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[2026] NSWCA 165
procedural. Notice of motion dismissed with costs. The requested stay, restraint, alternative 14-day notice order and time to consider an undertaking as to damages were not granted ([44]–[46]).
The Court of Appeal refused to stop the liquidators selling the Co-operative’s main property while the members pursued leave to appeal. The judge considered the proposed appeal grounds weak at this preliminary stage, and reasoned that the sale proceeds would remain available for the Co-operative if the winding-up orders were later set aside. The applicants had delayed bringing their motion, while creditors remained unpaid and the sale process was well advanced. The judge concluded that the practical balance favoured allowing the liquidation and sale process to continue.
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This is an interlocutory decision about whether a court should pause the consequences of an earlier winding-up judgment while proposed appeal proceedings are underway. It is not the substantive appeal from the winding-up orders. Griffiths AJA decided only the applicants’ notice of motion seeking interim protection, and dismissed it with costs ([46]).
On 10 July 2026, Williams J ordered Manly Warringah Cabs (Trading) Co-operative Society Ltd to be wound up as insolvent under ss 459A and 459P of the Corporations Act 2001 (Cth), as applied by s 444 of the Co-operatives National Law (NSW) (CNL). She appointed Trevor Pogroske and Anthony Warner as joint and several liquidators and made costs orders against specified members ([1]). The five members who became the applicants in the stay motion challenged that judgment, filing a notice of intention to appeal and a summons seeking leave to appeal ([5]).
The Co-operative had experienced poor management, financial disarray and continuing member disputes ([8]). Its financial statements showed trading losses and current liabilities more than $1 million greater than current assets. Its principal significant asset was a property at Cromer, estimated at $3.8 million in the audited statements ([9]). The administrators explored interim finance, but a proposed sale of the Property required member approval under s 359(1)(b) of the CNL. The required special resolution was to be conducted by special postal ballot, with 75% of members needing to vote in favour ([10], [32]).
The administrators put sale and interim finance elements together in a ballot proposal. The opposing members objected to that linkage. The primary judge accepted evidence from an administrator that sale of the Property was the repayment pathway for the existing debts and proposed facility, and that no lender was prepared to provide finance absent that pathway ([11], [21]). The stay judge treated the evidence accepted by the primary judge as an answer to the claim that there was no evidence supporting the finding about lenders’ position ([20]–[21]).
The members’ motion sought to restrain sale, transfer, encumbrance or other dealing with the Property. In the alternative, they sought 14 days’ written notice of a proposed transaction and its material terms ([2]). Their stated concern was that sale before the appeal would destroy its practical subject matter. At the hearing, however, the judge was told that contracts might be exchanged as soon as 20 August 2026, making the motion urgent ([7]).
The judge set out the parties’ broad agreement about the governing stay principles. A successful party is ordinarily entitled to the fruits of victory; the applicant bears the onus; the Court can make a preliminary assessment of prospects without conducting an in-depth appeal analysis; the applicant must show a real risk of prejudice not redressable by a successful appeal; and, where relevant, the balance of convenience is considered ([14]). A stay can be made subject to conditions, including the usual undertaking as to damages ([14]).
First, Griffiths AJA assessed the proposed appeal grounds as relatively weak. On insolvency, the applicants argued that the primary judge had failed to engage with Sandell v Porter and with the possibility of realising value by sale, mortgage or pledge ([17]). The stay judge considered that the primary judge had nevertheless applied the relevant substance of the principle: she assessed the Co-operative’s financial position as a whole, including commercial realities and resources potentially realisable by borrowing against assets ([18]). The primary judge had found no realistic prospect of borrowing against the Property ([19]).
The stay judge also rejected the assertion that the primary judge had inferred lender conditions without evidence. The evidence of Mr Pogroske, accepted at the trial, supported the finding that finance depended on the sale pathway ([20]–[21]). The judge also noted a letter from the applicants’ solicitor stating that it was “obvious to everyone that Co-operative [sic] is insolvent”, and considered that the primary judge could rely on it as an acknowledgement ([22]–[23]).
The proposed challenge to the exercise of discretion was also considered weak. The applicants relied on House v The King and alleged that the primary judge treated insolvency as determinative, failed to consider adjournment or dismissal, and overlooked relevant matters. Griffiths AJA considered that the primary reasons showed insolvency was not treated as determinative, explained why winding up was ordered despite member objections, and addressed the matters identified as overlooked ([24]–[26]). The proposed grounds about declaratory relief and appointing the administrators as liquidators were likewise considered weak because the primary judge had addressed those matters ([27]–[28]).
Second, the judge rejected the claim that sale would render the appeal nugatory. The applicants’ own proposed pathway involved selling the Property and paying creditors. The judge considered that a sale by the liquidators would convert the asset into a fund in the court-supervised liquidation. If the appeal later succeeded in setting aside the winding-up orders, the net proceeds would remain held for the Co-operative, after payment of creditors ([30]–[31]). The judge therefore characterised the interest the applicants sought to preserve as control of the sale process, rather than the underlying value of the Property ([31]).
