Solicitors:
Kells Lawyers (Plaintiffs)
Hall Partners (Defendants)
File Number(s): 2014/96930
[2]
Judgment - ex tempore
By Notice of Motion filed on 4 June 2015, one of the defendants in the proceedings before me, Leon Plant Hire Pty Ltd ("Leon Plant Hire") seeks an order that the judgment and final orders made in the proceedings be stayed pending determination of Court of Appeal proceedings in which the moving parties, who would be the First, Second, Fourth and Fifth Defendants on the notice of motion, are the prospective appellants. The form of the motion recognises, at least in its latter part, that no appeal has yet been filed and, as I will note below, it appears that an appeal could not now be filed without leave of the Court of Appeal.
I should note something as to the history of the proceedings. I delivered my primary judgment on 10 April 2015 (2015] NSWSC 397 and directed that the parties bring in short minutes of order to give effect to the judgment within 14 days. That judgment, therefore, did not give rise to operative orders, as distinct from contemplating that orders will be prepared by the parties and then made. There were some differences between the parties as to orders and I heard submissions as to those matters and, by a further judgment delivered on 29 May 2015 ([2015] NSWSC 602), made orders to give effect to the judgment. It appears to be largely common ground between Counsel that the material date for the purposes of the filing of any appeal would be the making of the orders on 29 May 2015 with the result that the appeal would have had to have been filed by late June 2015. That has not occurred.
The application for a stay is supported by an affidavit of Mr Marcos Leon (Senior) sworn 4 June 2015. Mr Leon indicates that he has instructed his solicitors to file an appeal, and the affidavit annexes a notice of appeal, or more precisely, a draft notice of appeal dated 4 June 2015 which appears to be signed by the Defendants' solicitors. I will refer further to the draft notice of appeal below. Mr Leon also refers to his understanding that the First Plaintiff, the liquidator of the Second Plaintiff, Lyon Form Pty Ltd ("Lyon Form") seeks to bring about a sale of a property situated at Merrylands, which I held in my judgment delivered on 29 May 2015, was the subject of an equitable charge in favour of Lyon Form to secure the payment to it of the amount of $110,779.55 to Lyon Form. It appears that Mr Leon's understanding is correct, so far as it remains to deal, today, with an application by the liquidator in respect of steps toward a sale of that property.
Mr Leon's evidence is that the relevant property is not rented and is vacant, and adjoins a second property at which he and his wife reside. He expresses the view that the properties would preferably be sold as a development site, although plainly that is not a matter which the liquidator could achieve without Mr Leon and Mrs Leon's cooperation so far as that would require a sale of both properties. Mr Leon also gives some evidence as to other assets of himself and his wife and makes the somewhat limited statement that his son Marco does not own a house, although he does not give any other evidence as to Marco's assets. Mr Leon in turn states that he is unaware how the judgment could be satisfied, other than from the sale of the two properties. He offers an undertaking not to deal, to put it broadly, with the relevant property pending the outcome of any appeal, and Mr Johnson, who appears for the Defendants, also points out that a caveat has now been placed over the relevant property which would restrain such a dealing in any event.
Mr Leon's evidence as to the inability to satisfy the judgment, other than by a sale of one or other of the properties, is inconsistent with information provided by Ms Manuela Leon to the Sheriff's office on 10 August 2015, which stated that the Defendants had the money to cover the debt, but would be seeking advice from their lawyer prior to payment. It is impossible to resolve that inconsistency, which leaves open the possibilities that, if Mr Leon is correct, the judgment could only be met by a sale of the property and, if Mrs Leon is correct, the judgment could be met simply by paying the money that is already available to the Leons to do so, and it would be their choice, whether or not to pay that money, that brought about any sale of the relevant property if it was not paid.
