, the overall issue is whether the grant of a stay (perhaps on terms) is warranted taking account of all the circumstances. A particularly important matter in that regard is whether the absence of a stay may render the special leave application, and any subsequent appeal, nugatory because of the loss of the subject matter of the appeal: see eg in Gerah at 197-198 per Dawson J.
2. Kirk JA summarised the position at [10]: In summary, then, exceptional circumstances must be shown to warrant the grant of a stay pending the determination of a special leave application; significant factors in that regard are whether the applicant has substantial prospects of obtaining special leave, where the balance of convenience lies and whether the application for special leave may be rendered nugatory unless a stay is granted; those factors are not exhaustive; "substantial prospects" does not require that the court conclude that a grant of special leave is likely; the overall question is whether, taking account of all the circumstances, there are sufficiently significant prospects of special leave being obtained to warrant a grant of a stay, perhaps on terms designed to protect the interests of the respondent.
3. The approach in Burgundy Royale has been adopted consistently by the High Court in considering such applications: see, for example Edelsten v Ward (No 2) (1988) 63 ALJR 346 at 347 (Brennan J); Gerah Imports Pty Ltd v Duke Group Ltd (in liq) [1994] HCA 3; 68 ALJR 196 at 197 (Dawson J); Haydon v Chivell [1999] HCA 39; 73 ALJR 1311 at [8] (Gaudron J); and Comandate Marine Corp v Pan Australia Shipping Pty Ltd [2006] HCATrans 353 (Heydon J). In Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (No 2) [1998] HCA 32; 72 ALJR 869 at [2]-[4], Hayne J noted that the jurisdiction may be invoked if granting a stay is "necessary to prevent the exercise of rights of appeal being rendered futile or their exercise in circumstances where restoration of the status quo cannot be achieved".
4. All the cases emphasise the exceptional circumstances that are required before the jurisdiction to grant a stay is exercised. In short, that test is one that emphasises that the jurisdiction to grant a stay pending an application for special leave to appeal is an extraordinary one, and exceptional circumstances must be shown before a stay is warranted.
5. We are conscious that Bathurst CJ said in Rinehart v Welker (2012) 83 NSWLR 347; [2012] NSWCA 1 at [48]: We do not, however, agree with the respondents that in all cases it is an essential prerequisite for the grant of a stay that the Court finds that there are substantial prospects of success on the special leave application. 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 this Court is unable to reach the view that the application has substantial prospects of success.
6. This is not one of those rare cases.
7. The Council did not contest Piety's position that the principles in Burgundy Royale apply. Accordingly, the motion should be determined on that basis. It is unnecessary to consider the different principles relating to an application for interim interlocutory relief, as opposed to the approach in Burgundy Royale.
8. It may also be accepted that relief may be granted during an unexpired appeal period even where, as here, no application for special leave has yet been filed: see De L v Director-General, Department of Community Services (NSW) [1996] HCA 9; 136 ALR 201.