Third, the judge considered the alternative member-led sale pathway uncertain. A sale by the Co-operative outside liquidation required the statutory member approval process, and the active members had rejected the proposal put to them in March 2026 ([32]). The applicants’ efforts to reconstitute the Co-operative had not succeeded, and their proposed pathway depended on steps for which the primary judge had found no realistic prospect ([33]). In those circumstances, the Court would not permit one faction of a divided membership to conduct a sale of the principal asset while liquidators remained in office ([34]).
Fourth, the judge considered the delay and practical consequences. The applicants knew by 24 July that the requested undertaking would not be given and that the sale campaign would continue, but filed the motion on 14 August, about five weeks after the winding-up orders ([35]). The explanation that counsel could not be consulted until shortly before the motion was filed was found inadequate in the circumstances described in the judgment ([36]).
Finally, the balance of convenience favoured the respondents. Creditors had long-overdue debts, interest continued to accrue on secured debt, and delay would increase liquidation and holding costs ([37], [42]). The sale process was advanced: agents had been appointed, valuation and preparatory work undertaken, marketing completed, and prospective buyers had improved offers ([38]). The judge accepted evidence that delay could unsettle a purchaser, affect market confidence and require an expensive sale process to be repeated without assurance of the same result ([39]–[40]). The applicants’ claimed prejudice was, in the judge’s assessment, the loss of an opportunity to control a sale that they did not presently have ([41]).
The judgment does not purport to alter the law governing stays pending appeal. It records principles drawn from Alexander v Cambridge Credit Corporation, Michael Hill Jeweller (Australia) Pty Ltd v Gispac Pty Ltd and McLean Tecnic v Digi-Tech; Kalifair v Digi-Tech, and applies them to an urgent application concerning a winding-up and a proposed asset sale ([13]–[15]).
The decision’s contribution is therefore primarily an application of established stay considerations to this particular procedural and commercial setting. It illustrates the distinction between preserving the subject matter of an appeal and preserving a party’s preferred way of managing or realising an asset. Here, the judge reasoned that the sale proceeds, rather than the physical Property or control of the sale, could preserve the relevant value if the appeal later succeeded ([29]–[34]).
The judgment also applies the familiar need for caution when assessing proposed appeal grounds at an interlocutory stage. The judge did not conduct a full appeal hearing. She made a preliminary assessment and concluded that the proposed grounds were relatively weak, while explaining why the primary judge appeared to have addressed the matters said to have been ignored ([14], [16]–[28]). The discussion of House v The King concerned the asserted errors in the exercise of discretion ([26]).
The judgment does not state that it changes the test for insolvency or the requirements of s 359 of the CNL. It refers to the primary judge’s approach to solvency, including commercial realities and resources that might be realised by borrowing against assets ([18]–[19]). It also refers to the statutory requirement for member approval of a sale outside liquidation ([32]). Those matters formed part of the assessment of the proposed appeal and the practical position, rather than a new ruling on the substantive construction of the legislation.
At [14], the Court stated: “The applicant for a stay carries the onus of persuading the Court to grant a stay in its discretion.” In plain English, a stay is not automatic merely because an appeal is contemplated. The party asking for one must persuade the Court that interim protection is justified.
The same paragraph explains that a stay court need not conduct “an in depth assessment” of appeal prospects, but may assess whether the proposed appeal has no real prospects. This marks the limited scope of the inquiry. The stay judge was not finally determining the appeal grounds; she was deciding whether they provided a sufficient basis for pausing the existing orders.
At [18], the judge noted that the primary judge assessed solvency “objectively” by considering the Co-operative’s financial position as a whole and commercial realities, including possible borrowing secured against assets. In practical terms, the stay judgment rejected the proposition that the primary judge had ignored the possible value of the Property merely because she did not cite Sandell v Porter by name.
At [31], Griffiths AJA said that the sale would convert the Property into a fund held within the liquidation and that, if the appeal succeeded, the net proceeds would be held for the Co-operative. The plain-English point is that the Court saw a potential distinction between losing the asset itself and losing the opportunity to direct its sale. It considered that the former concern could be addressed by preserving the proceeds, while the latter was not a right or opportunity then available to the applicants.
At [41], the Court said the applicants’ asserted prejudice “reduces, on analysis, to the loss of an opportunity to conduct the sale themselves”. This was central to the assessment of irreparable prejudice. The judge treated the liquidators’ sale as not destroying the economic value potentially relevant to the appeal, while recognising that it would remove the applicants’ preferred control over the transaction.
At [42], the judge rejected the argument that creditors were not prejudiced because assets exceeded liabilities. In context, her concern was that unpaid debts, interest, liquidation expenses and holding costs continued to accumulate. A possible eventual surplus did not, in her assessment, eliminate the costs of delay.
