Analysis
47 The first relevant matter is the merits of the appeal.
48 As I have said, the respondents filed a Second Notice of Appeal on 24 September 2019. I do not propose to set out the grounds of appeal and the particulars. The respondents submit that the Second Notice of Appeal raises a number of grounds of error in the substantive reasons which they contend have merit.
49 At the commencement of the hearing of this application, I raised with the parties whether it would be appropriate for me to refer the stay application to another judge on the basis that I may be placed in a position where I would have to form an opinion as to the strength or otherwise of an appeal against my own judgment. Counsel for the respondents indicated that he would not be making any submissions as to the strength or lack thereof or otherwise of the appeal and that he was proposing to proceed on the basis that the appeal is arguable. Counsel for the applicants indicated that he would not be making a submission that the appeal is so manifestly hopeless such that this was a reason to refuse the stay in and of itself, but that he did intend to make a submission that the respondents' Second Notice of Appeal is in such general terms that it does not permit any assessment of the strength or otherwise of the appeal. He indicated that the applicants did not consider that this was a reason for me to refer the application to another judge.
50 I decided that I could deal with the application. I proceed on the assumed basis that there are grounds of appeal which are arguable, no more or no less.
51 Counsel for the respondents summarised the central issue raised by this application in the following way. If the appeal is arguable, which is accepted, the issue becomes one of balancing the prejudice suffered by each of the parties depending on the outcome of the appeal. If the appeal is successful, then the respondents ought not to be put in a position where they cannot be returned to their current position. Conversely, if the appeal is unsuccessful, then the applicants ought not to be precluded from obtaining the full benefit of the judgment. The respondents' case is that if the stay is not granted and the appeal is successful, the respondents will suffer prejudice that cannot be remedied by an order of the Full Court.
52 The respondents' submissions relevant to prejudice appeared to be directed primarily at the Costs Order.
53 The respondents contended that the "real thrust" of the prejudice was that if the Costs Order is not stayed, the following would occur if it transpires that the appeal was ultimately successful:
(1) the first respondent is likely to be liquidated and wound up and is unlikely to be able to be restored to a non-liquidated state;
(2) Tony is likely to need to file for bankruptcy and is unlikely to be able to be restored entirely to his pre-bankruptcy state; and
(3) Vito will be required to sell real estate in order to meet the costs orders in circumstances in which there is no prospect of re-purchasing the property.
The respondents characterised this prejudice as of a "non-financial" nature.
54 For their part, the applicants submitted with respect to the first respondent and Tony, that the possible insolvency or bankruptcy of an appellant is not ordinarily a reason of itself to grant a stay. They referred to Wealthsure Pty Ltd v Selig [2013] FCA 628 at [24] in support of this submission.
55 While this proposition may be accepted, I note that, in any event, counsel for the respondents accepted that, collectively, the respondents had sufficient assets to satisfy the Costs Order. He also acknowledged that the Costs Order involved a joint and several liability and may be enforced against any of the three respondents.
56 It is therefore unnecessary to decide whether the stay should or should not be granted by reason of the possibility or likelihood of insolvency of the first respondent and Tony. As the Costs Order involved a joint and several liability, and there are sufficient assets between the respondents to satisfy the Costs Order, the likelihood of the first respondent and Tony facing winding up and bankruptcy respectively due to enforcement of the Costs Order is, in fact, very low, if not non-existent. It follows that the respondents will suffer no "non-financial" prejudice beyond the possible prejudice to Vito due to sale of real property. Counsel for the respondents appeared to accept this conclusion when he submitted that compliance with the Costs Order would "at the very least" require Vito to sell real property.
57 The respondents submitted that the sale of real property by Vito would give rise to real and substantial prejudice because the property in question, being 135 Oakley Road, McLaren Vale, is the source of the grapes used by the first respondent for its business venture. They contend that, as far as the sale of wine by the first respondent is concerned, the sale of the property would create a circumstance in which the respondents would be required, as an interim measure, to forego their ability to source grapes from their own vineyard in McLaren Vale. They contend that even if the appeal is successful, this "ongoing prejudice" could not be cured by an order of the Full Court overturning the Costs Order and requiring repayment of an amount for costs.
58 The applicants respond to this contention by submitting that, although it may be accepted that Vito may not be able to recover the property in question, there is no evidence either way about the ability of Vito to find other land of the same value in McLaren Vale if he is successful on appeal.
59 In any event, it seems to me that the problem faced by the respondents is that they have not offered security in relation to the property as a condition of the stay. When I asked counsel for the respondents about this, he said that he had not obtained instructions to do so. The applicants contend that I should have regard to this fact and that it is a significant matter in the exercise of the discretion.
60 In my view, as far as the Costs Order and the Second Costs Order are concerned, the failure by the respondents to offer security in any form is decisive for the purposes of this application. If it is accepted, as the respondents contend, that the respondents ought not be put in a position where they cannot be returned to their original position, then offering security in some form as a condition of the stay would prevent, or go some way towards preventing, this circumstance. Moreover, the applicants are, as the successful party in the proceeding, entitled to the fruits of the judgment which has been entered. Although the respondents sought to suggest otherwise by reference to the limited nature of the stay sought, the Costs Order represents a substantial part of those fruits. As the applicants contend, it is undoubtedly a form of prejudice for a party that is entitled to very significant costs orders to be held out of those funds for a prolonged period. This is particularly so where there is a real prospect that the effect of the stay would be to allow the respondents to dissipate their assets on the costs of the appeal such that if the applicants are successful on appeal, there will either be less funds available or no funds available to satisfy the existing Costs Order (see Citrus Queensland Pty Ltd v Sunstate Orchards Pty Ltd [2008] FCA 1867 at [39] per Greenwood J).
