Dwyer v Craft Printing Pty Ltd [2009] NSWCA 254 | Case summary

Ex tempore 10 August 2009 Paul Andrew Dwyer v Craft Printing Pty Limited Judgment 1 HER HONOUR: The appellant, Paul Andrew Dwyer, has filed an appeal against an order for judgment against him in a sum exceeding $400,000 made by Johnstone DCJ on 7 April 2009. The debt for which judgment was given arose in circumstances where his Honour found that Mr Dwyer had signed a personal guarantee in respect of debts incurred by a company called Comsta Pty Limited (Comsta), of which he was the sole shareholder and director. The guarantee was given in conjunction with an Application for Credit Account made to Craft Printing Pty Limited (the respondent) for printing services. Some time after the giving of that personal guarantee, there was a restructure of the various companies through which Mr Dwyer conducted his business of selling sporting gear. Subsequently, Comsta went into liquidation. The respondent sued Mr Dwyer on the guarantee. 2 There were two essential bases upon which the trial judge found Mr Dwyer was liable on his guarantee, one of which was under the Trade Practices Act 1974 (Cth), s 52. The trial judge found that not only was Mr Dwyer liable, but also rejected his argument that the respondent had already appropriated funds to Comsta's alleged indebtedness to it. The company, Paul's Retail Pty Limited (Paul's Retail), which in effect is the business that Mr Dwyer runs, is itself subject to a Deed of Administration. At the time the Deed of Administration was entered into with Mr Morgan as administrator, Paul's Retail had a net deficit in excess of $9 m. Paul's Retail is still under administration, a factor upon which Mr Dwyer relied as indicating it may come out of administration at the end of the term of the Deed of Administration and continue to operate. Put another way, it was submitted that because the administrator had not caused the company to be put into liquidation, nor had the company otherwise gone into liquidation, it was likely that the company will eventually become a profitable trading entity again. That is not a matter upon which I make any finding or draw any conclusions. All that is known at the moment is that Paul's Retail is in administration and at the time it went into administration it was in a significant deficit position. 3 Mr Dwyer's appeal to this court is as of right. He filed an affidavit sworn 31 July 2009, in which he deposed that he is presently subject to a bankruptcy notice, in respect of which he has made an application to extend time for compliance. That matter is listed for mention in the Federal Magistrate's Court on 11 August 2009. He has given evidence of his personal assets, which are minimal. He has also given evidence of his shareholdings in companies, which are essentially associated with his business. Those shares or those companies are subject to significant indebtedness. His income as the general manager of Paul's Retail is $50,000 per year, although his affidavit does not indicate whether that is net or gross. He has deposed to the fact that he believes he cannot raise enough money to pay the judgment debt and also run the present appeal from any source of funds available to him. Finally, so far as is relevant in this regard, he deposed that he has been informed by his solicitor that he has good prospects of success on the appeal. I might interpolate at this point that an applicant for a stay does not need to demonstrate good prospects of success on the appeal, but does have to demonstrate an arguable case. 4 The principal ground that will be argued on the appeal is that the conduct upon which the trial judge relied in finding that there was a breach of the Trade Practices Act, s 52, is not 'conduct' within the meaning of that term in the Trade Practices Act. There will also be an argument relating to the order in which debts are paid pursuant to the rule in Clayton's case and an issue as to whether or not the respondent had already appropriated moneys paid to it in satisfaction in whole or part of the indebtedness that comprised the judgment debt. 5 The respondent relied upon its right as the successful party in litigation at first instance to be entitled to the fruits of that victory. That is a well-established principle and an important one. The respondent also said that the appellant has come to this Court seeking an indulgence which ought not to be granted. Counsel for the respondent described the appellant as being a "one man commercial wrecking machine", an assertion he sought to make good by reliance upon an affidavit of Mr Morgan, the administrator, which was filed in other proceedings. I made rulings as to the use to which that affidavit could be put. The assertion made by counsel was not made out, given the extent to which I granted leave to rely upon Mr Morgan's affidavit. Nonetheless, it is clear that Mr Dwyer is himself without readily accessible assets and may have no assets of any real extent, and that Paul's Retail, of which he is the sole director and shareholder, is a company which is in financial difficulty. 