Federal Court of Australia

Fu v Bondi Junction Prime Pty Ltd [2024] FCA 1222

ORDERS

THE COURT ORDERS THAT:

1.    On the condition that by 30 October 2024, the appellant pays into either:

(1)    an interest bearing account in the name of and operated jointly by the solicitor for the appellant and the solicitor for the first respondent; or

(2)    the Federal Court of Australia’s Litigants Fund,

the sum of $56,000, the operation and enforcement of orders 1 to 7 and 9 made on 2 October 2024 by the Federal Circuit and Family Court of Australia (Division 2) in Fu v Bondi Junction Prime Pty Ltd [2024] FedCFamC2G 979 be stayed, until the determination of the appeal in this proceeding (NSD1442 of 2024), or until further earlier order.

2.    Costs be reserved.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

GOODMAN J

A.     Introduction

1    The appellant, Mr Fu, seeks the continuation of a stay of certain orders made by the primary judge on 2 October 2024 in the Federal Circuit and Family Court of Australia (Division 2) Fu v Bondi Junction Prime Pty Ltd [2024] FedCFamC2G 979 (PJ2). Those orders gave effect to the primary judge’s reasoning in Fu v Bondi Junction Prime Pty Ltd [2024] FedCFamC2G 513 (PJ1) and to the reasoning in PJ2. The stay is sought until the determination of an appeal commenced by Mr Fu in this Court against the orders made in PJ1 and PJ2, or until further earlier order.

2    References in these reasons for judgment to paragraphs of PJ1 are to such paragraphs as they exist following corrections made to PJ1 by the primary judge on 26 September 2024.

B.     Background

3    The background described below is taken from PJ1.

4    On 3 June 2015, Mr Fu entered into a contract with the first respondent (BJP) – a company developing land in Bondi Junction that was to include an apartment building – for the purchase of an apartment “off the plan” in that building.

5    Mr Fu entered into the contract at an event hosted by BJP which he attended with his wife (Ms Mao) and others. Representatives of BJP and of the second respondent – Park Coast Realty Pty Ltd (PCR), a real estate agent engaged by BJP for the marketing and sale of the apartments in the proposed apartment building – were present, including Mr Felix Milgrom, one of two directors of BJP heading the development project.

6    Upon entry into the contract and in accordance with its terms, Mr Fu paid a deposit of $160,000, representing 10 per cent of the purchase price, which was placed into an interest bearing account operated by BJP’s then solicitors.

7    Mr Fu contended before the primary judge that he entered into the contract by reason of various representations made to him, including representations to the effect that the apartment would be a penthouse and on the eleventh and uppermost floor of the proposed apartment building.

8    Subsequently, Mr Fu learnt that the proposed apartment building would have a twelfth floor. He declined to complete the contract, and commenced the proceeding below.

9    In that proceeding, Mr Fu sought orders for the setting aside of the contract and for the return of the deposit on the basis that his entry into the contract was the product of misleading or deceptive conduct by BJP and PCR, in contravention of s 18 of the Australian Consumer Law (ACL), being schedule 2 to the Competition and Consumer Act 2010 (Cth). Alternative relief was sought pursuant s 55(2A) of the Conveyancing Act 1919 (NSW). BJP brought a cross-claim pursuant to which it sought relief based upon the contract including for the retention of the deposit and for losses caused by Mr Fu’s failure to complete the contract.

10    The primary judge dismissed Mr Fu’s claim and upheld BJP’s cross-claim.

11    Her Honour did not accept that various oral representations – including that the apartment would be a “penthouse”, on the uppermost floor of the apartment building – had been made.

12    However, the primary judge found that in all of the circumstances, including contemporaneous documentation, BJP and PCR had represented that the apartment building, when constructed by BJP, would comprise 11 floors of apartments (PJ1 [111] and [112]). It was common ground that such a representation was as to a future matter, which was misleading or deceptive absent proof that BJP and PCR had reasonable grounds for making it, by dint of the operation of s 4 of the ACL. The primary judge was persuaded that BJP and PCR did have such reasonable grounds primarily on the basis of evidence given by Mr Milgrom and various contemporaneous documents (PJ1 [123] to [128]).

13    Mr Fu’s claim under s 55(2A) of the Conveyancing Act failed for essentially the same reasons. BJP’s cross-claim – which was based upon the terms of the contract – was upheld.

14    As part of PJ1, the primary judge: made a declaration that BJP is “entitled to keep and recover” the deposit; made an order dismissing Mr Fu’s claim; and directed BJP and PCR to prepare a draft short minute of order to reflect the reasons for judgment in PJ1.

15    Following a further hearing, the primary judge delivered PJ2 on 2 October 2024. PJ2 resolved various controversies concerning the form of the orders. The orders made by the primary judge on 2 October 2024 are as follows:

1.    That the first respondent/cross-claimant is entitled to interest on $160,000 at Federal Court of Australia rates calculated from 6 December 2018 until the date of these Orders.

