Stay of the orders below, including the Costs Judgment
8 The application is made pursuant to r 36.08(2) of the Federal Court Rules 2011 (Cth). Rule 36.08 provides:
36.08 Stay of execution or proceedings under judgment appealed from
(1) An appeal does not:
(a) operate as a stay of execution or a stay of any proceedings under the judgment subject to the appeal; or
(b) invalidate any proceedings already taken.
(2) However, an appellant or interested person may apply to the Court for an order to stay the execution of the proceeding until the appeal is heard and determined.
(3) An application may be made under subrule (2) even though the court from which the appeal is brought has previously refused an application of a similar kind.
Note: Interested person is defined in the Dictionary.
9 The appellants stress and I accept that it is not necessary for the grant of a stay pending an appeal that 'special' or 'exceptional' circumstances be made out. Rather it is 'sufficient that the applicant for the stay demonstrates a reason or an appropriate case to warrant the exercise of the discretion in his favour': Powerflex Services Pty Ltd v Data Access Corp (1996) 67 FCR 65 per Burchett, Heerey and Whitlam JJ (at 66) and Alexander v Cambridge Credit Corporation Ltd (1985) 2 NSWLR 685 (at 694). The appellants, as the party seeking the stay, need to show some reason that the stay should be granted: Henderson v Amadio Pty Ltd (No 3) (1996) 65 FCR 66 per Heerey J at 69.
10 In Powerflex, the Court said by reference to the earlier rules of the court (at 66B-66F):
The principles applicable depend on the terms of order 52, r 17 of the Federal Court Rules 1979(Cth). Rule 17(1) provides:
"An appeal to the Court shall not:
(a) operate as a stay of execution or of proceedings under the judgment appealed from; or -
...
except so far as the Court or a Judge or the court below may direct."
The language of that rule suggests no limitation upon a broad discretion inhering in the Court. Several judges of the Court, most recently Heerey J in Russell Fraser Henderson v Amadio Pty Ltd (No 3) (1996) 65 FCR 66 have followed the decision of the Court of Appeal of New South Wales in Alexander v Cambridge Credit Corporation Ltd (Receivers Appointed) (1985) 2 NSWLR 685, where, at 694, that Court said it was "sufficient that the applicant for the stay demonstrates a reason or an appropriate case to warrant the exercise of discretion in his favour". The Court of Appeal also referred with approval to a statement of Mahoney JA in Re Middle Harbour Investments Limited (in liq) (unreported, Court of Appeal, NSW, 15 December 1976) where, with the concurrence of the other members of the Court, Mahoney JA said:
"Where an application is made for a stay of proceedings, it is necessary that the applicant demonstrate an appropriate case. Prima facie, a successful party is entitled to the benefit of the judgment obtained by him and is entitled to commence with the presumption that the judgment is correct. These are not matters of rigid principle and a court asked to grant a stay will consider each case upon its merits, but where an applicant for a stay has not demonstrated an appropriate case but has left the situation in the state of speculation or of mere argument, weight must be given to the fact that the judgment below has been in favour of the other party."
Notwithstanding that in the Supreme Court of Victoria a more stringent test has generally been applied (see Cellante v G Kallis Industries Pty Ltd [1991] 2 VR 653; Lagarna Pty Ltd v Bridge Wholesale Acceptance Corporation (Australia) Ltd [1995] 1 VR 150), we think we should follow the decision in Alexander v Cambridge Credit. "Special" circumstances do not have to be shown. In any case, in this Court the word "special", in a comparable context, has not been thought to raise a significant barrier to the exercise of a broad general discretion: Jess v Scott (1986) 12 FCR 187. There, the rule itself dealing with leave to appeal out of time used the expression "special reasons".
(Emphasis added.)