6 Mr Dwyer relied upon the principles stated by this court in McLean Tecnic Pty Ltd v Digi-Tech (Australia) Limited; Kalifair Pty Limited & Anor v Digi-Tech (Australia) Limited & Ors [2002] NSWCA 383; (2002) 55 NSWLR 737 as setting out the relevant principles upon which the court should operate in determining whether or not to grant a stay. In that case, the court referred to the principles well established in this court in Alexander v Cambridge Credit Corporation Limited (1985) 2 NSWLR 685 where the court stated that on an application for a stay, it is sufficient that the applicant demonstrates a reason or appropriate case to warrant the exercise of discretion in favour of the grant of a stay. It was further stated in that case that the court has a discretion whether or not to grant a stay and if so, as to any terms of the stay that would be fair. The considerations that are relevant include the balance of convenience and the competing rights of the parties. 7 The other two relevant principles to which the court referred in Alexander v Cambridge Credit were as follows: first, where there is a risk that the appeal will prove abortive if the appellant succeeds and a stay is not granted, courts will normally exercise their discretion in favour of a stay. Secondly, where it is apparent that unless a stay is granted an appeal will be rendered nugatory, that will be a substantial factor in favour of the grant of a stay. 8 In Kalifair the court, after referring to those principles, as well as the prima facie principle that a successful party is entitled to the fruits of judgment, said further, at [28], 743, that a successful party is entitled to be protected as far as practicable from the risk that if the appeal fails, assets which earlier were available to satisfy the judgment will no longer be available for that purpose. In those circumstances, the court pointed out it would endeavour to see that a stay does not cause that kind of prejudice to a judgment creditor. That can be achieved, for example, by an order that security be provided as the price for a stay. In Kalifair the court further noted, however, that in that case the judgments were already worthless and the judgment creditor was not entitled to have conditions imposed on the assets for the purpose of increasing their value. In that case, the court ordered that the appellants were entitled to an order for a stay of execution without any conditions requiring security. 9 The appellant also referred the Court to FAI Insurance Limited v Registrar of Workers Compensation Commission of New South Wales (1982) 1 NSWLR 239. In that case, the court held that where the refusal of a stay, although not rendering an appeal nugatory, would have a devastating effect on the appellant, that was an appropriate consideration in determining whether to grant a stay. 10 The Court of its own motion decided to grant expedition in this matter. It is a commercial matter and the grant of expedition should go some way to ensuring that the respondent is not kept out of its money, if it is so entitled, for the period usually involved in an appeal coming on for hearing in the normal course. The expedition which has been granted has been particularly expedient, with a hearing being allocated in about five weeks time. In those circumstances and in circumstances where on the evidence before me the appellant is not in a position from his own resources to pay the judgment debt or at least to pay the judgment debt and prosecute his appeal, I have reached the conclusion that unless a stay is granted the appeal may be rendered futile. I say "may", because it is not apparent as to the extent to which the appellant may be able to call upon others to assist him financially. Nonetheless, it does appear that from his own resources it is unlikely that he would be able to prosecute the appeal unless a stay is granted. 11 I have given consideration to whether the stay should be granted on condition that the judgment debt, in whole or in part, be paid into Court or otherwise preserved in a fund. However, in circumstances where on the evidence before me it is not apparent that there are assets to which recourse can be readily had, any condition on the grant of a stay ought not be imposed. I have come to that conclusion because it seems to me that the respondent is not really in any worse position by the grant of a stay without conditions, given the financial position of the appellant. As I have said, the significant relief which the Court considered it could give to the respondent to best protect it was by the grant of expedition. 12 Accordingly, I make the following orders and directions:

Dwyer v Craft Printing Pty Ltd

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