2.    That the applicant pay to the cross-claimant the sum of $140,482.22 representing the loss on resale of Apartment 1103, including interest.

3.    That the applicant pay to the cross-claimant the sum of $32,252.87 representing the agent’s commission on resale of Apartment 1103, including interest.

4.    That the applicant pay to the cross claimant the sum of $2,084.66 representing legal fees of AMW Lawyers, including interest.

5.    That the applicant pay to the cross claimant the sum of $304.39 representing legal fees of AMW Lawyers, including interest.

6.    That the applicant pay the costs of the first respondent in accordance with Schedule 2 of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).

7.    That the applicant pay the costs of the second respondent in accordance with Schedule 2 of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) (“the Rules”) up to the time of the Deed of Indemnity.

8.    That the declaration made on 6 June 2024 that the first respondent/cross-claimant is entitled to keep and recover the deposit in the sum of $160,000 paid by the applicant be stayed for 28 days from the date of this Order.

9.    That Mr St Leon will be released from his Undertaking given on 22 February 2019 not to release the deposit held in this matter.

10.    That Orders 1 through to 7 and Order 9 of these Orders be stayed for 28 days from the date of this Order.

16    The effect of orders 8 and 10 is to stay the operation of the declaration made on 6 June 2024 and orders 1 to 7 and 9 made on 2 October 2024. The primary judge’s reasoning for the making of the stay orders is set out at PJ2 [97] to [100], as follows:

Consideration

97    The Draft Notice of Appeal articulates five grounds. I will not refer to all of them. Ground 3 contends an error in concluding that the evidence of one of the two directors of the first respondent at the relevant time, Mr Milgrom, was sufficient to discharge the onus of proof placed on the respondents that the representations made to the applicant were made on reasonable grounds. Ground 4 contends that Mr Milgrom’s evidence that “developers amended plans constantly” did not justify the respondent’s decision to add a twelfth floor to the building.

98    Noting the low threshold of arguable case, I consider it is arguable that, had I not found the evidence of Mr Milgrom sufficient to discharge the onus on the respondents, the result may well have been different. I find that there is some rational prospect of success of the appeal such as to warrant a stay of the orders until determination of the appeal.

99    I accept the submissions of the applicant that in circumstances where the first respondent is a single purpose company, and that it is no longer trading, there is no evidence that it has any assets except for the disputed deposit. Absent the stay, should the first respondent receive the funds which are in Mr St Leon’s trust account, there is no impediment to it dissipating those funds should it so wish.

100    The balance of convenience leans in favour of granting the stay.

17    On 14 October 2024, Mr Fu filed a notice of appeal in this Court. The grounds of appeal are as follows:

1.    The primary judge erred by failing to find that the Respondents represented in trade or commerce to the Appellant prior to the execution by him of the Contract for Sale of Land dated 3 June 2015 that the apartment that he was purchasing would be located on the top floor of the proposed apartment building.

2.    The primary judge having found at paragraph [114] of her Honour’s reasons for judgment published on 6 June 2024 (Reasons 1) that the Respondents represented to the Appellant that the apartment building that he was purchasing “off the plan” when constructed by the First Respondent would “comprise of” (sic) 11 floors of apartments erred in law by holding that the Respondents had discharged the onus of proof placed upon them pursuant to S.4 of the Australian Consumer Law (ACL) to establish that the representations found to have been made by them being were made on reasonable grounds and that their conduct was misleading or deceptive.

3.    In the event that her Honour the primary judge had found, as it is respectfully submitted she ought to have found, that it was represented by the Respondents to the Appellant in trade or commerce that the apartment he was purchasing “off the plan” would be located on the top floor of the proposed apartment building, then her Honour ought to have held that the Respondents had not discharged the onus of proof placed upon them pursuant to S.4 of the ACL to establish that the representations made by them being were made on reasonable grounds and that their conduct was misleading or deceptive.

4.    The primary judge erred in concluding that the evidence of Mr Milsom, one of the directors of the First Respondent, was sufficient to discharge the onus of proof placed upon the Respondents to show that the representations made to the Appellant were made on reasonable grounds.

5.    The primary judge erred in concluding at paragraph [128] of Reasons 1 that the circumstances established by the Respondents concerning their decision to add a twelfth floor to the building was justified on the basis of Mr Milgrom’s evidence that “developers amend plans constantly” and that this assertion somehow constituted or contributed to reasonable grounds for the purposes of S.4 of the ACL.

6.    Acting upon the errors of the primary judge identified in appeal grounds 1 to 5 above, her Honour misapplied the provisions of S.55(2A) of the Conveyancing Act 1919 (NSW) in refusing to order the return to the Appellant of the deposit paid by him under the Contract.

