Nichol v Discovery Africa Limited

Federal Court of Australia|2016-03-15|Before: Gilmour J, McKerracher J

The application for leave to appeal be heard with the appeal.
The application for leave to appeal and the appeal be listed for hearing before the Full Court of the Federal Court of Australia on a date to be fixed.
The applicant file and serve a notice of appeal within 14 days. The notice of appeal must include a statement to the effect that the appeal requires leave and the question of leave has been ordered to be heard with the appeal, and a copy of this order must be attached to the notice.
Costs of these directions be in the cause. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

MCKERRACHER J: 1 There are two applications for a stay of the orders made by Gilmour J in WAD 87 of 2014 on 23 December 2015 (Discovery Africa Ltd v Nichol [2015] FCA 1497). The applicants for the stay are: (1) Mr Danie van den Bergh, the second respondent in WAD 87 of 2014; and (2) Mr Kevin Nichol, the applicant in WAD 40 of 2016, (together, the applicants). Each of the applicants is a foreign resident. 2 The stay applications are opposed by Discovery Africa Limited (ACN 147 324 847) in both cases. 3 In addition, each applicant submits that the question of leave to appeal from the orders of Gilmour J (being summary judgment orders) should be determined by the Full Court in conjunction with the appeals (which includes WAD 47 of 2016: Danie van den Bergh v Discovery Africa Limited). That proposal is also opposed by Discovery Africa on the basis that leave will not be granted. 4 In my view, this is a matter where the application and appeal in both matters should be heard together by the Full Court. 5 However, for the reasons that follow, I do not intend to grant stay orders, other than on terms of payment into court.

LEGAL PRINCIPLES 6 A party bound by a judgment or order may apply to the Court for an order that the judgment or order be stayed: Federal Court Rules 2011 (Cth) r 36.08(2), r 41.03. The power of the Court to stay the execution of judgments appealed from is provided by s 29 of the Federal Court of Australia Act 1976 (Cth). 7 As I noted in Harbour City Real Estate Pty Ltd t/as Re/Max Harbour City Real Estate (ACN 111 210 023) v Cargill [2008] FCA 1382 (at [11]), the relevant principles include the following: The general principle is that the successful party is entitled to the fruits of judgment and the appellants must give sound reasons to justify a suspension of that right: McBride v Sandland (No 2) (1918) 25 CLR 369 (at 374); Powerflex Services Pty Ltd v Data Access Corporation (1996) 67 FCR 65 (at 66) citing Re Middle Harbour Investments Ltd (in liq) (unreported, Court of Appeal NSW, 15 December 1976)); The onus is upon the applicant to demonstrate a proper basis for a stay that will be fair to all parties: Alexander v Cambridge Credit Corporation Ltd (1985) 2 NSWLR 685 (at 694); 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: Alexander (at 694); Henderson v Amadio Pty Ltd (No 3) (1996) 65 FCR 66 per Heerey J (at 68); Powerflex Services (at 66); The now commonly accepted test - that a reason or appropriate case to warrant the exercise of the discretion must be demonstrated - may be satisfied where there is a real risk that it will not be possible for a successful appellant to be restored substantially to its former position if the judgment is executed: Commissioner of Taxation (Cth) v Myer Emporium Ltd (No 1) (1986) 160 CLR 220 (at 222-223), although, I note, this judgment refers to the earlier, more stringent test that 'special circumstances' must exist; The financial position of the respondent to the application may be a relevant consideration: see for example, Welcome Real-time SA v Catuity Inc (No 2) [2002] FCA 258 per Heerey J; The general rule is that a stay will be granted where there is a likelihood that a successful appeal will be rendered nugatory: Australian Competition and Consumer Commission v BMW (Australia) Ltd (No 2) [2003] FCA 864 per Finkelstein J (at [5]) citing Wilson v Church (No 2) (1879) 12 Ch D 454 (at 458); and The Court has a discretion whether or not to grant the stay and, if so, as to the terms that would be fair. In the exercise of its discretion, the Court will weigh considerations such as the balance of convenience and the competing rights of the parties before it: Alexander (at 694), citing Attorney-General v Emerson (1889) 24 QBD 56.