11 The appellants appropriately rely upon the general principles for granting a stay considered by Finkelstein J in Australian Competition and Consumer Commission v BMW (Australia) Limited (No 2) [2003] FCA 864, where his Honour said (at [5]):
The principles which govern a court's discretion in granting a stay pending the determination of an appeal are well known: see generally Alexander v Cambridge Credit Corporation Ltd (Receivers Appointed) (1985) 2 NSWLR 685. Although it is not possible to state exhaustively the considerations that may be taken into account in the exercise of this discretion, it is appropriate that I mention those that bear on this application. The general rule is that a stay will be granted where there is a likelihood that a successful appeal will be rendered nugatory: Wilson v Church (No.2) (1879) 12 Ch D 454, 458. A court will also consider the balance of convenience and the competing rights of the parties as well as whether either party will be prejudiced by the stay: The Marconi's Wireless Telegraph Company Limited v The Commonwealth [No.3] (1913) 16 CLR 384, 386; Philip Morris (Australia) Ltd v Nixon [1999] FCA 1281 at [17]. Even though a judge will generally not be required to speculate about the appellants prospects of success, it is well established that a stay will not be granted in the absence of arguable grounds of appeal, or if the appeal is not bona fide: J C Scott Constructions v Mermaid Waters Tavern Pty Ltd (No. 1) [1983] 2 Qd R 243, 248; Alexander v Cambridge Credit Corporation Ltd (Receivers Appointed) (1985) 2 NSWLR 685, 695. It necessarily follows that a stay will not be granted if an appeal has no prospect of success: Australian Workers' Union v Pilkington (Aust) Ltd (2000) 101 FCR 35, 43.
12 As to those principles the appellants contend that:
(a) a successful appeal would be rendered nugatory in the sense that the appellants:
(i) may lose the financial ability to progress the appeal, stifling an arguable claim;
(ii) would lose the assets that at this stage are being preserved pending the outcome of the case;
(b) the balance of convenience favours the granting of the stay in order to preserve the position of the appellants because:
(i) the appellants will suffer an irremediable harm if the stay is not granted;
(ii) the ACCC will not suffer an irremediable harm if the stay is granted. Any risk to the ACCC is addressed by the undertakings to preserve assets to satisfy penalty and redress orders that have been in place since the commencement of the proceedings below;
(c) the appeal is bona fide and features arguable grounds; and
(d) the appeal has reasonable prospects of success.
13 The appellants argue that there are also no other aspects of public interest that would weigh against the stay being granted. There is no allegation that the appellants are delaying their prosecution of the appeal, despite difficult circumstances in the current COVID-19 situation.
14 As to the evidence, it is contended that the affidavit of Ms Ali of 13 March 2020 establishes the following:
(a) the appellants gave early notice that they sought a stay, evidenced by the fact that:
(i) the appellants' intention to seek a stay of the orders below was first notified to the ACCC in the letter accompanying service of the notice of appeal in this matter on 24 February 2020;
(ii) on 27 February 2020 the ACCC advised that a formal application for a stay was required and stated that the appellants were in default of orders 7 and 8 of the Penalty Judgment;
(iii) the next day, on 28 February 2020, the appellants notified the Court that an application for a stay would be filed shortly;
(b) the combined effect of the financial penalties are high for individuals to be compelled to pay when regard is had to the fact that:
(i) the combined effect of orders 7 and 11 of the Penalty Judgment require that Ms Ali personally pay $1,545,000 by way of pecuniary penalties and consumer redress;
(ii) the combined effect of orders 8 and 11 of the Penalty Judgment require that the second appellant, Mr Cameron, pay $1,156,000 by way of pecuniary penalties and consumer redress;
(c) The appellants had indicated that orders as to costs flowing from the orders of 24 January 2020 would adversely impact their ability to conduct the appeal from an early stage, evidenced by the fact that:
(i) the original notice of appeal filed on 21 February 2020 seeks costs of the proceedings below;
(ii) the potential for costs orders against the appellants was contemplated at the time of the original interlocutory application filed on 13 March 2020 seeking a stay of the orders below;
(iii) as the appellants had notified the Court and the ACCC that they sought a stay as per the application before the Court, the appellants stated in evidence that they had not instructed their legal team to prepare submissions on costs in the proceedings below;
(iv) the appellants anticipated that the ACCC's costs would likely be high, being the costs of senior counsel, junior counsel and a legal team from an international law firm. Those costs were thought to likely be several hundred thousand dollars in their own right;
(d) The appeal goes to whether the penalty orders should have been be made;
(e) The appellants do not have the financial capacity to pay the penalties below and conduct the appeal as evidenced by the fact that:
(i) the appellants have been in evidence for some time to the effect that they do not have financial capacity to pay approximately $2.6 million dollars, plus costs;
(ii) unless a stay of these orders is granted, the appellants will likely be unable to continue the appeal;
(f) undertakings given in the proceedings below continue to operate to preserve the appellants' assets and protect any eventual rights of recovery for the ACCC as evidenced by:
(i) subsequent correspondence between the appellants and the ACCC that establishes that those undertakings continue to bind the appellants and remain in effect.
