Employment Services Australia Pty Ltd v Poniatowska

REASONS FOR JUDGMENT 1 In this matter at first instance, judgment was delivered and orders were made on 23 June 2009 and formally entered on 7 July 2009: Poniatowska v Hickinbotham [2009] FCA 680. The appellant has appealed from Orders 1 and 3 then made. By motion filed on 15 July 2009 it seeks a stay of Orders 1 and 3 made on 23 June 2009 and entered on 7 July 2009, pending the hearing and determination of the appeal. 2 The application is made pursuant to O 52 r 17 of the Federal Court Rules. The principles upon which a stay should be granted are relatively straight forward and have been enunciated most recently in the decisions of Finkelstein J in Australian Competition and Consumer Commission v BMW (Australia) Limited (No 2) [2003] FCA 864 at [5], McKerracher J in Harbour City Real Estate Pty Ltd t/as Re/Max Harbour City Real Estate (ACN 111 210 023) v Cargill [2008] FCA 1382 at [5] and Greenwood J in Citrus Queensland Pty Ltd (ACN 110 855 359) v Sunstate Orchards Pty Ltd (ACN 095 659 733) [2008] FCA 1867 at [39]-[44]. I propose to apply those principles. 3 It is therefore necessary for the appellant, the applicant on the motion, to satisfy the Court that there is a likelihood that, if its appeal is successful, the appeal will be rendered nugatory if no stay order is granted. 4 The evidence before me satisfies me that, apart from the property at Glen Osmond owned by the first respondent, the person in whose favour the orders appealed against have been made, she has no other significant assets. As was found in the primary judgment, she has not had meaningful employment since September 2006. Searches of the Land Titles Office disclose no other real assets. Senior counsel appearing for her has accepted that, but for such equity as she may have in that property, she has no other substantial assets. The evidence indicates that in December 2007, that property was mortgaged by two mortgages stamped to a lending amount of $630,000. The current Government of South Australia rating is that its capital value is $670,000 as at 1 January 2009. There is no evidence to suggest that the mortgages were not fully drawn. There is no evidence indicating whether the interest on the mortgages has been paid, or has been capitalised or dealt with in some other way. There is some evidence to indicate the first respondent has other relatively modest liabilities in respect of costs owed to a firm of solicitors, and potential liabilities arising out of some proceedings against her in the Magistrates Court of South Australia. There is a one line appraisal of the value of the property provided by a real estate agent, indicating that as at March 2007 it was then believed to be worth around $1M. The evidence indicates it was not then sold at that price. There is no current evidence as to its value, or as to any equity the first respondent has in the property. 5 In those circumstances, I am satisfied that, if the full amount of the judgment sum is paid to the first respondent, a significant amount of that judgment sum may be applied to meet other liabilities. I am also therefore satisfied that the appellant would be at risk if the full amount of the judgment sum were paid and the appeal were successful, of being unable to recover the full amount of the judgment sum. That does not demonstrate that the appeal, if successful, would be rendered fully "nugatory" if there were some mechanism in place to regulate the application of the judgment sum by the first respondent, if she were to receive it, but to a significant extent that risk exists. It also does not involve any assessment that the first respondent would misapply the proceeds of the judgment in any way. But, it is likely that to a not insignificant degree, the proceeds would be applied towards the first respondent's expenses and liabilities, so that the recovery of a significant proportion of the judgment sum would be at risk in the event of the appeal being successful. 6 In my view, that is sufficient to consider the balance of convenience, the competing rights of the parties, and the prejudice to the first respondent, in determining whether to make the stay order which is sought. 7 Obviously the risk to the appellant is significant if the appeal is successful. If the appeal is unsuccessful, there is no risk of the first respondent not then enjoying the fruits of her judgment. She will be paid. She will be paid because the appellant is prepared to offer a bank guarantee securing payment of the full amount of the judgment sum and interest and for costs. 