MR VAN DEN BERGH'S STAY APPLICATION 8 Mr van den Bergh submits that a stay should be granted because there is real and not fanciful prospect that: (a) the application for leave to appeal and any appeal may, respectively, be granted and upheld; and (b) if a stay is not granted, if successful, the application for leave and any subsequent leave may (in practical terms) be rendered nugatory because of the 'parlous' financial situation of the respondent to both applications for a stay, Discovery Africa. 9 The sole ground on which Mr van den Bergh seeks leave to appeal turns on the proper construction of s 200AA(1) of the Corporations Act 2001 (Cth). 10 It is unnecessary to examine in detail the prospects of success in both of these applications/appeals because I am satisfied that, even if Mr van den Bergh has good prospects of success, which Discovery Africa strongly refutes, there is no reasonable basis for a stay of execution of the judgment, unless Discovery Africa is protected by payment into court. 11 Submissions made by Mr van den Bergh effectively accept that position. That is, Mr van den Bergh does not oppose the stay being conditional upon: (a) Mr van den Bergh seeking a hearing of his application for leave to appeal/appeal at the earliest time convenient to the Court and parties; and (b) the amount held in Mr van den Bergh's bank account, the subject of the freezing order (together with an additional sum to be paid by Mr van den Bergh so as to total the full amount of the judgment debt) being either paid into Court or into an interest bearing account in the joint names of the solicitors for Discovery Africa and solicitors for Mr van den Bergh to abide the outcome of Mr van den Bergh's application for leave to appeal/appeal and to be paid out (including any interest) in accordance with any order made by the Court in due course. 12 That is the essence of the orders I propose making, save that provision should also be made for costs and interest.

MR NICHOL'S STAY APPLICATION 13 The position concerning Mr Nichol was not as simple. As with Mr van den Bergh, he resides out of the jurisdiction, presently in Ireland and at other times in Singapore. His funds and assets within the jurisdiction are extremely limited. 14 Summary judgment was ordered against Mr Nichol in the amount of $274,005.78 and costs. Although Mr Nichol produces a very rough and seemingly unverified list of assets said to total $308,013.86, it is common ground that only a small portion of that amount is readily available. Assets such as 50% of the net equity in a Singapore property (said to be worth approximately $180,000) held by Mr Nichol would not be readily realisable within the timeframe required for the making of these orders. 15 The information provided in connection with assets held both within and outside this jurisdiction by Mr Nichol in support of his application is extremely limited. It is also clear, whether by way of misunderstanding or not, that Mr Nichol has not complied with freezing orders in the past. For example, funds have been made available to members of his family. 16 Counsel for Mr Nichol submits that if there must be an order for payment into court, it should be for a relatively limited sum, such as the amount which Mr Nichol says he will be entitled to receive on or before 10 March 2016 from Consolidated Africa Limited. This is said to be USD50,000, or, on today's currency exchange rate, approximately AUD69,628.15. 17 As with Mr van den Bergh, I am prepared to assume that there is an arguable case to support the appeal. But this is by no means the end of the matter, particularly in Mr Nichol's case as the judgment against him was, when compared with the net assets of Discovery Africa, a reasonably significant sum. As matters presently stand following the judgment, Discovery Africa submits that the fiscal difficulties of Discovery Africa are in no small measure due to the former management and payments to Messrs Nichol and van den Bergh. 18 The evidence that Mr Nichol could not possibly borrow against his assets or, in some other way, obtain borrowings to support a payment into court, is extremely limited. It is, in substance, just his general denial that he would be able to raise the necessary funds. 19 Mr Nichol bears the onus of establishing that a stay will be fair to all parties. In doing so, there is a prima facie assumption that the judgment appealed from is correct and a prima facie assumption that the Court should not deprive the litigant of the benefit of a judgment in its favour. 20 The mere filing of an appeal per se is not sufficient to demonstrate an appropriate case for the granting of a stay. 21 As stated above, a stay will usually be granted if there is a real risk that the applicant will suffer prejudice or damage if a stay is not granted, which prejudice will not be redressed by a successful appeal. It is necessary to weigh the competing considerations, such as the balance of convenience and competing rights of the parties. 22 Mr Nichol, like Mr van den Bergh, resists payment direct to Discover Africa contending that he would never recover those funds due to the financial position of Discover Africa. In relation to this submission it is sufficient to observe that a payment into Court appears an appropriate balance in the protection of the position of all parties. 23 The real question is how much is to be paid into court and on what terms, particularly in the case of Mr Nichol. 24 A substantial body of financial material has been put before the Court in respect of which detailed written submissions have been filed. 25 In the end, my view is that stays of orders and declarations of Gilmour J should only be granted if the judgment sums are paid into Court, together with provision for costs at first instance and security for costs of the appeal, given that each of the applicants resides overseas.

