• Lawyers in Sydney
• Lawyers in Melbourne
• Lawyers in Brisbane
• Lawyers in Perth
• Family lawyers
• Employment lawyers
• Criminal lawyers
• Wills and estates lawyers
• Find a lawyer

ex tempore Judgment

1. HIS HONOUR: There are two proceedings pending in this Court. The first, 2015/299594, is an application for leave to appeal connected with costs orders. The second, 2015/219321, is an appeal as of right against a judgment debt together with interest. In both cases, the amounts in question are large.
2. By notice of motion filed on 27 October 2015, Ms Felicity Cassegrain, who is the applicant for leave to appeal and the appellant in the first and second proceedings respectively, seeks two substantive orders. The first is a grant of leave pursuant to s 471B of the Corporations Act 2001 (Cth) which is required by reason of the fact that one of the companies joined as respondents to each proceeding, Gerard Cassegrain & Co Pty Ltd, is in liquidation. The counsel for the liquidator, Mr Ashhurst SC, who also appears for other respondents in both proceedings, did not oppose the grant of leave and in the orders I will make, there will be a grant of leave. The second orders sought are stays of orders made on 15 May 2014, 5 December 2014, 30 June 2015 and 5 August 2015 until the determination of the application for leave and the appeal. It is necessary to say something about each of those orders.
3. The first, that made on 15 May 2014, relates to costs. It was order 3 made by the primary judge, Bergin CJ in Eq, ordering Ms Cassegrain to "pay the plaintiff's costs of the statutory derivative and oppression proceedings on the ordinary basis". The evidence before me establishes that that order was made by consent although there is uncontested evidence from Ms Cassegrain's solicitor that he may have been under a misunderstanding as to the effect of what he was consenting to. He says: "I had not intended to consent on behalf of the applicant to her becoming liable to pay the whole of the costs of the proceedings": see para 12 of Mr Condon's affidavit sworn 22 October 2015.
4. The order made on 5 December 2014 was made without the opposition by Ms Cassegrain. It amounts in substance to a "lump sum" costs order of the costs the subject of order 3 made on 15 May 2014, in the amount of $1,399,870.71. It is convenient to note now that although those two orders were made in May and December last year, the application for leave to appeal from them was not filed until 28 September 2015. I will deal later in more detail with the procedural history.
5. The order made on 30 June 2015 was made by the primary judge in a reserved judgment after argument as to the adoption of a referee's report: see Denis Cassegrain v Gerard Cassegrain & Co Pty Ltd (in liq) [2015] NSWSC 851. The orders were that the second, third and fourth defendants (Mr Claude Cassegrain, Ms Felicity Cassegrain and Mr Anthony Sarks) were jointly and severally liable to pay equitable compensation in the amount of $2,596,039.
6. The order made on 5 August 2015 is an order for interest. It is that the same three defendants are to pay interest in the amount of $2,302,302.40. (The amounts of interest are large; I understand that they reflect interest on the two amounts giving rise to the $2,596,039 referred to in the order made on 30 June 2015.)
7. Both the appeal and the application for leave are set down for hearing on 29 February 2016, with an estimate of one day. The Court has the benefit of written submissions in support of the appeal and application for leave which have been filed by Ms Cassegrain.
8. In the meantime, bankruptcy proceedings have been commenced by the judgment creditors in respect of the lump sum costs order made on 5 December 2014. Those proceedings have come before Robertson J in the Federal Court on an application for a sequestration order against Ms Cassegrain under s 43 of the Bankruptcy Act 1966 (Cth): see Cassegrain v Cassegrain [2015] FCA 1233. The outcome of a hearing over two days in October 2015 was to "adjourn the applicants' application for a sequestration order against the estate of Felicity Cassegrain until the determination of the proceedings in the New South Wales Court of Appeal". His Honour also granted liberty to apply on three days' notice. It is convenient here to note what his Honour said at [92], on which Ms Cassegrain relies: "It would not be appropriate to consider those grounds in detail given the pendency of the hearing of the proceedings in the Court of Appeal. Indeed the arguments in relation to the grounds were not fully developed before me. However, what seems to me to be arguable, in particular, are the grounds which relate to the point in time in the litigation at which the costs orders were made and the related general law question as to whether Felicity Cassegrain's liability for costs may be affected by any notion of apportionment, as raised in her grounds of appeal from the substantive orders. The relevant threshold of an arguable point is relatively low: Nolten v Groeneveld Australia Pty Ltd [2011] FCA 1494 at [29]. On the former aspect, I take into account the applicants' submission that Sarks v Cassegrain [2015] FCAFC 38 shows that, in equity, a judgment on liability with a reference for an enquiry is regarded as a final order but, arguably, the point sought to be taken in the Court of Appeal is a different one, having as its concern an exercise of discretion by Bergin CJ in Eq."
