Wang v Farkas

Variation of terms of payment in

Order (3) made on 10 March 2014 read as follows: "In the event that the application to the High Court is dismissed or, if leave be granted, the appeal is dismissed, Mr Farkas is to pay to Mr Wang and Ms Gu the costs incurred by them by way of fees, charges and the difference between income earned on the deposit and the interest payable by them under their home mortgage with the Commonwealth Bank for the period from 10 March 2014 until the date of repayment of the funds held by the Court, interest to be assessed on the funds held from time to time until repaid or otherwise applied in accordance with an order of a court."
Mr Farkas' motion seeks, with respect to that order: "(1) A declaration that such Order does not apply in the circumstances (2) Alternatively that such Order is revoked (3) Alternatively, that if such Order is applicable, it is only applicable until 7 May 2014, alternatively until 17 June 2014, alternatively until 25 June 2014".
The significance of each date proposed in the third option is as follows: (i) 7 May 2014 was the date on which an entitlement to seek special leave to appeal without an extension of time expired; (ii) 17 June 2014 was the date on which Mr Wang emailed the Registrar requesting release of the proceeds of the bank guarantee, because the 28 day period had expired; (iii) 25 June 2014 was the date on which Mr Farkas emailed the Registrar submitting that the applicants should file a notice of motion and advising that he would oppose an order for release of "the totality of the funds held by the Court".
The second point by way of clarification must be to identify the basis upon which Mr Farkas contended that the order "does not apply" or should be "revoked".
The circumstances relied upon by Mr Farkas can be briefly summarised as follows: (a) the condition that Mr Farkas would have to pay an amount equivalent to the difference between the interest paid by the applicants pursuant to a home loan mortgage and the interest payable on the deposit was based upon an affidavit read by Mr Wang on the interlocutory application by Mr Farkas, to which the latter had no opportunity to respond; (b) the implication that the applicants would source the funds by drawing down on their home loan mortgage account was false, and (c) it is appropriate for this Court in the exercise of its discretion to vary the interlocutory order to change the conditions on which the money was then deposited.
So far as the first matter is concerned, it is true that Mr Wang read an affidavit which had been provided to Mr Farkas on the morning of the hearing. It is also true that the affidavit contained an annexure setting out calculations in respect of the anticipated costs of a deposit of funds by Mr Wang. It is also true that Mr Farkas objected to this material being relied upon by the Court. It may also be accepted (although the transcript of the hearing on that day was not tendered on the motion) that the court accepted Mr Wang's affidavit but noted that there was a dispute as to the facts in respect of certain matters which it did not intend to resolve. [5]
As noted in the judgment given on 10 March 2014, the intention of the conditions was that, in the event that Mr Farkas was not successful in the High Court, he would "bear the costs of Mr Wang of maintaining the security", an approach which was to reflect the usual undertaking accompanying an interlocutory injunction. [6] The judgment continued: "[18] Mr Wang has put on evidence that the costs include fees charged by the bank and a differential between the amounts he is paying by way of interest on his home loan mortgages and the amount of interest which is payable to him on a term deposit, which he has apparently made to obtain the bank guarantee. The actual cost will depend upon the time period over which the calculations are to be carried out."
Order (3) did not seek to quantify any costs: the schedule to Mr Wang's affidavit was disregarded. What it did was to identify the basis upon which such costs would be assessed. That basis included an amount for interest to be calculated by reference to the potential cost to the applicants of the funds deposited. There is, and was at the time, no suggestion that funds might be available more cheaply than pursuant to a home loan mortgage. Where the applicants actually obtained the funds was not an issue relied on in formulating the condition. If they had the money available in cash, to deposit it with the Registrar at a low interest rate would deprive them of any other commercial use or investment to which the funds might be put, including paying down their mortgage which had a balance outstanding well in excess of the required deposit. The Court was well aware on 10 March 2014 that the actual source of the funds was unknown and that the costs alleged by Mr Wang were in dispute. Nothing turned on those matters. The complaint of procedural unfairness in that respect has not been made out.
Even if there were some basis for such a complaint, there would be strong discretionary reasons for refusing to reopen the order made at this stage. Had his complaints been material to the outcome, Mr Farkas might have been expected to seek a variation of the orders shortly after they were made. Indeed, he might have been expected to foreshadow such an application at the time they were made. Even if, as is possible, he had health problems which precluded immediate steps being taken, a notice of motion seeking such variation could nevertheless have been filed promptly. Nothing of that kind was done.
With respect to the second matter, the circumstances are more troubling, though not in a manner favourable to Mr Farkas. Since some date in 2010, Mr Farkas has engaged solicitors, Bruce Stewart Dimarco, Lawyers, to act form him with respect to the enforcement of the costs orders he had obtained in the Local Court against the applicants. He put on evidence by way of tax invoices from the solicitors in support of his claim for moneys payable to him out of the deposited funds. These accounts show that the lawyers (now Bruce & Stewart) arranged for the issue of subpoenas in the Local Court addressed to the Commonwealth Bank and the ANZ Bank on behalf of Mr Farkas. The subpoenas and certain bank records produced in response to them were also tendered by Mr Farkas.
Certain documents obtained from the Commonwealth Bank pursuant to those subpoenas were relied upon by Mr Farkas in support of his motion to vary the orders made by this Court. The purpose for which the subpoenas were issued is by no means clear; while Mr Farkas claimed to have moneys owing to him under a costs order made in the Local Court, the schedules to the subpoenas sought evidence as to the amounts owing to the Bank on various mortgages over property owned by the applicants "as at 9 September 2013", "as at 26 September 2013" and "as at 12 May 2014", together with the interest rate charged by the bank on the amounts outstanding from 9 September 2013. 9 September 2013 was the date on which the bank guarantee was required by this Court.