This decision is relevant to stay applications where a party seeks to prevent the realisation of an asset pending an appeal, particularly where the asset is likely to be sold under either the challenged order or the applicant’s own proposed alternative. It shows the importance the Court gave to whether the value of an asset could be preserved in proceeds, rather than whether the asset itself remained unsold ([29]–[34]).
The reasoning may also be relevant where the asserted prejudice is a loss of control over a process rather than destruction of the economic value at stake. The judgment’s analysis depended on the particular finding that sale proceeds would remain held for the Co-operative if the winding-up orders were set aside ([31]). It should not be read as saying that sale of an asset can never make an appeal nugatory. The judgment considered the nature of the asset, the proposed alternative pathway, the likely treatment of proceeds and the evidence about the sale process.
The decision also concerns circumstances where the proposed appeal grounds have been set out but not yet finally determined. It illustrates the role of a preliminary assessment at the stay stage, particularly where the grounds allege that a primary judge overlooked evidence, failed to consider relevant matters or erred in exercising a discretion ([16]–[28]).
Other relevant features were an advanced sale process, creditors with overdue debts, accumulating interest and costs, market uncertainty, and delay in bringing the stay motion ([35]–[43]). The decision’s reasoning is fact-sensitive: the judge relied on evidence about the offers, valuation, marketing and likely consequences of a delay. It does not establish that any sale process must prevail over an application for a stay.
The supplied judgment contains no information about later judicial treatment of Fletcher v Manly Warringah Cabs. It was decided on 19 August 2026, and the source text does not identify subsequent cases that have followed, distinguished, applied or criticised it. No conclusion about its later status or influence can therefore be drawn from this source alone.
The decision itself identifies the authorities it relied on for the stay principles: Alexander v Cambridge Credit Corporation, Michael Hill Jeweller (Australia) Pty Ltd v Gispac Pty Ltd, and McLean Tecnic v Digi-Tech; Kalifair v Digi-Tech ([13]). It also refers to House v The King in considering the proposed discretionary-error grounds ([26]) and Sandell v Porter in summarising the applicants’ proposed insolvency challenge ([17]). Those are authorities discussed within this judgment, not evidence of later treatment of this judgment.
The substantive appeal was not decided. The judgment records that the applicants had filed a summons seeking leave to appeal and supplied draft grounds, but Griffiths AJA was determining only the stay motion ([5], [15], [46]). The merits of the insolvency finding, the winding-up discretion, the declaratory relief questions and the appointment of the liquidators therefore remained unresolved by this decision.
The judgment does not determine whether the primary judge’s construction of the CNL, or her treatment of the member ballot and finance proposal, was ultimately correct. It gives a preliminary assessment of the proposed grounds for stay purposes and relies on the primary judge’s findings and reasons ([16]–[28]). A final appellate determination could require a fuller analysis of the record and the legal arguments.
Nor does the decision establish what would happen to sale proceeds in every possible appeal outcome or under different terms of a winding-up order. Its reasoning relied on the expectation that proceeds would be held for the Co-operative if the winding-up orders were set aside ([31]). The judgment also does not decide the terms on which a future stay could be granted, because it refused the requested relief and did not need to resolve the proposed undertaking as to damages ([45]).
Finally, the source does not report whether contracts were ultimately exchanged on 20 August 2026, what the sale price was, or what happened in the proposed appeal. Those events fall outside the decision as supplied. Any account of them would require later source material.
This is general legal information, not legal advice. Zoe can make mistakes. Before acting on, relying on or using this analysis, have it checked by a qualified Australian lawyer.
Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: Fletcher v Manly Warringah Cabs (Trading) Co-operative Society Ltd (in liq) [2026] NSWCA 165
Hearing dates: 17 August 2026
Date of orders: 19 August 2026
Decision date: 19 August 2026
Before: Griffiths AJA
Decision: Notice of motion dismissed, with costs.
Catchwords: APPEALS — Procedure — Stay pending appeal — Stay of primary judge’s orders winding up Co-operative, appointing liquidators and awarding costs — Appeal grounds weak — Delay in seeking stay — Balance of convenience favours respondents — Stay refused
Legislation Cited: Co-operatives National Law (NSW), ss 60, 153, 359, 444
Corporations Act 2001 (Cth), ss 459A, 459P, 467
Cases Cited: Alexander v Cambridge Credit Corporation (1985) 2 NSWLR 685
House v The King (1936) 55 CLR 499; [1936] HCA 40
In the matter of Manly Warringah Cabs (Trading) Co-operative Society Ltd (administrators appointed pursuant to the Co-operatives National Law (NSW)) [2026] NSWSC 797
McLean Tecnic v Digi-Tech; Kalifair v Digi-Tech (2002) 55 NSWLR 737; [2002] NSWCA 383
Michael Hill Jeweller (Australia) Pty Ltd v Gispac Pty Ltd [2024] NSWCA 128
Sandell v Porter (1966) 115 CLR 666; [1966] HCA 28
Category: Principal judgment
Parties: Paul Fletcher (first applicant)
Manoj Kumar (second applicant)
Mohammad Dar (third applicant)
Makhan Hayer (fourth applicant)
Ashwin Sharma (fifth applicant)
Manly Warringah Cabs (Trading) Co-operative Society Ltd (first respondent)
Trevor Pogroske (second respondent)
Anthony Warner (third respondent)
Representation: Counsel:
N Hill (solicitor) (applicants)
S A Wells (respondents)
Solicitors:
Australegal (applicants)
Assured Legal Solutions (respondents)
File Number(s): 2026/00315917
Publication restriction: Nil
(a) Manly Warringah Cabs (Trading) Co-operative Society Limited (the Co-operative) be wound up as insolvent under ss 459A and 459P of the Corporations Act 2001 (Cth), as applied by s 444 of the Co-operatives National Law (NSW) (CNL); (b) Mr Pogroske and Mr Warner be appointed as joint and several liquidators of the Co-operative; and (c) the applicants’ costs be paid by specified members of the Co-operative, who are described in the judgment as the “Opposing Members”.
