Procedure - Supreme Court procedure - Tasmania - Jurisdiction and generally - Stay of execution - Principles governing exercise of discretion to grant stay pursuant to Supreme Court Rules 2000, rr676 and 887.

The Commissioner of Taxation of the Commonwealth of Australia v The Myer Emporium Limited (No 1) [1986] HCA 13; (1986) 160 CLR 220; Townsend v Balmer 113/1997; Alexander v Cambridge Credit Corporation Ltd (1985) 2 NSWLR 685; Joskovitz v Bonnick [1964] VicRp 83; [1964] VR 654, referred to.

Judgment Number: [2006] TASSC 70

NATIONAL FOODS MILK LIMITED v ROGER SMITH (NO 2)

1 This is an application by the respondent for a stay of execution of an order made on 1 May 2006 pursuant to which he was ordered to pay the sum of $255,114.81 together with interest to the appellant and a consequential stay of a writ of fieri facias dated 9 June 2006.

2 On 10 November 2005 the respondent obtained a judgment against the appellant for an amount of $467,447.10, being damages for personal injuries suffered in a workplace accident plus costs to be taxed.

3 On 30 November 2005, the appellant appealed that decision and sought that judgment be entered against the respondent in its favour. On 5 December 2005 the respondent cross-appealed.

4 In December 2005, the appellant paid the following amounts pursuant to the judgment at first instance:

$100,000.00 to the respondent through his solicitors;

$20,870.10 to Centrelink on the respondent's behalf; and

5 On 1 February 2006 the respondent's costs of trial were taxed at $87,500. On 26 February 2006 that amount was paid to the respondent. The payments in par4, plus the costs, totalled $255,114.81 and were payments in part satisfaction of the judgment sum and costs which totalled $554,947.10.

6 On 12 April 2006 the Full Court allowed the appellant's appeal and dismissed that of the respondent and ordered that judgment be entered for the appellant against the respondent (National Foods Milk Limited v Smith [2006] TASSC 24). On 1 May 2006, the Full Court made a number of consequential orders. These were:

(a) That the respondent pay the appellant's taxed costs of the trial and appeal.

(b) That the respondent have an indemnity certificate in relation to the costs of the appeal.

(c ) That on or before 4pm 5 May 2006 the sum of $255,114.81 paid to the respondent by the appellant pursuant to the judgment entered on 10 November 2005, be repaid by the respondent to the appellant.

(d) That the respondent pay interest on the amounts which made up what he had already received.

"If you, Roger Smith, neglect to obey this Order by the time limited in the Order, you will be liable to process of execution to compel you to obey the Order, and will also be liable to sequestration of property."

8 On 3 May 2006 the solicitors for the respondent advised the appellant's solicitors that almost the entirety of the sum paid by the appellant to the respondent had been expended in the following way:

Purchase of vehicle plus costs of purchase and insurance

9 On 4 May 2006 the respondent paid an amount of $25,125 (being the term deposits and interest) to the appellant in part satisfaction of the order of 1 May 2006.

10 On 22 May 2006 the appellant's costs of trial were taxed by consent at $77,400 and the costs of appeal were taxed at $26,926.52.

11 In all, therefore, the appellant was entitled to recover from the respondent $359,441.33.

12 The appellant has recovered a total of $48,695 made up as follows:

Leaving aside interest, the appellant remains entitled to recover from the respondent some $310,700.

13 The appellant sought to levy execution against a 2005 BA Falcon sedan, an exercise bike, a treadmill, set of weights, an 81cm flat screen Panasonic television, a Panasonic DVD and a Panasonic digital set top box. The appellant instructed the bailiff to seize these items save the exercise equipment. It proposed they be stored at its cost pending disposition of the hearing of an application the respondent indicates he has made for special leave to appeal to the High Court. It is prepared to agree it will take no steps to dispose of the items in that period.

14 In practical terms, the appellant seeks to take possession of the relevant items and store them while the respondent seeks to retain possession and use of the items pending disposal of his special leave application.

Law relevant to applications for stay of execution

15 The respondent brings his application pursuant to the Supreme Court Rules 2000 ("the Rules"), r887. That provides:

"(1) A party against whom judgment is given or an order is made may apply to the Court or a judge for a stay of execution or other relief against the judgment or order on the ground of a matter occurring after judgment.

(2) The Court or a judge may give relief on any terms as may be just."

Therefore, while the circumstances in which a judge may order a stay of execution are limited by their having to involve a matter occurring after judgment, it would appear otherwise a judge has a wide discretion as to whether a stay is ordered.

