E. CONSIDERATION
45 I was satisfied that if the consumer redress orders were not stayed pending the determination of the appeal, the appeal would have been rendered nugatory.
46 Ms Grubisa gave unchallenged evidence in her affidavit that:
(a) on at least one approach, if the consumer redress orders were required to be paid in full, Master Wealth would be required to provide a refund in the order of some $14.7 million to its former students;
(b) Master Wealth's accountant had prepared a profit and loss statement and a balance sheet for Master Wealth as at 30 June 2024 that recorded a loss of $65,006.65 for that financial year, and a balance sheet as at 30 June 2024 with negative equity of $667,134.08; and
(c) the primary judge had referred in the Relief Judgment at [4] to a balance sheet for Master Wealth as at 31 March 2024, which showed net assets in a negative amount of $484,555.00.
47 On the financial information before the Court, there is no serious prospect that Master Wealth would be able to comply with the consumer redress orders, in any material amount, let alone in the sum of $14.7 million. It is possible that in the future, a liquidator might be able to commence proceedings to seek to claw back or recover funds, but on the financial statements of Master Wealth before the Court, Master Wealth has not disclosed any material ability to meet the consumer redress orders.
48 There were references during the hearing to a company of which the former husband of Ms Grubisa was apparently a director. There was insufficient evidence, however, to form any view on the material before the Court, that that company would be either in a position to, willing to or would otherwise be under any obligation or liability to, remit funds to Master Wealth to enable it to satisfy any of the consumer redress orders.
49 In my view, for the foregoing reasons, it is reasonably apparent that if the present stay of the consumer redress orders is discharged, it is likely that a liquidator will be appointed to Master Wealth and the appeal sought to be advanced by the appellants will be rendered nugatory.
50 I am also satisfied that the balance of convenience favours a stay of the consumer redress orders. The specific prejudice that the ACCC identified was a delay in students receiving the benefit of the consumer redress orders and the diversion of financial resources that could otherwise be utilised to compensate students to paying the legal costs of the appellants in advancing their appeal. In many cases this would be a material consideration. In this case, however, the parlous financial position of Master Wealth demonstrates that this consideration carries more limited weight. The financial evidence before the Court does not provide any plausible basis that Master Wealth would be able to provide compensation to students, in whole or in material part, pursuant to the consumer redress orders. Further, the financial evidence does not suggest that Master Wealth is able to fund the proceedings or satisfy the order for security for costs from its own resources. On the material before the Court, it would appear that third parties will have to fund the provision of the security for costs and the appellants' legal costs of prosecuting the appeal.
51 In light of these matters, the critical issue in determining whether or not the stay of the consumer redress orders should continue, turns on an assessment of the prospects of success of the grounds of appeal advanced by the appellants.
52 In determining whether to grant a stay of orders pending an appeal, the degree to which a Court needs to be satisfied that appeal grounds are arguable will generally be informed by all the circumstances of a case, including an assessment of whether rights of appeal would be rendered nugatory and where the balance of convenience might otherwise lie, particularly the extent of any prejudice to the party resisting the stay. In my view, a more rigorous standard, consistent with the interests of justice and the reasoning in Redbubble and Stefanovski referred to at [32] above, is applied where it is questionable whether likely rights of appeal would be rendered nugatory in the absence of a stay or where a stay would cause material and irredeemable prejudice to the successful party at first instance.
53 Unlike the position that had prevailed on the first day of the hearing of the stay application, the notice of appeal that had been filed on the second day of the hearing, included grounds challenging both the liability giving rise to the relief obtained by the ACCC, including the consumer redress orders (principally, Ground 11), and that the compensation to students provided pursuant to the consumer redress orders was manifestly excessive (principally, Grounds 29 and 30).
54 Ground 11 is in the following terms:
The learned trial judge erred in making declaration 2, in that the declaration is broader and goes beyond his Honour's finding at [82] that the product could not provide immediate and complete protection, which finding correctly adopted the temporal limits on the concession by Senior Counsel for the Respondents set out by his Honour at [82].