CONCLUSION IN RELATION TO THE STAY APPLICATIONS 26 The sum which Mr van den Bergh has offered to pay into Court or into a joint solicitors' account comes close to the amount which I consider is appropriate. It falls short in relation to costs. 27 In relation to Mr van den Bergh, Discovery Africa submits if the Court is minded to grant a stay (which Discovery Africa opposes) any stay would have to be subject to and conditional upon: (1) the funds frozen in the Commonwealth Bank account in the amount of $151,145 and an additional payment of at least $80,000 (which amount represents a fair and reasonable security for the summary judgment, interest and costs and security for the appeal) be paid into Court within 7 days of the order of the Court; (2) the funds paid into Court not being released until further order of the Court or unless with the consent of Discover Africa; (3) Discovery Africa being entitled to apply the funds into Court to enforce the summary judgment, interests and costs if the appeal is unsuccessful; and (4) any failure to pay $230,000 into Court by a specified date would result in the application for leave to appeal in WAD 47 of 2016 being dismissed. 28 In relation to Mr Nichol, Discovery Africa submits if the Court is minded to grant a stay (which Discovery Africa opposes), then the stay should be subject to and conditional upon: (1) Mr Nichol paying into Court, within 7 days of the order, the amount of $380,000 (which represents a fair and reasonable security for the summary judgment orders, pre-judgment interest, post-judgment interest and costs); (2) the funds paid into Court not being released until further order of the Court unless with the consent of Discovery Africa; (3) Discovery Africa being entitled to apply the funds paid into Court to enforce summary judgment, pre-judgment interest, post-judgment interest and costs, if the appeal is not successful; and (4) any failure to pay $380,000 into Court by a specified date resulting in the application for leave to appeal being dismissed. 29 I propose making orders largely consistent with those set out above, except that the amount in [27(1)] of $80,000 should be $50,000, and 7 days should be 21 days. In [27(4)], the order would be that any failure to pay the sum into Court within 21 days would result in the discharge of the order staying execution of the judgment. 30 In relation to Mr Nichol, while reducing the sum of $380,000 in [28(1)] to $325,000 and otherwise making the same adjustments as for Mr van den Bergh, I would impose those conditions of any order granting a stay. 31 If the parties seek to vary these orders (for example, by the funds being paid into a joint account), they should apply. 32 In relation to the Mr Nichol's application for leave to appeal (in WAD 40 of 2016), I make the following orders:

The application for leave to appeal be heard with the appeal.
The application for leave to appeal and the appeal be listed for hearing before the Full Court of the Federal Court of Australia on a date to be fixed.
The applicant file and serve a notice of appeal within 14 days. The notice of appeal must include a statement to the effect that the appeal requires leave and the question of leave has been ordered to be heard with the appeal, and a copy of this order must be attached to the notice.
Costs of these directions be in the cause. 33 In relation to the Mr van den Bergh's application for leave to appeal (in WAD 47 of 2016), I make the following orders:
The application for leave to appeal be heard with the appeal.
The application for leave to appeal and the appeal be listed for hearing before the Full Court of the Federal Court of Australia on a date to be fixed.
The applicant file and serve a notice of appeal within 14 days. The notice of appeal must include a statement to the effect that the appeal requires leave and the question of leave has been ordered to be heard with the appeal, and a copy of this order must be attached to the notice.
Costs of these directions be in the cause. I certify that the preceding thirty-three (33) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher.

SCHEDULE OF PARTIES WAD 87 of 2014

Fourth Respondent: IAN BERT LOVETT Fifth Respondent: PHILLIP ANDREW THICK Sixth Respondent: PETER JAMES AVERY Seventh Respondent: CBP PTY LTD (ACN 166 080 682)

Corporations Act 2001(Cth)s 200AA(1)

Federal Court Rules 2011(Cth)rr 36.08(2), 41.03, r 36.08(2), r

The orders and declarations of Gilmour J made in Discovery Africa Ltd v Nichol [2015] FCA 1497 on 23 December 2015 in relation to Mr van den Bergh be stayed, subject to and conditional upon: (a) Mr van den Bergh paying $201,145 into Court within 21 days of this order of the Court; (b) the funds paid into Court not be released until further order of the Court or with the consent of Discover Africa; (c) Discovery Africa being entitled to apply the funds paid into Court to enforce the summary judgment, interests and costs if any appeal is dismissed; and (d) any failure to pay the sum into Court within 21 days resulting in the discharge of the order staying execution of the judgment. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

At a glance

Court

Decision date

Before

Source

Judgment (8 paragraphs)

Parties

Legislation Cited (3)

Cases Cited (9)

Cited By (4)