16 Counsel specifically did not seek to proceed pursuant to the Rules, r676. She submitted that rule related to an application designed to bring proceedings to a halt, whereas r887 related solely to stays of execution. With respect, I think the difference arises in a somewhat different way. Rule 676 deals with a stay of proceedings sought pending an appeal and is not constrained by the requirement that there should be an event occurring after judgment. On the other hand, r887 is not confined to cases where there is an appeal pending, but relates to cases where an event has occurred after judgment which might justify a stay. There is nothing in r676 which prevents its use in respect of a stay of execution pending the disposition of an appeal and in fact r677 suggests clearly it may be used for that purpose.

17 Where r887 is invoked, the party applying must first satisfy the court that a matter has occurred after judgment. In the present case, that matter is said to be an application for special leave to appeal to the High Court. Ironically there was nothing in any affidavit or the oral evidence of the respondent which said such an application had been filed and on what date it was filed. There were simply references to intending that one should be made and submissions which appeared to be predicated on the basis one had been. The point was not taken at the hearing and I will proceed on the basis an application has been made. However, it is apparent from the material filed in respect of this application that advice had already been taken from Melbourne counsel about such an application prior to the order of 1 May 2006 and that subject to that advice being confirmed in writing, the application would be made. The situation appears to be that the actual filing had not occurred as at the date of the order the execution of which is sought to be stayed, but the respondent and his solicitors were well aware at the time that such filing would shortly occur.

18 Neither counsel addressed the question of whether r887 contemplated that the filing of an appeal or an application for a grant of special leave to appeal would be considered as "a matter occurring after judgment" in the context of that rule. I am not necessarily persuaded that could be the intention of the rule given the existence of rule 676 and I make no finding as such that it does. Both parties have proceeded on the basis that it does constitute such an event such as to trigger the operation of the rule and I will proceed on that basis. Both counsel addressed instead the test to be applied by a judge when exercising his or her discretion under the rule.

19 Neither counsel could refer the court to any authority specifically dealing with r887. The cases each referred to dealt with various rules, all of which were in the words the same as, or similar to, r676. Counsel for the respondent, however, submitted that the authorities to which she referred were the more appropriate to have regard to because they dealt with stays of execution as opposed to stays of proceedings generally. It may also have been that in both cases the court did not use the test later expounded by the High Court in The Commissioner of Taxation of the Commonwealth of Australia v The Myer Emporium Limited (No 1) [1986] HCA 13; (1986) 160 CLR 220, a test which at face value is quite a stringent test and one the respondent may not have been able to meet.

20 In that case, the Commissioner of Taxation had been ordered to issue an amended notice of assessment against the respondent company. The Commissioner appealed that decision unsuccessfully and then sought and was granted special leave to appeal to the High Court. The Commissioner sought a stay of the order requiring him to issue the amended notice. Dawson J said at 222:

"It is well established by authority that the discretion which it confers to order a stay of proceedings is only to be exercised where special circumstances exist which justify departure from the ordinary rule that a successful litigant is entitled to the fruits of his litigation pending the determination of any appeal. See, eg, The Annot Lyle (1886) 11 PD 114, at p116; Scarborough v Lew's Junction Stores Pty Limited [1963] VicRp 20; (1963) VR 129, at p130. Special circumstances justifying a stay will exist where it is necessary to prevent the appeal, if successful, from being nugatory. See Wilson v Church (No 2) (1879) 12 Ch D 454, at p458; Klinker Knitting Mills Pty Ltd. v L'Union Fire Accident and General Insurance Co Ltd [1937] VicLawRp 28; (1937) VLR 142. Generally that will occur when, because of the respondent's financial state, there is no reasonable prospect of recovering moneys paid pursuant to the judgment at first instance. However, special circumstances are not limited to that situation and will, I think, exist where for whatever reason, there is a real risk that it will not be possible for a successful appellant to be restored substantially to his former position if the judgment against him is executed. See McBride v Sandland (No.2) [1918] HCA 59; (1918) 25 CLR 369, at p375."

The court there found there were exceptional circumstances and granted the stay.

21 In Townsend v Balmer 113/1997, Slicer J quoted some of the words from the reasons of Dawson J in the Myer Emporium case quoted above. The case he was dealing with involved an appeal by an employer against a decision of the Workers Rehabilitation and Compensation Tribunal. The employer sought a stay of the tribunal's order pending appeal. It was unsuccessful.

"The test in determining whether or not a stay should be granted on the above basis was stated by Dawson J in The Commissioner of Taxation of the Commonwealth of Australia v The Myer Emporium Limited [No 1] [1986] HCA 13; (1986) 160 CLR 220 at 223, that:

'... there is a real risk that it will not be possible for a successful appellant to be restored substantially to his former position if the judgment against him is executed ...'.