(Emphasis in original.)
55 I accept that read as a whole, the primary judge's reasoning was that the Vestey Trust Representations were representations to the effect that the product offered by the appellants provided "immediate and complete" protection for consumers. The declaration made by the primary judge with respect to the Vestey Trust Representations, however, was expressed as the provision of "complete" protection. It was not qualified or otherwise supplemented with the word "immediate".
56 It is not readily apparent, however, how the findings made by the primary judge at LJ [84] to the effect that the financial structure and programmes promoted to students would provide some students with at least some measure of protection of their financial assets in future periods relevantly qualify or are inconsistent with the proposition that the financial structure and programmes promoted to students did not offer "complete" protection to students. Any temporal delay in obtaining protection or any protection less than complete protection would appear to be consistent with a finding that the Vestey Trust Representations, as framed in the declaration, was false or misleading and deceptive. These are of course only preliminary observations made in the context of the stay application but for present purposes, on the material before me, I am not able to conclude that the challenge to the making of the Vestey Trust Representations in the notice of appeal has arguable prospects of success.
57 Ultimately, I was satisfied, however, that the grounds relied upon to challenge the quantum of the consumer redress orders were at least arguable, given my conclusions that (a) if the stay of the consumer redress orders is not continued, there would be every likelihood that the appeal against those orders would be rendered nugatory, and (b) the absence of any material immediate prejudice to students, at least on the financial information of Master Wealth before the Court.
58 Grounds 29 and 30 are in the following terms:
29. His Honour erred by finding at [65] that the MWC course fees paid by students represented the loss or damage which had been suffered (or likely to be suffered) in circumstances where:
(a) students received the asset protection structure that had been paid for, namely the creation of a corporate trustee and instructions to borrow from the trustee after gifting or assigning income to it, and many students were likely to have already established it;
(b) his Honour found that the structure still offered some protection from creditors, albeit on an incremental basis; and
(c) in light of the above, students could be expected to have a range of protection depending on the amount that had been gifted or assigned to the trustee and borrowed from it.
30. In the premises, the complete refund of all students of all course fees in orders 7 - 10 was manifestly excessive.
59 Contrary to the submissions of the ACCC, I accept that it is at least arguable that the proposed form of orders provided by the appellants to the primary judge at the relief hearing did not constitute a concession by the appellants that the course fees paid by students necessarily represented the loss or damage which they had suffered by reason of the Vestey Trust Representations.
60 The proposed form of orders provided by the appellants to the primary judge, included proposed order 9, as follows:
9. An order pursuant to s 239 of the ACL hat MWC provide a refund to each student enrolled in the MWC program in the period April 2017 to November 2022 who requests such a refund within 90 days from the date of these orders in an amount equal to the course registration fee paid by that student.
61 I accept that proposed order 9, as set out above, on its face, is in unqualified terms.
62 Proposed order 9 was reflected by the primary judge in Order 7 of the 19 July 2024 orders. Order 7 provided:
7. Pursuant to section 239 of the ACL, DG Institute offer redress to each student who enrolled in the MWC program in the period April 2017 to November 2022 (the MWC students) in accordance with orders 8 to 10 below.
63 Order 8 of the 19 July 2024 orders provided for a notification procedure, and Order 9 provided for the provision of additional information that would be made available to students who had been notified of the opportunity to obtain a refund.
64 Order 10 provided that within 56 days of the making of the orders, a refund was to be provided in an amount equal to the course registration fee. This in effect, provided for a full refund as advanced in proposed order 9 of the appellants' proposed orders, to those students who had provided their bank account details.
65 Schedule 1 to the 19 July 2024 orders provided the specific form of the notification and information to be provided to students. It stated that eligible students could either choose to accept the redress or not to accept the redress, and if they chose to accept the redress, then they were to provide their name and bank account details to enable the redress to be paid. It was not a case of blanket compensation, rather, compensation would be offered to all students, but would only be paid in the event that, effectively, the student agreed to take it up.