Mr Leon's affidavit, as I noted, annexed a draft notice of appeal. The notice of appeal is relatively lengthy, and identifies the nature of the proceedings before me, and identifies a number of errors which it is suggested were made in the judgment. A difficulty with the form of the notice of appeal is that that identification of error largely occurs by asserting that the Court should have reached the opposite finding, to the finding which it did reach, in respect of particular matters. In some circumstances, there is at least implicitly a basis disclosed for that proposition, for example, in respect of a matter to which Mr Johnson refers, that a particular schedule was admitted in evidence on an unlimited basis, and, it is put, the Court should have given greater weight to it than it did. However, the notice of appeal does not make clear how a different finding, in respect of the particular matters, would have deprived any essential step in the reasoning in the judgment of its validity, so as to require an opposite result to that reached by the judgment. It also does not make clear why particular factual findings, as to which an opposite result is said to have been achieved, were not findings that were reasonably open to me, albeit that another judge or an appellate court might, potentially, have taken a different view of the facts to that which I took. The notice of appeal also identifies legal issues as to the scope of s 286 of the Corporations Act and maintains that the Court should not have found that Lyon Form was insolvent by reference to specified matters.
Leon Plant Hire has, in turn, provided a short outline of submissions which draws attention to uncontroversial propositions of law in respect of the grant of a stay, and in particular to the decision in Alexander v Cambridge Credit Corp Ltd (1985) 2 NSWLR 685 at 694-695 which identifies relevant principles. It is, as I understand it, essentially common ground between the parties that the onus is upon the applicant to demonstrate a proper basis for a stay; that a discretion is more likely to be exercised in favour of granting a stay, if there is a risk that an appeal would prove abortive if the appellant succeeds and a stay is not granted; and the Court may make a preliminary assessment as to whether the appellant has an arguable case, in order to exclude an appeal lodged without any real prospect of success, and may require payment of the whole or part of the judgment sum for the provision of security as a term of a stay. Leon Plant Hire also fairly refers to the common practice of staying a judgment, pending appeal, where there is a risk that the plaintiff will be unable to repay the money without difficulty or delay if the appeal were to succeed.
Mr Johnson, in turn, refers, in oral submissions, to the particular issues which are said to support the possibility of a successful appeal, although, with all respect to Mr Johnson's submissions, I was not left with any clear understanding of any essential point which was said to involve an apparent factual error in the judgment, or an apparent error of law, the success on which would lead to a different result in the proceedings. Mr Johnson fairly accepted that it would be necessary for the Defendants to obtain an extension of time from the Court of Appeal, in order now to bring an appeal, but noted that a stay could be granted on terms that such an extension was sought.
Mr Golledge, who appeared for the Plaintiffs, in turn referred to the difficulty for the stay application, that it would be necessary to obtain an extension of time to bring an appeal and pointed to the delay in filing the notice of appeal. It appears, at least from submissions, that an attempt to file that notice of appeal was made yesterday, nearly two months after the draft notice of appeal was dated, and was not accepted by the Court of Appeal, for reasons that are not entirely clear, but may or may not reflect the fact that the appeal is now out of time.
Mr Golledge in turn submitted that it was unlikely that leave to appeal would be granted, in respect of a notice of appeal in its present form, which did not clearly identify errors in the judgment, as distinct from, Mr Golledge submitted, identifying conclusions to the contrary of those in the judgment which might have been reached. Mr Golledge submitted that the stay application should be refused on the basis that the Defendants could then make an application in the Court of Appeal for leave to file an appeal out of time and, if that application was granted, seek a stay at the same time. Mr Golledge also submitted that the various circumstances in which a stay might be granted were not established in this case.
Mr Johnson, in reply, pointed to the risk that the relevant property would be sold, to satisfy a charging order in the amount of approximately $110,000 to which I referred previously, although his submission in that respect faced the difficulty of Ms Manuela Leon's statement to the Sheriff's office that the Defendants have the monies available to meet the judgment. Mr Johnson also pointed, with some force, to the risk that a payment made to a company in liquidation would be difficult to recover, if the appeal was successful, particularly if moneys had been disbursed, in circumstances that the liquidator was otherwise without funds, and the judgment was in favour of the company in liquidation, rather than the liquidator personally.
The relevant principles applicable to the grant of the stay are well established, and I noted above that a number of them are common ground between the parties. In particular, it is to be recognised that, prima facie, a judgment is correct, notwithstanding a foreshadowed appeal or actual appeal, and the Court should not deprive a party of the fruits of victory, unless a proper basis for a stay is established: Network 10 Pty Ltd v Rowe [2006] NSWCA 4; Aquaqueen International Pty Ltd v Titan National Pty Ltd [2015] NSWCA 9 at [42]. Second, the overriding principle in an application for a stay is to ask what the interests of justice require: NSW Bar Association v Stevens [2003] NSWCA 95 at [83]; Aquaqueen at [44]. It is not necessary for the Defendants to establish that special or exceptional circumstances are made out, and it is sufficient that they demonstrate a reason or appropriate case to warrant the exercise of discretion in their favour in respect of the stay: Alexander at 694.