7.    In the orders made and the reasons for judgment published by the primary judge on 2 October 2024 (Reasons 2) her Honour erred in concluding at [47] that it was too late for the Appellant to submit that the First Respondent/Cross Claimant had not proved its entitlement to damages for a sum of $27,780 by way of additional agent’s sale commission.

8.    Her Honour at paragraph [48] of Reasons 2 erred in holding that the First Respondent had established an entitlement to damages for a sum of $27,780 by way of additional agent’s sale commission.

(The references to paragraphs 114 and 128 of PJ1 should be references to paragraphs 112 and 126 in view of the corrections made to PJ1 by the primary judge.)

C.     THE PRESENT APPLICATION

18    Mr Fu seeks the continuation of the stay of orders 1 to 7 and 9 made by the primary judge, until the determination of the appeal, or until further earlier order.

19    Mr Fu relies upon an affidavit of his solicitor, Mr David Balog. In that affidavit, Mr Balog deposes, inter alia, as to Mr Fu’s concerns that absent a stay, the deposit would be released to BJP, thereby rendering the appeal nugatory in circumstances where BJP is a single project company with no other significant assets.

20    BJP relies upon an affidavit from Mr Lachlan Macinnis, a solicitor in the employ of its solicitors. Mr Macinnis’s evidence addresses, inter alia, BJP’s concerns that: (1) it will not have access to the monies that Mr Fu has been ordered to pay to it, for the purpose of defending the appeal; and (2) those monies may not be recoverable from Mr Fu in the event Mr Fu’s appeal is unsuccessful.

21    There is no issue as to the Court’s power to grant the stay sought: see s 29 of the Federal Court of Australia Act 1975 (Cth) and r 36.08 of the Federal Court Rules 2011 (Cth). The principles which inform the exercise of the discretion to grant such a stay are well-established: see, e.g., Dubow v Fitness First (Australia) Pty Ltd [2010] FCA 660 at [19] to [24] (Flick J); Flight Centre Ltd v Australian Competition & Consumer Commission [2014] FCA 658 at [9] (Rangiah J); Bethell v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2021] FCA 756 (White J); and Redbubble Ltd v Hells Angels Motorcycle Corporation (Australia) Pty Limited [2022] FCA 1039; (2022) 168 IPR 74 at 82 to 84 ([35] to [37]) (Derrington J). In particular, the Court’s discretion is broad and it is necessary to consider whether the appeal raises a reasonably arguable point, and where the balance of convenience lies.

22    BJP is content for the Court to assume on this application that the appeal is reasonably arguable but submits that the prospects of the appeal succeeding are poor; and that this should inform the exercise of the discretion. I am satisfied that the appeal is reasonably arguable. That is sufficient for present purposes, particularly as anything other than a broad assessment of the prospects of the appeal upon the limited materials before the Court and the necessarily attenuated nature of the argument as to prospects on this application, is not feasible.

23    I am also satisfied that there are concerns as to whether BJP would retain any funds paid to it, a matter which was accepted by the primary judge (see [16] above) and not contested by counsel for BJP on this application. Against this, BJP has a prima facie entitlement to payment of the amounts awarded to it by the primary judge. In these circumstances, an order which achieves a fair and appropriate balance between the interests of Mr Fu and the interests of BJP is an order which provides for a continuation of the stay, but on the condition that Mr Fu pay into a neutral account an amount referable to BJP’s entitlement under the primary judgments. As the Court of Appeal of the Supreme Court of New South Wales (Kirby P, Hope and McHugh JJA) in Alexander v Cambridge Credit Corporation Ltd (1985) 2 NSWLR 685 at 695 explained, “... it is not at all unusual for the Court, in the exercise of its discretion, to grant a stay on terms that the appellant give to the judgment creditor security in terms defined by the Court as appropriate to the fair adjustment of the rights of the parties.”

24    The amounts owed by Mr Fu to BJP pursuant to the orders made by the primary judge on 2 October 2024, and which are presently known, are:

25    The primary judge also ordered that Mr Fu pay the costs of each of BJP and PCR. Mr Macinnis has estimated that the quantum of BJP’s costs will be in the order of $30,000, with the exact amount to depend upon “the characterisation of certain Court attendances and whether the Court certifies that it was reasonable to engage counsel”. I do not propose to take into account BJP’s entitlement to recover its costs given the present uncertainty as to the quantum.

26    Thus, BJP has an entitlement to $227,513.52 under the primary judgments. The account in which the deposit is held has a balance of $171,521.83. Mr Fu should pay the balance ($227,513.52 less $171,521.83, being $55,991.69, which I will round to $56,000) into a neutral account as a condition of the stay.

27    I will make orders accordingly.

Associate:

Dated:    22 October 2024