The Opposing Members (who are now the applicants) seek a stay of parts of the orders made on 10 July 2026. By a notice of motion dated 11 August 2026 and filed 14 August 2026, they seek the following orders:
Pending the determination of the appeal or further order of the Court, the orders made by Williams J on 10 July 2026 be stayed insofar as they authorise or permit the sale, transfer or other disposition of the property known as XX Boola Place, Cromer NSW 2099 (Folio Identifier XX/XXXXXX) (the Property).
Pending the determination of the appeal or further order of the Court, the first, second and third respondents, whether by themselves, their servants or agents, be restrained from selling, exchanging, transferring, encumbering or otherwise dealing with the Property.
In the alternative to orders 1 and 2, that the second and third respondents provide to the appellants’ solicitor not less than 14 days’ written notice of any proposed contract of sale or other dealing with the Property, such notice to include the material terms of the proposed transaction.
The costs of this motion be costs in the appeal.
Time for service of this notice of motion be abridged.
Such further or other orders as the Court considers appropriate.
The notice of motion sets out the following bases for the orders sought:
The appellants have filed a Notice of Intention to Appeal dated 28 July 2026 from the whole of the decision of Williams J delivered on 10 July 2026 (the primary judgment), by which her Honour ordered the winding up of the Co-operative and appointed the second and third respondents as liquidators.
The appeal raises serious questions to be tried, including whether her Honour erred in finding the Co-operative to be insolvent, in the exercise of discretion, in declining to grant declaratory relief, and in appointing the administrators as liquidators.
The Property is the Co-operative’s principal asset with an estimated value of approximately $4 million, against total liabilities of approximately $2 million. If the Property is sold before the appeal is determined, the appeal will be rendered nugatory and the appellants will suffer irreversible prejudice.
The Property is currently being actively marketed for sale by the liquidators, with expressions of interest closing on 12 August 2026.
The balance of convenience favours preserving the status quo pending the appeal, as the surplus of assets over liabilities means that creditors are not prejudiced by a stay, whereas the appellants will be irreversibly prejudiced if the Property is sold.
The appellants’ solicitor sought a written undertaking from the respondents’ solicitor not to deal with the Property pending the appeal. That undertaking was refused by letter dated 24 July 2026.
Ground 1 - Error in the finding of insolvency
1. The primary judge erred in finding the Co-operative insolvent, in that:
a. her Honour at [76] dismissed the authorities on the Sandell v Porter solvency test in a single sentence without engaging with the principle that solvency is assessed by reference to what can be realised by sale, mortgage or pledge, or with the evidence establishing that the Cromer property was a readily realisable asset with substantial unencumbered equity,
b. her Honour at [73] drew an inference that was not reasonably open on the evidence, namely that the availability of finance was conditional on member approval of the sale, when the documentary evidence did not support that inference and when, on a proper construction of s359 of the Co-operatives National Law (NSW) (the CNL), the inferred condition was incapable of being satisfied,
c. her Honour at [73] treated the question of insolvency as dependent on whether one or more of the three specific lenders remained willing to advance,
d. her Honour at [115] dismissed the Appellants' construction argument concerning s 359 of the CNL as not supported by submissions on statutory construction, when the submissions expressly advanced that argument, and cited the wrong statutory provision,
e. her Honour admitted substantial late-served evidence over objection without reasons, in circumstances productive of procedural unfairness.
Ground 2 - Error in the exercise of discretion
2. The primary judge erred in the exercise of the discretion under s 467(1) of the Corporations Act 2001 (Cth**),** as applied by the CNL, to order that the Co-operative be wound up by:
a. treating insolvency as effectively determinative,
b. failing to properly consider whether the application should be adjourned or dismissed notwithstanding insolvency,
c. rejecting at [80] the submission that the Administrators caused the insolvency by conflating the proposition that lenders required a sale of the property as a repayment pathway (which was uncontroversial) with the proposition that lenders required advance member approval of that sale
d. dismissing at [80] the Appellants' complaints about the ballot process and the Administrators' conduct as having "no bearing on the insolvency" when those complaints were directed at the exercise of the discretion, and
e. failing to take into account material considerations including the availability of the Cromer property as a readily realisable asset, the proximity of the members' pathway to completion, the disenfranchisement of members following the cessation of operations, the Administrators' failure to convene or facilitate the members' requisitioned meeting, and the Administrators' failure to disclose the cost of the administration.