66 Had that been the end of the inquiry, it is difficult to see how the appellants could seriously challenge the consumer redress orders.
67 Order 9 of the appellants' proposed orders, however, was advanced as part of a suite of orders that relevantly included the following additional orders:
7. The Respondents are to issue to all clients who purchased the "MWC program" in the period April 2017 to November 2022 the information at Tab 4 of the Confidential Exhibit to the affidavit of Greg Klopper sworn 28 June 2024 as amended by the documents annexed to the affidavit of Greg Klopper sworn 1 July 2024 (Supplementary MWC Documents).
8. An order that the Supplementary MWC Documents be issued within 14 days of these orders as follows:
(i) where MWC has an email address for the client, by email;
(ii) where MWC has a postal address but not an email address, or MWC receives an "undeliverable" message in response to an email, by ordinary prepaid post.
68 Those proposed orders provided for a regime or a structure whereby explanatory documents, in the form of what were described as the Supplementary MWC Documents, were to be provided to all students at the same time as the offer of full refunds was made to them (explanatory documents). The explanatory documents might neutrally be described as an attempt by Master Wealth to put in context what otherwise were very damning findings by the primary judge, no doubt in the expectation that those explanations would militate against a wholesale refund request from all students.
69 It also is necessary in that context to understand that the consumer redress orders proposed by the appellants to the primary judge appear to have been advanced in a context where they were seeking to persuade the Court that they had understood the significance of the conduct, the impact it had on students and the extent to which they were now prepared to compensate students who may have been misled, and in that context, were hoping for a more modest pecuniary penalty than might otherwise be imposed for the purposes of specific and general deterrence. The relationship between the consumer redress orders and the pecuniary penalty orders is emphasised in the notice of cross appeal filed by the ACCC on 21 August 2024 in which the ACCC contends that the pecuniary penalties should be substantially increased if there is to be any adjustment or alteration to the consumer redress orders by reason of any decision of the Full Court.
70 The primary judge declined to make proposed orders 7 and 8 in the terms sought by the appellants. His Honour concluded that the explanatory documents were misleading and deceptive, and even went as far as to state that the appellants' proposed provision of the documents demonstrated a lack of contrition on the part of Master Wealth and potentially Ms Grubisa: RJ [79].
71 The fact that the explanatory documents might have been found by the primary judge to be misleading or deceptive is clearly relevant for the purposes of contrition and pecuniary penalties. The finding, however, does not necessarily preclude the appellants from relying on proposed orders 7 and 8 as qualifying any alleged concession otherwise made in proposed order 9.
72 Nor did I accept the submission made by the ACCC that the "same refund payment outcome" would necessarily be expected if the primary judge had made orders consistently with the appellants' proposed orders 7 and 8. In my view, it is plausible that a not insignificant number of students might be less likely to demand a refund if they were provided with the explanatory documents. The primary judge appeared to have implicitly at least reached that view given his concern that the explanatory documents were misleading or deceptive.
73 Finally, I accepted the force of the submissions made by the ACCC, that I have summarised at [43] above. Each bears directly on the merits of the appeal against the consumer redress orders. None of those matters, however, precluded a finding that Grounds 29 and 30 have arguable prospects of success, or necessarily lead to a finding that the grounds are so weak that they justified discharging the interim stay of the consumer redress orders and thus, for the reasons advanced at [45] to [49] above, rendering the appeal against those orders nugatory.
74 For the foregoing reasons, I was satisfied that Grounds 29 and 30 of the appeal are arguable, but that was a preliminary conclusion reached only for the purposes of determining whether in the interests of justice the stay of the consumer redress orders should continue until the determination of the appeal. As the authorities make clear, it is not appropriate for me to consider the merits of grounds of appeal, except to the extent that I am to consider whether or not there are arguable prospects of success.