George v Fletcher

REASONS FOR JUDGMENT 1 Lauren George was substantially unsuccessful in this proceeding (George v Fletcher (Trustee) [2012] FCAFC 148) and has since filed an application for special leave to the High Court. Ms George applied for a stay of the costs orders. Later she applied for a stay of all orders with the exception of Order 2, which remitted the proceeding to the Federal Magistrates Court (now the Federal Circuit Court) on one discrete issue. 2 The basis of the initial stay application was twofold. First, Ms George submitted that if the costs were paid, it is reasonable to assume that the first respondent, Mr Fletcher (the trustee in bankruptcy), would have disbursed any monies received in costs and would therefore be unable to meet any costs order that might be made by the High Court in the event that this Court's decision were set aside on appeal. Similarly, Ms George submitted that if she paid the costs of the second and third respondents (the Ironside parties) in accordance with the Court's order (Order 4) and she succeeded on an appeal, there was "no reasonable probability" that she would recover from them what she had paid. There was no evidence to support this submission. Secondly, Ms George contended that there were reasonably arguable grounds of appeal, although she did not then say what they were. 3 In her submissions in reply Ms George sought to extend the stay application to all orders except for Order 2, being the partial remittal to the Federal Magistrates Court. Neither stay application was supported by evidence. In support of the wider application Ms George submitted that a stay was necessary to preserve the subject matter of the special leave application. She argued that the Moggill property, with which most of the appeal was concerned, and which is now registered in the name of Mr Fletcher as trustee, might be sold before the special leave application is determined. She contended that, if a stay were not granted and the property sold and she were successful (presumably in any consequential appeal), "the value received from any sale may not give her the replacement value of the property concerned" and in that event she "and the beneficiary of the property" may not therefore receive full compensation. 4 A stay pending an application for special leave is an extraordinary jurisdiction which will only be exercised in extraordinary circumstances. In deciding whether it should be, it is relevant to consider whether there is a substantial prospect that special leave will be granted, whether the grant of a stay will cause loss to the respondents and where the balance of convenience lies. See Jennings Construction Ltd v Burgundy Royale Investments Pty Ltd (No 1) (1986) 161 CLR 681 at 685 per Brennan J; Petrotimor Companhia de Petroleos S.A.R.L. v Commonwealth of Australia [2003] FCAFC 82 per Beaumont J and the authorities referred to there. 5 In her initial submissions Ms George did not identify any error in the judgment. In submissions purportedly in reply she annexed a copy of her application for special leave, which had been filed in the meantime. That application does identify alleged errors, although the grounds are expressed at a very high level of generality. Ms George has now filed three sets of submissions which urge the imposition of a stay. In none of them does she advance any reason why she is likely to succeed. In our opinion, the application does not have a substantial prospect of success. In these circumstances, it is probably unnecessary to consider Ms George's other arguments, but we would make two observations. First, a stay of the orders would not achieve Ms George's objective of halting the sale of the Moggill property. Second, where an appeal does not enjoy a substantial prospect of success, the balance of convenience plainly favours the respondents. We would also endorse what Logan J said when refusing a stay pending the hearing of the appeal to this Court (George v Fletcher (Trustee) (No 2) [2011] FCA 1033 at [5]): This case is one which has been unresolved for a great length of time. Over the course of that time the second and third respondents, in one way or another, have had the burden of servicing the mortgage. Whilst it might be said that the National Australia Bank's interests are, in the short term, protected by that disposition to continue to service the mortgage, it is nonetheless an unresolved burden for the Ironside interests and also for the bank. That is to say nothing of the interests of the unsecured creditors in the estate, in whatever surplus exists, unlikely though it presently seems that there might be, once the property of the bankrupt is ascertained. The property of the bankrupt, in terms of the judgment below of course, includes the Moggill property. 6 While there may be rare cases where a Court may be prepared to grant a stay absent satisfaction that the application for special leave has a substantial prospect of success (see Rinehart v Welker (2012) 285 ALR 191 at [48]), this is not one of them. 7 The application must be refused. I certify that the preceding seven (7) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Siopis, Jessup and Katzmann.