Gill v Ethicon Sárl

1. The respondents' interlocutory application filed on 17 December 2020 be dismissed with costs. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

KATZMANN J: 1 On 21 November 2019 I delivered judgment in this long-running matter and on 3 March 2020 I made orders in the applicants' favour. Order 5 of those orders was that the respondents pay the applicants' costs. On 25 May 2020 I ordered that the costs be fixed in a lump sum and directed the Registrar to determine the amount of the lump sum. On 25 November 2020 the Registrar issued a determination, ordering that the costs be paid in a certain sum and that the amount be paid within 28 days. An appeal from my original orders is pending and due to be heard in February. On 17 December 2020 the respondents applied for a stay of the Registrar's orders pending the disposition of the appeal. In the alternative, the respondents sought an order that the costs be paid into and then held in escrow (to abide the outcome of the appeal) in an interest-bearing account under the joint management of the parties' legal representatives. 2 The application was supported by an affidavit of Colin Loveday, a partner of Clayton Utz and the solicitor on the record for the respondents in the proceeding. Mr Loveday's affidavit recited the history of the costs questions, the fact of the appeal and referred to some of the remarks by the Chief Justice at a case management hearing on the appeal, indicating the approach the Court would take to its disposition. 3 Annexed to the affidavit was correspondence between the parties relating to a proposal by Clayton Utz in the terms the subject of the alternative order sought in the interlocutory application; a proposal that Shine Lawyers, the applicants' solicitors, refused to accept. 4 Shine opposes the interlocutory application. While I was initially attracted to the alternative order, having heard the submissions advanced by Mr Bannon SC, who appeared with Ms Hillman for the applicants, I am persuaded the application should be refused. 5 The principles applying to an application of this kind are well known. I referred to them in Gill v Ethicon Sárl (No 8) [2020] FCA 771 at [48]-[51]: First, while special circumstances are not required and the Court has a broad discretion, the judgment is not to be treated as provisional. The Court starts with the premise that the successful party is entitled to its benefit and to the presumption that it is correct. Consequently, an applicant for a stay carries the burden of establishing that a stay is appropriate. See, for example, Alexander v Cambridge Credit Corporation Ltd (receivers appointed) (1985) 2 NSWLR 685 (CA) at 693-695; Powerflex Services Pty Ltd v Data Access Corporation (1996) 67 FCR 65 (FC) at 66 (Burchett J). Second, the burden is not discharged merely by the filing of an appeal or an application for leave to appeal: Alexander at 694. Third, a stay should not be granted unless the appeal is at least arguable, but "the existence of an arguable case on appeal does not of itself justify the granting of a stay": Red Bull Australia Pty Ltd v Sydneywide Distributors Pty Limited t/as Sydneywide Bottlers Australia [2001] FCA 1750 at [6] (Hely J). Fourth, in the exercise of the discretion, the Court will weigh up such factors as the balance of convenience and the competing rights of the parties, including, in particular, whether prejudice will be caused by the grant or the withholding of a stay. If there is a risk that the appeal would be rendered nugatory if a stay is not granted in the event that an appeal is successful, this will be a substantial factor in favour of granting a stay. See Alexander at 693-695; Phillip Morris (Australia) Pty Ltd v Nixon [1999] FCA 1281 (FC) at [17]. 6 On this application, Mr Wong, who appeared for the respondents, referred to a similar summary by Rangiah J in Flight Centre Limited v Australian Competition & Consumer Commission [2014] FCA 658 at [9] reproduced by O'Bryan J in Urban Alley Brewery Pty Ltd v La Sirène Pty Ltd (No 2) [2020] FCA 351 at [48]. O'Bryan J went on to point out at [50] that the principles in Alexander, to which I referred earlier, have been applied to costs orders, citing Australian Federation of Consumer Organisations Inc v Tobacco Institute of Australia Ltd (1991) 30 FCR 548 at 552; Henderson v Amadio Pty Ltd (1996) 65 FCR 66 at 68; Fair Work Ombudsman v Priority Matters Ltd [2016] FCA 1415 at [27]-[28]. Mr Wong accepted that his clients bore the burden of demonstrating that there is a proper basis for a stay. He also accepted that the starting presumption was that the judgment appealed from is correct. He emphasised that there is no need for an applicant for a stay to demonstrate special or exceptional circumstances and that it was enough that the applicant demonstrate a reason or an appropriate case to warrant the exercise of the discretion in its favour. 7 The difficulty for the respondents is that they have not discharged the burden of demonstrating that there is a proper basis for a stay or that, in the particular circumstances of this case, the alternative order should be made. 8 First, no attempt was made to persuade the Court that the appeal was arguable. The notice of appeal was not even placed before me. 9 Second, the only ground advanced by the respondents was that there was a real risk of dissipation based on the fact that Shine, who represented the applicants on a no-win no-fee basis, had obtained a "disbursement funding facility" in the form of a loan, and it was submitted that, if the loan were repaid, there is a risk that the respondents would not be able to recover some or all of the funds. But this was little more than speculation. The respondents adduced no evidence to suggest that Shine was not in a position to repay the costs in the event that the orders in the applicants' favour were set aside on appeal. 10 Third, given the current financial situation, where interest rates are so low as to be virtually negligible, placing the monies in an interest-bearing deposit account would not alleviate the prejudice to Shine. 11 Fourth, there was some delay in approaching the Court which was wholly unexplained. 12 It follows that the interlocutory application should be dismissed with costs. I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Katzmann.