61 I note the submission by counsel for the respondents that it is uncertain whether funds could be raised on the security of the property owned by Vito. Despite this, he ultimately accepted that he could not, on the evidence before the Court on this application, make a submission as to whether that could or could not be done.
62 The respondents raised another form of non-financial prejudice which they contend would be suffered by them in the event that the stay was not granted. They submitted that if the first respondent is unable to comply with the Costs Order and the Second Costs Order and is wound up, there is a genuine concern that a liquidator would not pursue the appeal. They submitted that this would render the appeal nugatory given that the first respondent is the party alleged to be primarily liable. Similarly, the respondents submitted that if Tony was unable to comply with the Costs Order and was required to file for bankruptcy, there is a genuine concern that any trustee in bankruptcy would not pursue the appeal.
63 In my view, it is not necessary to consider the prospects of the appeal being rending nugatory by reason of the unwillingness or otherwise of a liquidator or a trustee in bankruptcy to pursue the appeal. This is because the respondents have accepted that there are sufficient assets between them to satisfy the Costs Order. I would add that even if the first respondent was ultimately wound up, and a liquidator declined to pursue the appeal, it is not apparent to me that Vito and Tony would be precluded from pursuing the appeal to the extent that they have been found to be "involved" in the contraventions of the first respondent. The same could be said for Vito if Tony was required to file for bankruptcy.
64 There was a delay of over three months between the making of the final orders on 25 July 2019 and the filing of the stay application on 8 November 2019, and a delay of almost one month between the making of the orders of 10 October 2019 and the filing of the stay application.
65 The respondents submitted that they were first advised of the quantum of the costs claimed by the applicants pursuant to the Costs Order by letter dated 16 September 2019. They submitted that, accordingly, there has not been any significant or substantial delay in seeking a stay of the costs orders. I note that the delay from this date is slightly under two months.
66 The respondents also submitted that no specific prejudice has been identified by the applicants due to the alleged delay because the only matters which have progressed since the orders were made has been further discovery in relation to the account of profits. They submitted that, to the extent that costs have been incurred, they have been incurred disproportionately by the respondents in complying with the required disclosure. They submitted that the lack of specific prejudice to the applicants should not preclude the Court from granting the stay.
67 The applicants on the other hand, submitted that although the stay application was clearly in contemplation in the respondents' minds by no later than 11 July 2019, there has been no explanation of substance for the delay in bringing the application.
68 In my view, the delay by the respondents in bringing the stay application is a factor to be considered, but it is not decisive. I do not think that the delay, be it three months or less, should alone lead to a refusal of the application.
69 In summary, I do not consider that there should be a stay with respect to the Costs Order or the Second Costs Order. These orders represent liabilities already incurred. While it is true that there is an appeal and I am proceeding on the assumed basis that there are grounds of appeal which are arguable, the general proposition is that an appeal does not operate as a stay of the orders appealed from and the successful party is entitled to the fruits of its success. The respondents have not established that this is an appropriate case for a stay.
70 Vito is able to satisfy the costs orders. He is jointly and severally liable for the costs with the first respondent and Tony. The respondents are effectively Vito and Tony. If Vito satisfies the costs orders, the first respondent and Tony will avoid liquidation and bankruptcy respectively unless Vito immediately seeks contribution. The only reason Vito proffers for not wishing to satisfy the costs orders is that it means he will have to sell the Oakley Road property. I should say in this context that all that has been put before the Court by the respondents is Vito's statement to that effect. Unlike Tony, Vito has not attempted to disclose to the Court his assets, or at least the vast bulk of his assets. I do not consider that the circumstance that, absent a stay, Vito will have to sell the Oakley Road property and is most unlikely to be able to re-purchase it is sufficient to justify a stay. Even if that is wrong, despite the fact that I raised with counsel at least a couple of times during oral submissions the provision of security to the applicants, there has been no offer by the respondents to provide security. I consider this to be telling. I should say on the other side, that there is no suggestion that the applicants will be unable to repay any costs paid by the respondents should the respondents' appeal be successful.
71 I consider that different considerations apply to a stay (more accurately, a suspension) of the Programming Orders. The issue here relates to costs to be incurred. Had I been asked promptly to suspend the second stage of the proceeding pending an appeal, I may well have done so on the respondents' undertaking to prosecute the appeal expeditiously. Whilst the explanation for the delay is not wholly satisfactory, the delay itself and the fact that the appeal will be heard in May 2020 rather than February 2020 is not sufficient to persuade me that the parties should incur costs in relation to an exercise which involves, as I understand it, a closed period. I will suspend the Programming Orders until further order while there is an appeal pending. If circumstances change in a material respect, then the applicants can apply for the orders to be re-engaged.