8 On the other hand, the first respondent is at risk of the detriment in not receiving the judgment sum in a timely manner as, on the face of things, she is entitled to receive it. However, apart from the right to receive the judgment sum, there is little evidence of detriment to her by being delayed in receiving the judgment sum. So far as I can determine, the only direct evidence of any detriment is in an affidavit from a solicitor of the firm acting for her on the appeal and at first instance. That solicitor has estimated the costs of the appeal to the first respondent potentially to be in the range of $50,000, and asserted that the first respondent would be prejudiced in instructing counsel if a total stay is granted. It is easy enough to infer, as I do, given the case made by the appellant and the acknowledgement by the first respondent through her counsel, that she has no other significant assets to meet that liability. It would obviously be a detriment to her if she were not able properly to resist the appeal, and to prosecute her notice of contention. 9 There were certain other matters put on her behalf. Her counsel contended that she may be deprived of the capacity of making, or proposing to make, a payment in resolution of the liability which, it appears to have been accepted, she owes to the Commonwealth of Australia through Centrelink. That is the subject of the proceedings in the Magistrates Court of South Australia. I am not satisfied that is the case, simply because there is no direct evidence of it. It was within the capacity of the first respondent to adduce more cogent evidence as to that matter. It was also within her capacity to adduce evidence as to the amount of any equity in the property, or as to her capacity or otherwise to draw on the mortgages which have been granted. It is also not clear to me that she could not make such an offer in terms which expressly committed the funds which, if the appeal is unsuccessful or only partly successful, she will in any event recover from the appellant. 10 It was also contended that the recovery from her medical condition may be delayed if she were not to receive a substantial amount of the judgment sum prior to the determination of the appeal. Again, I am not satisfied that is the case. The finding at first instance was that, upon completion of issues relating to her claim, she would be likely to progressively recover. There was no medical evidence to indicate that a partial payment of the judgment sum, which itself may be required to be paid if the appeal is unsuccessful, would impact upon the timing of her recovery. 11 Finally I note the contention that, in any event, the first respondent is likely to recover some award of damages in the proceeding because there is no challenge on the appeal to the "Lotito" findings, that is, findings made at first instance about a particular type of conduct extending over some time. That is apparently the case. However, the amount of the damages was heavily influenced by the findings adverse to the appellant as to the relationship between the termination of her employment and that (and other) conduct. If that connection were not made out, the damages recovered in respect of the "Lotito" findings would be relatively small. In that event, the Full Court would have to address the extent to which costs at first instance, as well as on the appeal, would be awarded. 12 In the light of those considerations, in my judgment, an appropriate order subject to undertakings which the appellant has proffered, would be for the stay to be granted, provided that the appellant pays to the first respondent the sum of $50,000. In reaching that view, although as I have indicated the evidence to support that degree of disadvantage is not particularly strong, I have also taken into account that the evidence has not persuaded me that the full amount of the damages awarded, if the appeal is successful, would not be recoverable by the appellant, as I consider that the appeal would be rendered "nugatory" only to some extent, and not totally. That is, if the judgment sum were paid, and then the appeal were successful, I do not consider that the first respondent would be likely to have put herself in the position where no, or only an insignificant part, of the judgment sum would then be recoverable by the appellant. 13 I therefore make the following orders. 14 Upon payment by the appellant to the first respondent of the sum of $50,000, and upon the appellant undertaking to take all reasonable steps to proceed with the appeal as quickly as possible to the intent that it will be heard in the November 2009 sittings of the Full Court, and upon the appellant within seven days providing to the solicitors for the first respondent a bank guarantee in favour of the first respondent for the balance of the judgment (excluding the sum of $50,000 to be paid) and costs of the proceeding at first instance and on appeal, if awarded against it, together with interest on the sums outstanding at 10.5%, pending the hearing and determination of this appeal, such bank guarantee to be drawn so that it may extend for such further period or periods as the Court may determine in the light of the outcome of the appeal, the Court orders that: 1. Orders 1 and 3 made on 23 June 2009 and entered on 7 July 2009 be stayed pending the hearing and determination of the appeal. 2. The costs of the notice of motion be referred to the Full Court for determination. 3. There be liberty to apply. I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Mansfield.