That test was applied by Wright J in Firewood and Scantling Pty Ltd v R L Newman Pty Ltd B24/1989, and more recently approved by McHugh J in Advanced Building Systems and Anor v Ramset Fasteners (Aust) Pty Ltd [1997] HCA 24; (1997) 145 ALR 121. The applicants have not established that there is a real, as distinct from arguable, risk. Further, it is necessary to identify what is sought to be preserved. In this case, the subject matter is the right of appeal (Sali v SPC Ltd (1993) 67 ALJR 515) such right being unaffected by the continuation of payments."

23 In Joskovitz v Bonnick [1964] VicRp 83; [1964] VR 654, a stay of execution in respect of orders for costs made against a litigant was sought by her until some other proceedings were finalised in the Supreme Court. By reference to a rule not dissimilar to our r676, Herring CJ said, at 656:

"... I have ... a wide discretion which requires me to take into account all the circumstances of the case. I think I should say at once the decisions on other sets of facts do not bind me, nor is assistance to be derived from cases which are not really concerned with exactly the same problem as I am concerned with."

24 In Alexander v Cambridge Credit Corporation Ltd (1985) 2 NSWLR 685, the corporation sought a stay of execution in relation to a huge judgment obtained against it. The relevant rule was in similar terms to our r676. The court, at 693 and 694, discussed the principles relating to stays and said:

"In order to consider whether a stay should be granted in the present case, it is appropriate to refer to the principles, suggested by earlier cases, concerning the granting of a stay pending appeal. In a number of cases, including recent pronouncements of this Court, it has been said that a judgment creditor is entitled to the 'fruits of his victory' unless the appellant can show 'special' or 'exceptional' circumstances which warrant the imposition of a stay. This principle is often traced to the case of The Annot Lyle (1886) 11 PD 114. It has been expressed in many cases, including recently in this Court and in the Full Court of the Supreme Court of Victoria: see Monk v Bartram [1891] 1 QB 346; Klinker Knitting Mills Pty Ltd v L 'Union Fire Accident & General Insurance Co Ltd [1937] VicLawRp 28; [1937] VLR 142; Scarborough v Lew's Junction Stores Pty Ltd [1963] VicRp 20; [1963] VR 129; Bridges v Australian Consolidated Press Ltd (Court of Appeal, 16 June 1970, unreported); Trlin v Marac Finance Australia Ltd; cf Noulikas Holdings Pty Ltd v State Insurance Office (Full Court, Supreme Court of Victoria, 22 March 1985, unreported).

There are three reasons why it is appropriate to reconsider this formulation of the test for the grant of stays pending appeal. First, there is no suggestion in the rule that 'special' or 'exceptional' circumstances must be established before the discretion conferred upon the Court will be exercised. This is significant because, where the Act or the rules contemplate the need for special or exceptional circumstances to warrant a particular course they generally say so. For example the very next rule (Pt 51, r 11) dealing with security for costs of an appeal says, in terms, that such an order may be made 'in special circumstances'. No such limitation appears in Pt 51, r 10: cf also Supreme Court Act 1970, s75A. If it had been contemplated that 'special circumstances' were required or that 'exceptional circumstances' should be established to attract the discretion to grant a stay pending appeal, it might have been supposed that the legislature would have said so in terms. The absence of such a provision implies, at least in the practice of this Court, that no such requirement exists.

Secondly, the principle and the like expression of it in Barker v Lavery (1885) 14 QBD 769 and in Monk v Bartram first appear in decisions of the courts when the facility of appeal (which was not generally available at common law) was still relatively novel. In these circumstances the courts might more readily look upon appeals as an exceptional process. Today this is not the case. Far from being exceptional, appeals are common. Particularly is this so in commercial matters, where large sums are at stake. Appeal courts are enjoined, statute apart, to weigh competing inferences from the proved or accepted facts, and even where the credibility of witnesses is involved, to consider whether the advantages of the trial court may not be outweighed by compelling inferences to be drawn from the evidence proved: Voulis v Kozary [1975] HCA 44; (1975) 50 ALJR 59; 7 ALR 126. Where facts are undisputed or, though disputed, are established by the finding of the trial judge, the appellate court is said to be in as good a position as the trial judge to decide the proper inferences to be drawn from those facts. Though the appeal court will give respect and weight to the conclusion of the trial judge, once having reached its own conclusion, it must not shrink from giving effect to it. This principle was established immediately after the introduction of the facility of appeal by the Supreme Court of Judicature Act 1873 (Imp): see eg The Glannibanta (1876) 1 PD 283 at 287 - 288. Although it was for a time eclipsed (see eg Watt v Thomas [1947] AC 484 at 487 and Edwards v Noble [1971] HCA 54; (1971) 125 CLR 296), it was seen re-established in England (see Benmax v Austin Motor Co Ltd [1955] AC 370 at 376) and later in Australia: see Warren v Coombes [1979] HCA 9; (1979) 142 CLR 531 at 551; Taylor v Johnson [1983] HCA 5; (1983) 151 CLR 422 at 426. These modern duties of appellate courts, or at least of this Court, involve an historic change in the facility of appeal, particularly when compared to the position in the late 19th century when such facility was doubtless still considered by some judges to be novel, so that they were reluctant to interfere with verdicts by granting stays.