Ground 3 - Error in refusing declaratory and construction relief
3. The primary judge erred in refusing to determine the Appellants' claims for declaratory and construction relief concerning ss 60 and 153 of the CNL, including by
a. treating the relief as lacking utility when determination of those questions was material to the Appellants' proposed pathway and the exercise of the discretion whether to wind up the Co-operative, and
b. mischaracterising, or failing to determine, the construction arguments advanced by the Appellants
Ground 4 - Error in appointing the Administrators as liquidators
4. The primary judge erred in granting leave for the Administrators to be appointed as liquidators, including by failing to take into account material matters bearing on their independence, conduct and disclosure, relying on an inapplicable statutory safeguard concerning remuneration review, mischaracterising the Appellants' complaint concerning former directors' legal costs, and failing to recognise the significance of the matters relied upon as the basis for the administration order.
The respondents, who are the Co-operative and liquidators of the Co-operative, oppose the notice of motion. They rely upon an affidavit dated 14 August 2026 by one of the liquidators, Mr Pogroske.
This application has a degree of urgency. That is primarily because it emerged at the hearing of the motion that contracts for the sale of the property may be exchanged as soon as this Thursday 20 August 2026. The applicants’ primary objective is to prevent the Property being sold pending the hearing and determination of their application for leave to appeal and appeal if any.
The key background facts are helpfully summarised in the primary judgment at [3]ff. In brief, by consent, on 16 October 2025, the parties to proceedings before Black J agreed that the Registrar appoint an administrator to the Co-operative. This followed long running disputes between members of the Co-operative regarding various matters, including the proper construction of the concept of “active membership” in r 5A of the Co-operatives’ rules (Rules). Mr Pogroske and Mr Warner were appointed as joint and several administrators of the Co-operative on 5 December 2025. It was common ground that the Co-operative has faced significant challenges, including a history of poor management, financial disarray and ongoing disputes between the members.
The administrators caused audited financial statements to be prepared for the Co-operative for the financial year ended 30 June 2025, as well as special purpose financial statements for the financial half-year ended 31 December 2025. These statements showed that the Co-operative was trading at a loss and that its current liabilities exceeded its current assets by more than $1 million. As noted above, the Co-operative’s only significant asset was the Property. It was estimated in the audited financial statements to have a value of $3,800,000. As the primary judge noted at PJ [18], the administrators considered that the Co-operative was “in a dire financial position”. On 13 January 2026, the administrators wrote to members of the Co-operative and informed them that they were “extremely concerned about the solvency” of the Co-operative.
The administrators then explored whether finance could be obtained for the Co-operative. They came up with a proposal that interim finance could be obtained to pay the Co-operative’s current liabilities pending a sale of the Property. Under s 359(1)(b) of the CNL, any sale of the Property required member approval by special resolution and by a special postal ballot. This meant that 75% of the members would need to vote in favour of the sale.
In conjunction with the special postal ballot, the administrators provided members with a disclosure statement. In the disclosure statement the two proposed resolutions were set out, linking the Property sale with the interim finance aspects of the proposal. The Opposing Members strongly objected to this linking. Significantly, however, at PJ [31], the primary judge accepted the following evidence given by Mr Pogroske at the trial concerning that linking:
As will become apparent below, the Opposing Members are critical of the Administrators’ conduct in linking the property sale and interim finance elements of the Proposal and putting both elements of the proposal to active members for approval in the ballot. Mr Pogroske gave the following evidence:
“Mr Warner and I acknowledge (and previously acknowledged to the Respondents directly) that while member approval was required for the sale of the Property, member approval was not necessary to seek to raise finance. However, the two were nonetheless inherently connected.
The sale of the Property was required to provide the necessary funds to repay the existing debts of the Co-operative (including the debt secured by the mortgage in favour of Westpac Bank and the new proposed finance facility), making the sale a critical component of the overall proposal. As far as I am aware, up to the commencement of the application for a winding up of the Co-Operative, there was no alternative financing proposal from a third party lender other than [the term sheets from the three third-party lenders] (all of which required or were premised upon the sale of the Property). Absent that pathway to repayment, no lender was prepared to make finance available to the Co-Operative. Given this interdependence, and in light of the commercial realities of the Co-Operative’s financial position, we believed it was both appropriate and necessary to progress both matters together.
Seeking consent for the sale of the Property while also addressing the finance ensured transparency and, as far as we were concerned, allowed members to fully understand the broader context and implications of the Proposal. We maintain this approach was the correct one, as it ensured all members were fully informed and could make an appropriate decision about the future of the Co-Operative.”
