[1986] HCA 84
Rinehart v Welker (2012) 83 NSWLR 347
Source
Original judgment source is linked above.
Catchwords
[1986] HCA 84
Rinehart v Welker (2012) 83 NSWLR 347
Judgment (3 paragraphs)
[1]
[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
[2]
Judgment
MEAGHER JA: The first and second respondents (the respondents) were unsuccessful in this appeal (Super Vision Resources Pty Ltd BVI Registered No 1810534 v AC Holdings Co Pty Ltd [2020] NSWCA 319). Before this Court's final orders were made, they foreshadowed the making of a special leave application to the High Court and asked that this Court stay the execution of its orders requiring the payment of money to permit that application to proceed.
The proposed orders for the payment of money became orders 6 and 7 as follows:
(6) Order that Super Vision, AC Holdings and Qiao Wang forthwith cause the credit balance of the Controlled Moneys Account (as defined in the joint undertakings given to this Court and dated 26 June 2020) to be paid to the trustee-in-bankruptcy of Lawrence Xu.
(7) Order that AC Holdings and Qiao Wang pay to the trustee-in-bankruptcy of Lawrence Xu the amount of $197,373, being the sum of three payments made to AC Holdings and Qiao Wang from the Controlled Moneys Account for the payment of legal fees incurred by them in their defence of Super Vision's claim.
The amount presently held in the Controlled Moneys Account is about $2,368,550.
To accommodate the making of the foreshadowed special leave application, this Court, when making its final orders on 22 February 2021, stayed the operation of orders 6 and 7 for 14 days to enable the respondents to make a formal stay application.
A special leave application was filed on 3 March 2021 and the notice of motion seeking a continuation of the interim stay order made on 22 February 2021 was filed in this Court on 4 March 2021. On the same day this Court extended that interim stay until the determination of that motion, or further order.
There is one matter which should be mentioned before dealing with that motion. On 1 November 2020, the first respondent (ACH) was deregistered for non-payment of a fee or fees. An application for reinstatement of its registration under Corporations Act 2001 (Cth), s 601AH was lodged with ASIC, and the outstanding fee or fees paid, on 24 or 25 February 2021. The company's registration was reinstated on or about 6 April 2021.
In the period during which ACH was deregistered this Court made its final orders, as well as the order extending the interim stay, and the special leave application was filed naming ACH as first applicant. However, any difficulties which might otherwise have arisen as a result of that company's ceasing to exist during the period that it was deregistered (s 601AD(1)) have been cured by its reinstatement, s 601AH(5) providing that once reinstated "the company is taken to have continued in existence as if it had not been deregistered".
The first question for this Court, when exercising its "extraordinary" jurisdiction to stay the execution of its orders pending the determination of a special leave application, is whether "a stay is required to preserve the subject matter of the litigation": Rinehart v Welker (2012) 83 NSWLR 347; [2012] NSWCA 1 at [11] (and [48]), citing Jennings Construction Ltd v Burgundy Royale Investments Pty Ltd (No 1) (1986) 161 CLR 681 at 685 (Brennan J); [1986] HCA 84.
The subject matter of the present litigation includes the funds presently held in the Controlled Moneys Account.
By a letter addressed to the NSW "Supreme Court, Court of Appeal" dated 12 March 2021, Mr Xu's trustee in bankruptcy, Mr David Kerr, confirmed that he will "not distribute or deal with any funds that are paid to [him]" in accordance with the orders of this Court (including the balance of the funds in the Controlled Moneys Account and any moneys paid to him in accordance with order 7) "until such time as the appeal lodged by the first and second respondents is completed". The context in which that letter was written (and in particular the email from the respondents' solicitor to Mr Kerr dated 4 March 2021) makes clear that the reference to the completion of any "appeal lodged" is to the outcome of the application for special leave and any consequential appeal.
In the face of that undertaking a stay of execution of order 6 is not required. The "risk of dissipation" of those funds initially identified by the respondents - that most of that fund "will be distributed to creditors" and part "will be paid to the Trustee for his costs and disbursements" - will not arise.
There remains the order with respect to the amount of $197,373 advanced from the Controlled Moneys Account to ACH and the second respondent, Ms Wang.
As to those moneys, this Court observed in its second judgment (Super Vision Resources Ltd v AC Holdings Co Pty Ltd (No 2) [2021] NSWCA 14) at [8] that:
... they were to be restored to the fund from which they were paid in the event that the appeal was successful and costs orders made in favour of SV. The intent was that the moneys paid to ACH and Ms Wang ultimately would be treated in the same way as the moneys remaining in the Controlled Moneys Account. As they were paid to and for the benefit of ACH and Ms Wang, the order for their repayment should be made against each of them. As appears below, the condition as to there being a costs order in favour of SV will be satisfied.
It follows that this amount also forms part of the subject matter of the litigation. If this Court's orders are not set aside on appeal, it will remain for Mr Xu's trustee in bankruptcy to recover this amount from ACH and Ms Wang, and then to identify Mr Xu's unsecured creditors and to distribute the available funds between them. As the respondents' written submissions record, the identity of the creditors, other than Super Vision and Ms Wang, who are likely to seek to prove in Mr Xu's bankruptcy, and the amounts for which they will seek to prove, are not known.
If a stay of execution of order 7 is granted, and special leave refused or any appeal dismissed, there is little likelihood that that money will be paid or recovered in circumstances where it is said that the respondents do not "presently have money or other assets, either in Australia or China".
On the other hand, if there is no stay of execution of that order, there remains the prospect that should the trustee in bankruptcy press for payment before the determination of any appeal, some amount may be recovered. However, the likelihood that the trustee in bankruptcy might take such action is uncertain, particularly in circumstances where he has undertaken not to "deal" with any of the funds paid to him until the outcome of the application to the High Court is finally known.
Taking these matters into account, I am not satisfied that a stay of execution of order 7 is "required" to preserve the "value" of that part of the subject matter of the litigation consisting of ACH and Ms Wang's liability to repay the $197,373. Indeed, in my view the granting of a stay of that order would make it less likely that any moneys might be recovered.
Furthermore, whether or not a stay is granted, the trustee in bankruptcy remains in a position to set off Ms Wang's liability under order 7 against any amount to which she may be entitled by way of any distribution to unsecured creditors of Mr Xu.
These conclusions make it unnecessary to consider whether there is a substantial prospect that special leave will be granted, whether the grant of a stay will cause loss to the appellant, Super Vision, or where the balance of convenience lies.
In the result, the respondents' motion for a stay should be dismissed.
There remains the question of costs. The respondents submit that the costs of their application should be treated as costs "in the cause in the High Court". That submission does not sufficiently take account of the fact that the stay application was brought before the trustee in bankruptcy's position was known or sought to be known. Notwithstanding that by 12 March 2021 that position was known, the respondents pressed on with the application, which has been disposed of without any consideration of the merits, or otherwise, of the application for special leave.
In the circumstances, costs should follow the event.
[3]
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Decision last updated: 27 April 2021
Parties
Applicant/Plaintiff:
Super Vision Resources Ltd BVI Registered No 1810534