It is, as I have noted above, appropriate for the Court to make at least a preliminary assessment as to whether there is an arguable case on appeal (Alexander at 695) and an applicant for a stay must normally show that there are serious questions for the determination of the appellate court (Kalifair Pty Ltd v Digi-Tech (Australia) Ltd [2002] NSWCA 383; (2002) 55 NSWLR 737 at [18]. It is important to recognise that, even in circumstances where an appeal would be rendered nugatory if a stay is not granted, the Court must nonetheless determine whether there is a serious issue for the determination for the appellate court, and unless it concludes that there is a serious issue for the determination of the appellate court, it should not grant a stay, even if its not doing so might otherwise have an adverse effect upon the appeal: Aquaqueen above at [47]-[48].
In the present case, as I have noted, the prima facie position is that the judgment should be taken as correct, subject to a preliminary assessment of the prospects of appeal. As Mr Golledge has pointed out, an appeal can only be brought if the Court of Appeal grants leave to bring it, and the delay which has occurred since the delivery of the judgment and the making of orders is a factor which may tend against the grant of such leave. It also seems to me that, with all respect to Mr Johnson's submissions, the draft notice of appeal does not clearly demonstrate any particular error, which has a logical outcome that an appeal should be allowed. No doubt it will commonly be possible to a party, which seeks to appeal, to assert that the trial judge should have reached a different result as to many or all issues as to which it reached an adverse result to that party. However, that proposition is one that any potential appellant could make and, without more, it does not have the result that any potential appeal should bring about a stay as a matter of course. In some cases, it will be readily possible to say that there is a finding of fact that is both essential to the judgment, and controversial, or a finding of law that is essential to the judgment and as to which there is an obvious legal issue. In the present case, Mr Johnson's submissions did not, again with all respect to them, identify either a finding of fact that seemed to me to have that consequence, or an issue of law which had such critical impact.
I accept that, as Mr Johnson points out, there is a risk that, if money is paid to the company in liquidation, or if the properties are sold, the detriment which would follow could not be reversed if an appeal was successful. However, as I have noted, that is not sufficient to support a stay, without my being satisfied of some point which either supports a prospect of an extension of time, or an arguable issue on appeal, which has the prospect of leading to a different result, and I am not satisfied of those matters given the form of the notice of appeal as it now stands and the submissions which have been put to me.
In any event, it seems to me that the preferable course is, for these reasons, for me to decline a stay, on the basis that that will not bring about a final determination of the matter in any event. It has been clear, at least since the date of Mr Leon's affidavit of 4 June 2015, that the Defendants proposed to appeal, although they have not done so. They will now need to make an application to the Court of Appeal for an extension of time, if they seek to bring about such an appeal. It is to be assumed that they will do so promptly, since any further delay in making that application will only reduce the prospect of an extension of leave to bring the appeal being granted. If that is to occur, the Court of Appeal may well be in a better position than I am, to assess the prospects of an appeal which essentially takes the form of asserting that I should have reached contrary findings as to many of the matters before me.
Accordingly, my declining a stay does not deprive the Defendants of the prospect that their position will be protected, by a stay granted by the Court of Appeal on proper terms, if leave is granted to bring an appeal. It simply has the consequence that the Court of Appeal, in determining a leave application, and with the benefit of this judgment indicating the reasons I have taken the views I have taken, will need to consider whether there is an issue as to which a case sufficient to warrant a stay emerges in respect of the proposed appeal. For these reasons, I decline to stay the judgment, and the interlocutory application filed by the Defendants dated 4 June 2015 should be dismissed with costs. In reaching that view, I should note that I see little advantage in my granting a stay, conditional upon steps being taken by the appellants or potential appellants within a short time, since it is open, as I have noted, to the appellants to take those steps without such a regime, and to agitate their stay application in the Court of Appeal at the time of taking those steps.
[3]
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Decision last updated: 02 February 2016
Parties
Applicant/Plaintiff:
Angus Carnegie Gordon in his capacity as liquidator of Lyon Form Pty Ltd (in liq) & Anor