The parties were broadly agreed that the relevant principles relating to the grant of a stay are set out in cases such as Alexander v Cambridge Credit Corporation (1985) 2 NSWLR 685 at 694-5 per Kirby P, Hope and McHugh JJA; Michael Hill Jeweller (Australia) Pty Ltd v Gispac Pty Ltd [2024] NSWCA 128 at [5] per Payne JA; and McLean Tecnic v Digi-Tech; Kalifair v Digi-Tech (2002) 55 NSWLR 737; [2002] NSWCA 383 at [18] per Handley, Sheller and Ipp JJA.
In brief:
(a) A successful party is ordinarily entitled to the fruits of their victory. (b) The applicant for a stay carries the onus of persuading the Court to grant a stay in its discretion. (c) The Court is not expected to conduct an in depth assessment of the applicants’ prospects of success, but is entitled to make a preliminary assessment to determine whether the appeal has no real prospects of success. (d) The applicant must show there is a real risk it will suffer prejudice or damage if the stay is not granted, which will not be redressed by a successful appeal. (e) When these conditions are met, the balance of convenience should be considered. (f) The Court has a discretion to grant a stay on conditions, including a requirement that the applicant give the usual undertaking as to damages.
Proposed ground 1 claims that the primary judge erred in finding that the Co-operative was insolvent. The particulars of this ground are set out at [5] above.
The applicants claim that the primary judge failed to engage with cases such as Sandell v Porter (1966) 115 CLR 666; [1966] HCA 28 and to assess what might be realised by sale, mortgage or pledge.
Although the primary judge did not make specific reference to any relevant caselaw, she recognised and applied the correct principles. This is evident from PJ [69], where her Honour accepted “that the factual question of solvency or insolvency is to be determined objectively by considering the Co-operative’s financial position as a whole and having regard to commercial realities, including any financial resources that the Co**-**operative may be able to realise by borrowing against the security of its assets” (emphasis added).
Her Honour drew upon her earlier analysis and found that no lender was prepared to proceed unless the Property was sold. The “member finance proposal” was rejected by the primary judge as being deficient and conditional. (Mr Hill, who appeared for the applicants in the current application, stated in reply that the members’ financial proposal does not form part of the appeal at all). Her Honour also found that there was “no realistic prospect” of borrowing against the Property (at PJ [77]).
Mr Hill contended that there was no evidence to support what he described as an inference drawn by the primary judge that the prospective lenders to the Co-operative required the members to approve the sale of the Property as a condition of granting finance. Reference was made in particular to the terms of PJ [31], which are set out at [11] above.
The fundamental difficulty with this contention is that the evidence of both the requirement and the premise (as referred to in PJ [31]) was Mr Pogroske’s evidence itself, which the primary judge accepted at PJ [32]. Thus, there plainly was evidence to support the primary judge’s finding.
The relative weakness of the proposed challenge to the primary judge’s finding of insolvency is further highlighted by a statement made by Mr Hill in a letter dated 13 February 2026, which he sent to the Registrar. This letter became Exhibit C in the proceeding. Part of the letter is set out at PJ [35], including Mr Hill’s bald statement that “it is obvious to everyone that Co-operative [sic] is insolvent”. It was well open to her Honour to rely upon this statement as an acknowledgement by the solicitor himself, presumably acting on instructions from his clients, that the Co-operative was insolvent.
I do not accept Mr Hill’s attempts in reply to minimise the significance of that statement by referring to the context in which it was made, namely the applicants’ own proposals for restoring solvency. The statement speaks for itself.
(a) treating insolvency as effectively determinative; (b) failing properly to consider whether the application for winding up should be adjourned or dismissed despite insolvency; (c) the rejection at PJ [80] of the submission that the administrators caused the insolvency by linking the sale of the Property with the proposition that the lenders required the members to approve the sale in advance; (d) dismissing at PJ [80] the applicants’ complaints regarding the ballot process; and (e) failing to take into account various material considerations as set out in proposed ground 2(e).
It is notable that, in the summary of argument in support of the application for leave to appeal, there is no elaboration of any of the particulars to proposed ground 2.