15 The appellants argue that the Court should be satisfied that there is an arguable ground of appeal: Maher v Commonwealth Bank of Australia [2008] VSCA 122 (at [27]). The supplementary notice of appeal raises, at grounds 2-8, the issue of unconscionability which the appellants assert remains contestable, as per the division in the High Court in the recent decision of Australian Securities and Investments Commission v Kobelt [2019] HCA 18. Further, the appellants say that the form of the redress orders made at orders 11-31 of the Penalty Judgment (raised at grounds 11-12) is novel and outside of the recognised forms of redress envisaged in s 243 of the Australian Consumer Law (the ACL). The appeal also raises the issue, at ground 11(a), whether 'non-party consumer redress orders' can be made under s 239 of the ACL for the benefit of franchisees that do not meet the definition of 'consumers' under s 3(3) of the ACL. The ACCC has not suggested that these are not arguable grounds of appeal.
16 As noted above, the appellants are already subject to undertakings to preserve property for the purposes of satisfying orders of the Court. The ACCC's current position, if it succeeds on appeal, is protected. However the appellants say that the absence of a stay would force the appellants to liquidate the assets that are the subject of those undertakings in order to attempt to meet the obligations of the orders that have been made and to attempt to continue to fund the appeal. That, the appellants say, is an irremediable harm if they are successful on appeal in the absence of a stay. Moreover, if access to those assets were to be permitted to fund appeal costs, the ACCC would lose the benefit of the security provided by the undertakings. No such application is made at present.
17 The appellants seek that the stay be effective from either the date of filing of the notice of appeal being 21 February 2020, or the date of service on the ACCC being 24 February 2020, at which time the intention to seek a stay was first conveyed to the ACCC. The date of effect of the stay is important to the question of whether the appellants have continued in default of the orders in the Penalty Judgment. In my view the stays should operate from the date of filing to avoid risk of default. There is no doubt that prompt and adequate notice of intention to seek stays was given. Nor has that issue been challenged.
18 The ACCC relies upon an open offer that it provided to the appellants on 29 April 2020 to consider its position if provided with adequate financial evidence as to the appellants' inability to satisfy the monetary orders made at first instance.
19 It contends that a 'highly relevant' matter on the application is evidence about who is funding the appeal and who funded the trial at first instance.
20 Absent the evidence in the previous paragraph, and particularly having regard to the state of the evidence generally, the ACCC submits the application ought be dismissed summarily, in so far as the monetary orders are concerned.
21 The ACCC argues that insofar as the non-monetary orders are concerned, no evidence at all has been adduced in support of staying those orders. There being no evidence and the orders being self-evidently important in the public interest, the application in respect of those orders ought also be dismissed, it suggests.
22 The ACCC also suggests that the costs order stay can be dealt with by the ACCC undertaking not to enforce any costs order until determination of the appeal without giving 14 days' prior notice of an intention to do so.