In his written submissions on the current motion, Mr Farkas stated: [7] "By issuing subpoenas after the hearing on 10.3.14, as foreshadowed, to the Commonwealth and ANZ banks as the only way to test and investigate the veracity of the assertions in Mr Wang's Affidavit filed and provided to me one hour prior to the hearing, fresh evidence has been discovered capable of altering the result."
The proper course for Mr Farkas to have taken in support of that purpose would have been to file a notice of motion in this Court and to seek the issue by this Court of subpoenas in support of the motion. To go to the Local Court to seek the issue of subpoenas for documents to be provided to this Court would appear to be a gross abuse of process. However, no issue was raised by Mr Wang (appearing for the applicants) in respect of the manner in which the evidence was obtained, or its admissibility. Accordingly, the matter need not be pursued.
On the other hand, whatever the purpose of having his solicitors obtain the issue of the subpoenas in the Local Court, their tender in this Court demonstrated that, at least by late May 2014, Mr Farkas had all the material which he sought to rely upon pursuant to the motion filed on 1 April 2015. As one factor for denying that order (3) should be allowed to stand, Mr Farkas relied upon the fact that the applicants could have sought release of the moneys at an earlier date. That consideration is not nearly as powerful as the fact that Mr Farkas sought at the end point, when much if not all of the money will inevitably be released, to vary the terms on which it was deposited, and on the basis of material available to him within weeks of this Court ordering that the deposit be made.
In any event, the material relied on by Mr Farkas did not provide an adequate basis for his factual assertions. On 26 September 2013, the ANZ Bank provided a guarantee in favour of the Court for the applicants, in an amount not to exceed $411,813. Mr Farkas annexed to his affidavit a copy of a Commonwealth Bank account operated by Mr Wang headed "SVR Investment Home Loan". He noted that on 25 September there was a deposit to that account of $411,813 which was balanced by a debit in the same amount on the same day. The following day there was a debit of $411,813, which was presumably the amount used to obtain the bank guarantee from the ANZ Bank. Mr Farkas invited the Court to draw the inference that the deposit on 25 September demonstrated that the applicants had funds available from another source and this was not in truth a withdrawal from his home loan account, but only a funnelling of funds through that account.
Mr Wang relied upon an affidavit dated 20 April 2015 in which he identified the credit and debit on 25 September as indicating a proposal to fund a bank guarantee through the Commonwealth Bank, which he abandoned, with the result that the payment was reversed. Mr Wang annexed a letter from the Commonwealth Bank dated 17 April 2015 explaining how the transfers recorded on 25 September came about, each being initiated by a member of staff of the Commonwealth Bank. Based on this material, I would reject the inference sought to be drawn by Mr Farkas, if it were relevant and on the assumption that this material should properly be relied on by the Court. In any event the statement of account showed that the debit balance on 24 September was $411,000 lower than on 27 September, after the bank guarantee was obtained.
Mr Farkas' motion to vary the conditions in order (3) should be rejected on the following bases: (a) there was no relevant denial of procedural fairness; (b) if there were any issue as to procedural fairness, steps should have been taken to remedy it promptly in circumstances where the evidence on which Mr Farkas sought to rely was available to him by late May 2014; (c) the factual inference as to the source of moneys for the bank guarantee being other than the applicants' home loan account was not established; (d) the source of the funds in September 2013 was not the basis of the conditions imposed on 10 March 2014; and (e) the Court would not in any event vary the condition imposed on 10 March 2014 pursuant to a motion filed on 1 April 2015.
Finally, Mr Farkas submitted that the condition should be varied because the applicants, by delaying in bringing an application to have the money released, had benefited financially from the terms of the condition. In support of that proposition, and assuming that the money did come from the home loan account, Mr Farkas submitted that the interest rate exceeded any rate which would be payable on deposited funds in that amount and that the interest payable on the home loan account was fully tax deductible, "being a negatively gearing off set against both Mr Wang's and Ms Gu's income." Mr Farkas also suggested that the delay was part of "systematic vindictive behaviour" on the part of the applicants.
Apart from the fact that Mr Wang made inquiries of the registry as to when the time for a special leave application expired, there is no evidence to support the inference that the failure to seek release of the funds for a period of some seven months was a deliberate act to penalise Mr Farkas. The email of 17 June 2014 from Mr Wang requested the release of the "bank guarantee", meaning no doubt the proceeds of the bank guarantee held on deposit. On learning of the request, Mr Farkas' response was to require that the applicants file a notice of motion which, at least on some undisclosed basis, would be opposed. If Mr Farkas thought that he was at a financial disadvantage whilst the funds remained with the Court, he could at any stage have filed a motion himself seeking to have them, or any part of them, released. He did not do so. At no stage did he withdraw his indication of opposition should the applicants file such a motion; nor at any stage did he indicate an intention not to proceed with an application for special leave to appeal.
As to the other matters, the order was formulated so as to avoid ongoing disputation as to the calculation of damages suffered by the applicants from the depositing of funds with the Court. Again, any concern Mr Farkas had in that regard could have been avoided by advising the Court promptly of his intention not to seek special leave to appeal, with the result that the funds might well have been released within two months of their deposit.

At a glance

Court

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Before

Source

Judgment (8 paragraphs)

Parties

Legislation Cited (1)

Cases Cited (2)