9. The principles applicable to the exercise of the power to grant a stay pending appeal are well known and uncontroversial. They were recently restated by Gleeson JA in Lawrence v Gunner [2015] NSWCA 322 at [10]-[13]: "The principles to be applied when exercising the Court's power to grant a stay pending an appeal are well known: see Alexander v Cambridge Credit Corporation Ltd (1985) 2 NSWLR 685 at 694-695, and Kalifair Pty Ltd v Digi-Tech (Australia) Ltd [2002] NSWCA 383; 55 NSWLR 737 (Kalifair) at [17]-[20]. A successful party is prima facie entitled to the fruits of his or her judgment, but a stay may be granted where an applicant demonstrates an appropriate case to warrant the exercise of discretion in its favour. The mere filing of the appeal is insufficient, of itself, to demonstrate such a case. Usually it is demonstrated by showing that there are arguable grounds of appeal and that there is a risk that if money is paid it will be unable to be recovered if the appeal succeeds, or by demonstrating that unless a stay is granted the appeal will be rendered nugatory: TCN Channel 9 Pty Ltd v Antoniadis [No 2] [1999] NSWCA 104; 48 NSWLR 381 at [15]. The Court will weigh considerations such as the balance of convenience and the competing rights of the parties. It is for the applicant to demonstrate a proper basis for a stay that will be fair as between the respective interests of the parties: see Alexander v Cambridge Credit Corporation Ltd at 694; Adeels Palace Pty Ltd v Moubarak [2009] NSWCA 130 at [5]. It is appropriate to consider first whether the appeal raises a serious question to be tried, in the sense of arguable grounds, and if so, where the balance of convenience lies: Kalifair at [18]; Vaughan v Dawson [2008] NSWCA 169 at [17] (Campbell JA)."
10. I turn first to whether there has been shown to be a serious question to be tried. Mr Ashhurst, opposing the stay, points to the weakness, according to him, of both the application for leave and the appeal. In relation to the challenge to the costs orders, he says that the first order was consented to, the second (the lump sum order) was not opposed, and in those circumstances, there will be a next to impossible task to establish appellable error of law on appeal to the exercise of a costs discretion. He adds that Ms Cassegrain requires a significant extension of time given that the orders were made in 2014 and the application for leave to appeal was only made many months later. Passing over questions of when there could be some doubt on the part of Ms Cassegrain that time within which to seek leave to appeal was running, he points to the early months of 2015, culminating on 7 April 2015, when Ms Cassegrain's application to set aside the bankruptcy notice founded upon the lump-sum costs order was dismissed, as indicating that no later than then, it must have been clear to her and those advising her that there was an order which could be the subject of an application for leave to appeal. As noted earlier, the application for leave to appeal was only filed on 28 September 2015. On the appeal itself, the respondents submit that the principal basis for the appeal, which is that Ms Cassegrain should only be proportionately liable for some of the amounts of equitable compensation, was never squarely put either to the primary judge or to the referee whose report was adopted by the primary judge. He also made submissions that the proportionate liability regime did not apply to the claims in relation to which equitable compensation was awarded, and directed me to s 34A of the Civil Liability Act 2002 (NSW).
11. Against this, I have to bear in mind that a judge of the Federal Court has regarded the arguments sought to be advanced in the appeal as "arguable", although it should be observed that his Honour also noted that the relevant threshold of an arguable point is relatively low, quoting Nolten v Groeneveld Australia Pty Ltd [2011] FCA 1494 at [29]. His Honour also noted that the arguments had not been fully developed before him. That said, his Honour had the benefit of submissions over two days, a much lengthier time than has been available in this list.