The particulars in proposed ground 2(a)-(d) do not raise any clear error of the kind required by House v The King (1936) 55 CLR 499 where an appeal relates to the exercise of a discretion. Moreover, the particulars do not appear to have realistic prospects having regard to the following matters:
(a) As to particular (a), the reasons for judgment demonstrate that her Honour did not regard insolvency as determinative, as is clearly acknowledged at PJ [78]-[79]. (b) As to particular (b), her Honour explained at PJ [80]-[82] why she would proceed to order a winding up notwithstanding the objections raised by the Opposing Members. (c) As to particular (c), which challenges what is said at PJ [80] with reference to the primary judge’s acceptance of Mr Pogroske’s evidence set out at PJ [31], this complaint effectively repeats ground 1 and I have identified the weaknesses of that ground at [16]-[23] above. (d) As to particular (d), this also relates to her Honour’s analysis at PJ [80], which includes her Honour’s finding that complaints about the ballot process and the disclosure statement had no bearing on the issue of the Co-operative’s insolvency. It is difficult to discern any arguable error in that analysis, even on a preliminary basis. (e) As to particular (e), whilst it purports to identify a House v The King error by using the language of “failing to take into account material considerations”, each of those so-called material considerations was in fact addressed by the primary judge. Thus the availability of the Property as a readily realisable asset was addressed by the primary judge at multiple points in her reasons for judgment. Likewise, her Honour addressed at length what is described as the “members’ pathway to completion”, including at PJ [73], [80]-[81]. Similarly, the disenfranchisement of members following the Co-operative ceasing operations was addressed (see PJ [41]-[42] and [45]-[46]), as well as the administrators’ failure to convene or facilitate the members’ requisitioned meeting (see at PJ [48]-[55]). The administrators’ alleged failure to disclose the cost of the administration was also adequately addressed by her Honour at PJ [108]ff.
Proposed ground 3 relates to the primary judge’s refusal to grant declaratory relief concerning ss 60 and 153 of the CNL. As the respondents correctly point out, although the primary judge described the point as “reasonably arguable” (see PJ [102]-[104]), her Honour concluded that the relief sought lacked utility. This was because of the separate findings of insolvency and the absence of submissions from both parties on the issue of construction (see PJ [105]). Even on a preliminary basis, it is apparent that the proposed ground is weak.
Proposed ground 4 challenges the primary judge’s decision to appoint the administrators as liquidators. Again, as the respondents correctly point out, each of the applicants’ objections to this appointment was considered and rejected by the primary judge at PJ [110]-[119]. I consider this proposed ground also to be relatively weak.
The applicants contend that the Property is “the value on which the entire appeal is founded” and that its sale would destroy the appeal’s substratum. For the following reasons, I do not accept that claim.
First, it is common ground that the Property must be sold. The applicants’ own case at trial was that a “viable, member-driven pathway existed” by which members could “realise the value of the Cromer Property through an orderly sale and satisfy its creditors” (PJ [42] and [67(3)]). Mr Fletcher deposes that the pathway the applicants seek to protect consists of “restoring member control, obtaining funding, and effecting an orderly sale of the Cromer property”. The applicants’ own funding commitments were expressly conditioned on the Property being sold within 12 months, with the lenders repaid from the proceeds (PJ [49]). On any view of the appeal’s outcome, the Property will be sold and the creditors paid.
Secondly, as the respondents correctly pointed out, it follows that a sale by the liquidators deprives the applicants of nothing that any court order could restore. The sale converts the Property into a fund held within a court-supervised liquidation. If the appeal were to succeed in setting aside the winding up, the net proceeds — after payment of the creditors whom the applicants themselves propose to pay — would be held for the Co-operative. The surplus in which members are entitled to share (PJ [72] and [105]) is preserved, not destroyed. I accept the respondents’ contention that what is truly sought to be preserved is not the subject matter of the appeal but the applicants’ desire to control the sale process*.*
Thirdly, the member-conducted sale for which the applicants contend is not open to them and may never be. A sale by the Co-operative outside liquidation requires approval by special resolution by special postal ballot — 75% of members voting in favour (CNL s 359; PJ [25]). When that approval was sought in March 2026, with a Registrar-approved disclosure statement, the active members rejected it (PJ [39]). Until that procedure is completed and a sale finalised, the value of the Property remains illiquid and unavailable to meet the Co-operative’s debts.
The applicants’ attempts to reconstitute the Co-operative failed: the Registrar refused approval of the proposed new rule 5A on 24 April 2026 (PJ [47]). The New South Wales Civil and Administrative Tribunal dismissed their review for want of standing (PJ [53]). The applicants’ pathway depends on the Registrar revoking the administration — a step her Honour found had “no evidence of any realistic prospect” of occurring, being contrary to the consent orders of 16 October 2025 and productive of a “real risk” of reversion to the internal disputation that generated these proceedings (PJ [75]). A petition of 27 members opposed the applicants’ proposals and any interference in the administration (PJ [54]).
I accept the respondents’ contention that, in all these circumstances, the Court would not sanction one faction of a divided membership conducting the sale of the principal asset while the liquidators remain in office.
For the following reasons, I accept the respondents’ submission that the applicants’ delay in filing at the notice of motion is both lengthy and unexplained. As noted above, the orders were made on 10 July 2026. If they wished to appeal and seek a stay of those orders, the applicants should have promptly taken steps to institute an appeal or seek leave to appeal. Instead they waited until 21 July 2026 to request undertakings, a request which was declined by the liquidators within the timeframe set by the applicants in that letter. The applicants knew by 24 July 2026 that no undertaking would be given and that the sale campaign — having commenced on 22 July 2026 with a publicly advertised closing date — would proceed. They nevertheless waited until 11 August 2026 to prepare an application, which was brought before the primary judge on 12 August 2026 (where it was refused for want of power), and then belatedly filed the present motion only on 14 August 2026, approximately five weeks after the orders were made.