(b) Disposition of the motion

1. Senior Counsel for Piety confirmed at the hearing that Piety had given instructions to file an application for special leave to appeal. Shortly before the hearing of the motion, Piety provided a draft, unfiled and incomplete application for special leave to appeal. The following two proposed grounds of appeal were identified: 1. The Court of Appeal of NSW (Court) erred (at J[103] and J[107]-[110]) in finding that the First Respondent did not effectively communicate to the Applicant its acceptance of the Applicant's offer to purchase the respondent's land located at 13 John Street, Lidcombe, such that no binding agreement for the sale was concluded between the Applicant and the First Respondent. 2. The Court erred (at J [134]) in finding that there was no "memorandum or note" of the agreement which satisfied the requirements of section 54A of the Conveyancing Act 1919 (NSW).
2. The proposed first ground of appeal is ostensibly directed to this Court's finding that there was an insufficient communication of the Council's acceptance of Piety's offer so as to give rise to a binding contract. Somewhat curiously, however, in its draft summary of argument, Piety contends that this Court should have endorsed the primary judge's finding that, by passing the 3 November 2021 resolution, the Council accepted Piety's offer, so as to create a contract subject only to communication of that acceptance.
3. That contention presents several difficulties. First, as this Court pointed out at J[144]-[145], the primary judge did not make an unequivocal finding that, by passing the 3 November 2021 resolution, the Council accepted Piety's offer. The Court explained at J[145] why it thought it neither necessary nor appropriate to determine ground 1 of the Council's cross-appeal (which was directed to the issue whether or not there was a collateral contract): In these circumstances, it is neither necessary nor appropriate to determine ground 1 of the cross-appeal. Even if it that ground were upheld (and I express no view one way or the other on the merits of the ground nor the significance of the fact that at least part of the ground relates to claims which were not the subject of submissions below (see further at [69] above)), it would not alter the relevant order made by the Court below in dismissing Piety's claim in contract. The resolution of the issues raised by ground 1 of the cross-appeal should await a case in which the outcome will be affected by those issues. That is not the case here.
4. Secondly, as the Council pointed out, it is difficult to reconcile proposed ground 1 with the way in which Piety conducted the proceedings both below and on appeal. It was never contended by Piety that a binding agreement came into effect on 3 November 2021 by the passing of the 3 November 2021 resolution. Rather, as this Court stated at J[111], Piety's case was that a binding agreement came into effect on 9 November 2021.
5. Thirdly, and in any event, the critical issue in the proceeding was, assuming that the Council had accepted Piety's offer, whether that acceptance was sufficiently communicated to Piety so as to give rise to a binding agreement. The resolution of that issue was essentially one of fact, not law.
6. Fourthly, Piety contends in its draft special leave application that this Court erred in not finding that communication of the 3 November 2021 resolution "to the world", including the applicant, was communication of that acceptance to the applicant. That proposition is difficult to reconcile with the way Piety conducted the proceedings below. As the primary judge noted at [83]: Counsel for PD accepted that an un-communicated decision, on its own, was not sufficient, and that it needed to be shown that the Council had communicated its acceptance to PD.
7. The primary judge proceeded to note at [84] that he did not understand the parties to dispute the applicable principles relating to what amounts to sufficient communication. That is also the basis upon which the appeal was conducted.
8. No question of public importance has been identified and, as mentioned, this part of the appeal was determined essentially on the facts.
9. We do not consider that there are substantial prospects of special leave being granted in respect of proposed ground 1.
10. As to proposed ground 2, which relates to s 54A of the Conveyancing Act 1919 (NSW), as this Court noted at J[133], grounds 2 and 3 in the appeal did not require determination because of the rejection of ground 1. There are no prospects of Piety obtaining special leave to appeal in respect of proposed ground 2 if special leave is refused for proposed ground 1.
11. Turning now to the question of the balance of convenience, we consider that it weighs in favour of the Council. First, there is no evidence one way or the other as to whether the rescission motion is likely to succeed. It may well fail, in which case it is difficult to see how Piety could suffer any prejudice.
12. Secondly, we do not accept that Piety will be substantially prejudiced if the rescission motion succeeds. That event would not necessarily prevent it from obtaining specific performance of the alleged agreement (assuming that special leave was granted). It is difficult to reconcile Piety's present position with the argument it ran below, which is referred to at J[148] (emphasis added): Contrary to the Council's submission, Piety contended that the existence of the Council's power to vote on and pass a rescission motion should not affect the determination of the question of whether a contract existed between the parties. In circumstances where a binding contract had been made, Piety submitted that the Council's power to rescind should be considered to amount to no more than "the equivalent of a natural person changing their mind and repudiating a contract". Even if the rescission motion is passed the applicant would not be prevented from arguing in support of its special leave application that the 3 November 2021 resolution gave rise to a binding agreement (which, on Piety's case, was made on 9 November 2021). In that scenario, it would be open to Piety to argue that the effect of the passage of the rescission motion amounted to a repudiation of the agreement which would be ineffective to terminate the agreement as, self-evidently, Piety would not accept it.
13. Thirdly, in weighing the balance of convenience, it is important to have regard to the fact that the Council has a statutory obligation to consider and determine the rescission motion, noting s 372 of the Local Government Act 1993 (NSW).
14. Rescission motions are also addressed in cll 17.3-17.4 of the Council's Code of Meeting Practice.
15. The Council's obligation to consider and determine the rescission motion has effectively been suspended since the proceedings were commenced on 9 February 2022 (i.e. almost 2 and a half years ago).
16. We accept Mr Amentas' evidence that, having regard to the history of the matter and the fact that the Council will enter a "caretaker period" on 16 August 2024, more than 3 years may elapse before the Council is able to determine the rescission motion if it is restrained from doing so pending the outcome of the proceedings in the High Court.
17. Contrary to Piety's submission, in weighing the balance of convenience, it is relevant to take into account the public interest in the Council's timely discharge of its statutory and legal duties.
18. Fourthly, noting that Piety's best and final offer for the Property was valued at approximately 12 million dollars, it is self-evident that the Property forms an important part of the Council's assets. We consider that it is important and in the public interest that there be an early determination one way or the other as to what is to happen to that asset.
19. Finally, in determining the balance of convenience, account should also be taken of the Council's willingness to offer the following undertakings on a without admissions basis: 1. an undertaking to Piety that, following the outcome of the rescission motion dated 3 November 2021, it will not dispose of, or encumber, the subject land at 13 John St, Lidcombe NSW until Piety's application for special leave to the High Court is determined; and 2. an undertaking to the Court that, in the event that the Council passes the rescission motion at its upcoming meeting, it would not raise that fact/matter in opposing Piety's foreshadowed application for special leave to appeal.
20. These undertakings sufficiently ameliorate any arguable prejudice which may be suffered by Piety.

Conclusion

1. For all these reasons, we are not persuaded on the material before us today that the applicant has met the threshold in Burgundy Royale.

Orders

1. For the reasons given above, the court makes the following orders: 1. Dismiss the notice of motion filed 6 August 2024. 2. Order the applicant to pay the respondent's costs.

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