12. In relation to whether the submissions relating to proportionate liability were made, Ms Jackson, who has appeared for Ms Cassegrain, has taken me to a series of passages in the judgments and pleadings and the referee's report, namely: [74] of the judgment of Bergin CJ in Eq in Denis Cassegrain v Gerard Cassegrain & Co Pty Ltd (in liq) [2014] NSWSC 411, paras 9-10 of the amended points of defence of the third defendant before the referee dated 31 October 2014, para 12 and para 33 onwards in the report of the referee dated 30 January 2015, paras 24-27 of the third defendant's outline of submissions dated 19 November 2014, [119] of Bergin CJ in Eq's decision in Denis Cassegrain v Gerard Cassegrain & Co Pty Ltd (in liq) [2015] NSWSC 851, [76] of Emmett JA's judgment in Gerard Cassegrain & Co Pty Ltd (in liq) v Cassegrain [2013] NSWCA 455, and the plaintiff's reply to defences of the second, fourth and third defendants to the points of claim (in which there was no particularised contest to the clam that the third defendant should not pay any "substantial compensation").
13. It is unnecessary to reproduce those references. I think it is a reasonable summary to conclude that the question of proportionate liability, or the application of the particular provisions governing proportionate liability were at no stage in the complex procedural history before me squarely advanced on behalf of Ms Cassegrain. Instead her submissions were directed to achieving, an absence of any liability, either because there was no causal connection between her client and the loss or in the exercise of discretion, because her involvement was much less than that of the other defendants. That said, at some point the submission was made, in the alternative, that Ms Cassegrain should be liable for some "lesser amount".
14. In relation to seeking leave to appeal from the orders as to costs, Ms Cassegrain's point essentially is that that should be derivative upon the substantive judgment, notwithstanding the fact that the costs order came first in time.
15. Doing the best I can, I will proceed on the basis that the case sought to be advanced on appeal by Ms Cassegrain is one that is relatively weak, but still falls short of being as hopeless as had been contended by Mr Ashhurst for the respondents.
16. According I turn to the balance of convenience, which also needs to be satisfied in order to make out a proper basis for a stay. First, Ms Cassegrain has relied upon no evidence at all as to her solvency, as to her current assets, or as to her current income.
17. Secondly, the application for a sequestration order, founded upon the lump sum costs order made in December 2014, has been adjourned pending the determination of the proceedings in the New South Wales Court of Appeal. I note that in many cases the orders sought by an appellant or an applicant for leave would be in the nature of preventing the judgment creditor from taking steps by way of execution on the judgment sought to be challenged on appeal. As it happens in this case the regime ordered by the Federal Court already makes provision to that end.
18. Thirdly, there is no hard evidence before me of any material prejudice that Ms Cassegrain would suffer in the event that a stay not be ordered. It has been said that Ms Cassegrain is at risk of the liberty to apply granted by Robertson J being exercised and, accordingly, the application for a sequestration order being renewed. In the event that that happens, my decision being one that is interlocutory, it would be open to Ms Cassegrain to make further application to this Court. In any event, it would be incumbent upon any further application in the Federal Court to advise the judge of the fact of and the reasons for the orders I am making today.
19. Mention has been made also of further proceedings under s 66G of the Conveyancing Act 1919 (NSW) relating to the sale of some jointly owned property, a dairy farm. These proceedings are pending in the Equity Division of this Court. The material before me does not provide a sufficient basis to make a finding one way or the other material to the evaluation of the balance of convenience on this application.
20. I have not said anything about something mentioned only slightly in oral and written submissions before me, namely the applicability of the proportionate liability legislation at all to these claims, and s 34A of the Civil Liability Act. I have not heard full argument on the point, and it accordingly did not comprise part of my evaluation that there was a relatively weak but not hopeless case on appeal by Ms Cassegrain.
21. All of that said, I am not satisfied that Ms Cassegrain has made out that this is an appropriate case for a stay pending the determination of her appeal and her application for leave to appeal. My conclusion rests upon the balance of convenience, coupled with the relative weakness of the questions to be raised on appeal. [Discussion as to formal orders]
22. The orders that I make are: 1. Grant leave pursuant to s 471B of the Corporations Act 2001 (Cth) to Ms Cassegrain to proceed against Gerard Cassegrain & Co Pty Ltd (in liq) in proceedings 2015/219321 and 2015/299594. 2. Otherwise dismiss the notice of motion, filed 27 October 2015. 3. Order that the applicant, Ms Cassegrain, pay the respondents' costs of the notice of motion.