Thirdly, recent decisions of this Court, reflecting the language of the rules and the frequency and nature of appeals, have expressed the approach to be taken without reference to the need for 'special' or 'exceptional' circumstances to justify a stay. Thus in Waller v Todorovic (at 3) the court merely pointed to the need for the party seeking a stay to establish a reason therefor. To like effect is the judgment of Mahoney JA (with whom Moffitt P and Glass JA agreed) in Re Middle Harbour Investments Ltd (In Liq) (Court of Appeal, I5 December 1976, unreported). In that case, Mahoney JA said this (at 2):

'Where an application is made for a stay of proceedings, it is necessary that the applicant demonstrate an appropriate case. Prima facie, a successful party is entitled to the benefit of the judgment obtained by him and is entitled to commence with the presumption that the judgment is correct. These are not matters of rigid principle and a court asked to grant a stay will consider each case upon its merits, but where an applicant for a stay has not demonstrated an appropriate case but has left the situation in the state of speculation or of mere argument, weight must be given to the fact that the judgment below has been in favour of the other party.'

Although it is true that, in a number of more recent decisions of the Court, reference has been made to the requirement of 'exceptional' and 'special' circumstances, and although the same requirement appears still to be observed in Victoria, the general practice of the Court conforms more closely to that stated by Mahoney JA. In our opinion it is not necessary for the grant of a stay that special or exceptional circumstances should be made out. It is sufficient that the applicant for the stay demonstrates a reason or an appropriate case to warrant the exercise of discretion in his favour."

By reference to their specific rules the court found that:

"(2) The Court may grant a stay of proceedings where the applicant for the stay demonstrates a reason or an appropriate case to warrant the exercise of the discretion in his favour; it is not necessary that special or exceptional circumstances should be made out."

25 It is not in my view necessary to determine precisely which is the appropriate test because I am satisfied that, having considered all the circumstances of this case, the respondent would not be able to satisfy even what might be described as the lesser standard contended for.

26 I have had regard to a number of factors in reaching this conclusion. The respondent received in cash terms through his solicitors, as opposed to moneys paid on his behalf, the sum of $187,500 between December 2005 and February 2006. At the time he received those monies there was an appeal pending. There can be no criticism levelled against the appellant for paying those monies. Notwithstanding the respondent knew there was an appeal pending and at least ought to have known that if the appeal were successful against his judgment all monies paid to him would have to be repaid, he spent all except $25,000 of those monies. Some $93,000 of those funds was spent on expenditure to benefit him and his family directly, with the rest being paid to his solicitors for costs. The bulk of the monies spent by him were spent in such a way they either cannot be recovered at all or could only be recovered by the sale of items purchased such as a car and household goods.

27 The respondent is unemployed. He has virtually no assets of any significance save those sought to be secured by this application. In those circumstances the likelihood of the appellant recovering anything beyond the current sale value of those items in satisfaction of what is owed is minimal. The current value of the Falcon sedan and the other items is not known. The respondent's evidence was that the vehicle actually cost $33,000. I take judicial notice of the fact that their current realisable value must be less than their cost, although I am unable to determine what that is.

28 The respondent has sought a grant of, but not obtained, special leave to appeal. The details of the application are not before the court. That such an application was likely to be made and very soon after was known to the respondent and his solicitors at the time the order of 1 May 2006 was made. Counsel for the respondent, when asked why this application was not canvassed before the Full Court, responded that it was not known whether the appellant would seek to enforce the order and that the trigger for the application was action taken by the bailiffs.

29 The respondent gave evidence about the reasons why he had purchased some items and why they were needed. It was contended that hardship would flow to him and his family if the car and other items were seized. He gave evidence about another car parked at his home and his own and his family's needs. I was not satisfied by reference to the respondent's evidence that either he or his family would suffer any significant hardship were the car and other items seized. I accept they would suffer inconvenience.

30 The respondent has been unsuccessful in the proceedings before the court such that he has acquired an obligation to pay a significant amount of money to the appellant. He has no present ability to pay any but a small portion of it. It is unlikely he will. His only hope, if one can look at it in that light, is to successfully appeal the decision of the Full Court. Before he can do that he must obtain special leave. If the items sought to be seized are indeed seized and the respondent does successfully appeal, he will be able to be restored to the position he is in now. There was no suggestion to the contrary. However if he is unsuccessful, the appellant is unlikely ever to be able to be restored to its original position. What it seeks to do by enforcing its order is minimise any loss it will suffer.

31 There is nothing in these factors which in my view warrants the activation of the Court's discretion in favour of the respondent. His application will in the circumstances be dismissed.