The explanation offered in Mr Fletcher’s affidavit — difficulty consulting counsel until “late last week” at a conference on 9 August 2026 — is inadequate. No detail is given of why an urgent application foreshadowed on 21 and 23 July 2026 “without further notice” could not be brought for three weeks. I accept the respondents’ submission that Mr Fletcher’s evidence, which was to the effect that a stay could not be sought pending counsel’s advice was obtained on prospects, is inconsistent with explicit statements in Mr Hill’s letters dated 21 and 23 July 2026 which indicated that the decision had already been made to commence proceedings.
For the following reasons, I consider that the balance of convenience strongly favours the respondents. First, various creditors (including two former employees owed entitlements estimated at $101,910 and trade creditors (including taxi operators) owed approximately $336,072) have been owed amounts “well overdue for payment” since before March 2026. Interest continues to accrue on the secured debt of $466,983. Every month of delay diminishes the fund from which creditors will be paid.
Secondly, the sale process is at its most advanced and most fragile point: agents have been appointed, an independent valuation obtained, repairs and preparatory works committed to and marketing expenditure incurred. The EOI campaign for the Property closed on 12 August 2026. On 14 August 2026 the agents sought best and final offers, which two parties increased. That process has produced a purchaser prepared to acquire the Property at a price above the independent valuation obtained.
I accept the respondents’ submission that a restraint could imperil that expenditure, alarm the prospective purchaser, and signal to the market that the Co-operative cannot complete a sale. This might also depress any future sale price for the Property. There is no assurance that the prospective purchaser, or any of the parties who submitted expressions of interest, would remain willing or able to proceed, at least at the price currently negotiated, if the sale is delayed.
Thirdly, I accept Mr Pogroske’s evidence that the selling agents have advised that the property market remains volatile, that buyer confidence is subdued and access to finance is tight, and that the direction of values in the Cromer area over the coming months is uncertain and may be significantly affected by movements in interest rates. This evidence is consistent with the liquidators’ own experience of the market. A stay would expose that risk for no corresponding benefit. The Property must be sold in any event, and delay would not avoid the sale but would require aspects of an advanced process to be repeated, at additional cost and with no certainty of an equivalent result.
Fourthly, the applicants’ asserted prejudice reduces, on analysis, to the loss of an opportunity to conduct the sale themselves — an opportunity they do not presently have and may never obtain (see above). The liquidators, by contrast, are experienced insolvency practitioners, officers of the Court, obliged to obtain fair market value, and have obtained an independent valuation of the Property to test the reasonableness of offers.
Fifthly, I accept the submission that the applicants’ assertion that “no creditor is prejudiced” because assets exceed liabilities inverts the analysis. The prospect that creditors may ultimately be paid does not justify delaying payment of debts long overdue, nor the accrual of unnecessary costs which diminish the return to creditors and, ultimately, to the members themselves — including the approximately 90 members who are not applicants. The delay intrinsic to a stay would generate significant additional legal costs, continuing liquidation expenses and ongoing holding costs, which must diminish the return to creditors and reduce any surplus available for distribution to members.
As noted above, in the alternative to a stay or injunction, the applicants sought an order that they be given at least 14 days’ written notice of any proposed contract of sale or other dealing with the Property. I would not grant this relief. Having regard to what emerged at the hearing on 17 August 2026, the applicants are now on notice that contracts of sale in respect of the Property may be exchanged as early as tomorrow. The alternative order is pointless.
For completeness, I would also reject the applicants’ application to have time to consider proffering an undertaking as to damages and providing evidence of financial means. These issues do not arise having regard to my findings in the sections above headed (a), (b) and (c).
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Correct formatting of case name
Fletcher
Manly Warringah Cabs (Trading) Co-operative Society Ltd (in liq)
[1936] HCA 40
[2026] NSWSC 797
(1985) 2 NSWLR 685
(1936) 55 CLR 499
(2002) 55 NSWLR 737
(1966) 115 CLR 666
Notice of motion dismissed with costs. The requested stay, restraint, alternative 14-day notice order and time to consider an undertaking as to damages were not granted ([44]–[46]).
In support of their motion, the applicants rely on an affidavit dated 11 August 2026 by Paul Fletcher (who is one of the applicants) and filed on 14 August 2026.
To complete the procedural background, the applicants filed and served a notice of intention to appeal, which was served on the last of the respective respondents on 31 July 2026. They filed a summons seeking leave to appeal on 14 August 2026. They have also provided draft grounds of appeal, which are as follows:
Proposed ground 2 claims that there was an error in the exercise of discretion under s 467(1) of the Corporations Act as applied by the CNL, in ordering that the Co-operative be wound up on the ground of insolvency. In brief, the applicants argue that the error is reflected in the following matters:
For these reasons, I consider that the balance of convenience weighs heavily in favour of the respondents.