HIS HONOUR: By an amended notice of motion filed on 15 June 2023,the applicant seeks an order that the orders of the Local Court of New South Wales made in proceeding number 2022/00141789 on 3 May 2023 regarding costs, be stayed pursuant to s 67 of the Civil Procedure Act 2005 (NSW) and/or r 57 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR), pending the determination of the application for leave to appeal to the Supreme Court of New South Wales filed on 29 May 2023 and any subsequent appeal.
The applicant is the plaintiff in the substantive proceedings. The respondent to the motion is the defendant in the substantive proceedings. I will refer to the parties by their titles in the substantive proceedings.
The plaintiff seeks leave to appeal from part of the decision of the Local Court, that part being an order that the plaintiff pay the defendant's costs in an amount of $73,000.
The background to the application is litigation that took place in the Local Court, in which the plaintiff unsuccessfully took action against the defendant. The defendant is a former employee of the plaintiff. In the Local Court proceedings, the plaintiff alleged that the defendant had engaged in conduct in breach of restraints of trade contained in her employment contract and an undertaking that had been given to the plaintiff.
On 14 March 2023, Magistrate Brender dismissed the plaintiff's claims and ordered that the plaintiff was liable to pay the defendant's costs of the proceedings. At the suggestion of the Court, the parties agreed that rather than proceeding by way of a costs assessment, a lump sum costs order could be made. Magistrate Brender made timetabling orders for the parties to exchange written submissions on the question of the proper quantum of the lump sum costs order. The parties filed submissions in accordance with this timetable. In addition, the plaintiff put on additional supplementary submissions, to which the defendant responded.
Those submissions on behalf of the plaintiff contested any liability for costs, on the basis that the defendant was not herself liable to pay the costs of her solicitors. On 3 May 2023, Magistrate Brender made orders fixing the plaintiff's liability to pay the defendant's costs in an amount of $73,000. On 29 May 2023, the plaintiff filed a summons in this Court seeking leave to appeal from the order awarding that lump sum costs amount. The application for leave to appeal is brought pursuant to s 40(2)(c) of the Local Court Act 2007 (NSW).
The plaintiff contends that the magistrate erred in making a costs order where the defendant had no liability to pay the fees of her solicitors. The plaintiff, in this regard, points to the retainer between the defendant and her solicitors, under which the only person with a payment obligation was a third party, that being the defendant's new employer. The parties have addressed in their submissions the merits of the plaintiff's argument.
I should say at this stage, that I am grateful for the assistance that I have received from Mr Harding on behalf of the plaintiff and Mr Moretti on behalf of the defendant, both with respect to their helpful written submissions and in relation to, in particular, the practical and efficient way the matter has been argued this morning.
Whilst the merits of the argument were addressed in the written submissions, and to a circumscribed extent in oral submissions, it is inappropriate for me to, at this stage, pre-empt the result of the plaintiff's appeal. What I would accept from the submissions that have been made, is that the plaintiff has at least an arguable case, but I would also accept that there are arguments both ways.
It is additionally not without significance that the proposed appeal, being against an order for costs, requires leave pursuant to s 40(2) of the Local Court Act. It is also accepted by the plaintiff that leave is also required as the appeal is brought with respect to an asserted error, or errors, of mixed fact and law: see Local Court Act, s 40(1).
The principles applicable to this Court's exercise of the discretion to grant a stay pursuant to s 67 of the Civil Procedure Act or r 50.7 of the UCPR pending an appeal, are well established. They include, as summarised in the submissions of the defendant:
"(a) generally a successful party is entitled to the benefit of the decision or orders obtained at first instance and, in order for this principle to be displaced, an applicant for a stay must demonstrate that the circumstances warrant the exercise of discretion in their favour;
(b) the applicant bears the onus of demonstrating a proper basis for a stay which will be fair to all parties;
(c) in the exercise of its discretion as to whether a stay should be granted, the Court will weigh consideration such as the balance of convenience and the competing rights of the parties before it;
(d) although the Court generally will not speculate upon the applicant's prospects of success on its appeal, it may make some preliminary assessment as to whether the applicant has an arguable case so as to exclude an appeal lodged without any real prospect of discuss simply to gain time; and
(e) as a condition of a stay, the Court may require payment of the whole or part of the judgment sum or the provision of security." (footnotes omitted)
In Kalifair Pty Ltd & Anor v Digi-Tech (Australia) Limited (2002) 55 NSWLR 737; [2002] NSWCA 383, the Court of Appeal said at [17]-[18]:
"17 In Alexander v Cambridge Credit Corporation Ltd (1985) 2 NSWLR 685 this Court (Kirby P, Hope, McHugh JJA) restated the principles to be applied in exercising this Court's jurisdiction to grant a stay pending an appeal. The Court said (694, 695):
"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 … demonstrates a reason or appropriate case to warrant the exercise of discretion in his favour …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 … Two further principles may be mentioned. The first is that where there is a risk that the appeal will prove abortive if the appellant succeeds and a stay is not granted, courts will normally exercise their discretion in favour of granting a stay … where it is apparent that unless a stay is granted an appeal will be rendered nugatory this will be a substantial factor in favour of the grant of a stay".
18 Thus the relevant principles are analogous to those which govern the grant of interlocutory relief before trial to protect the status quo. The appellant must show that the appeal raises serious issues for the determination of the appellate court, and that there is a real risk that he will suffer prejudice or damage, if a stay is not granted, which will not be redressed by a successful appeal. This requirement will be satisfied if the appeal will be rendered abortive or nugatory unless a stay is granted. If these pre-conditions are established the Court will then consider the balance of convenience."
See also Yolarno Pty Ltd v Shandong Delisi Food Co Ltd [2022] NSWCA 30 at [4].
The plaintiff, in the hearing of this motion, relied on evidence establishing its ability to pay the costs order and evidence of its willingness to undertake that the equity of the plaintiff will not be reduced to a figure below $300,000 during the time between any stay and the resolution of the application for leave to appeal, or the appeal itself. There is no reason to doubt that the plaintiff has the ability to pay the costs order and will retain that ability.
Whilst there is evidence of this capacity, there is no evidence or suggestion that the plaintiff's operations will be in any way harmed by the loss of the use of the monies between the present time and any successful appeal. Of course, the application for leave may be unsuccessful. If successful, the appeal itself may not be successful.
In order to show that there is a real risk that the plaintiff will suffer prejudice or damage, the plaintiff relies on evidence in relation to the defendant's financial capacity. In short, it is the plaintiff's submission that if the monies are paid, pursuant to the magistrate's order, to the defendant, she is entitled to treat those monies as her own with the potential consequence that those monies will not be available to the plaintiff in the event that the plaintiff is ultimately successful.
The evidence on which the plaintiff relies to establish the existence of this real risk is evidence that the defendant does not own any real property and was, at the time of her employment with the plaintiff, earning $100,000 per annum plus superannuation.
The plaintiff seeks to reason from that circumstance that if required to repay the monies, the plaintiff may not do so, or at least, putting it in proper terms, there is a real risk that she will not do so.
In my view, there is nothing in the evidence that supports this as being a real risk as opposed to one that is merely speculative. There is absolutely no reason to think that if the defendant is ordered to repay monies, she would not do so. To suggest that she would not, simply on the basis of the evidence that has been put forward, would require me to come to a conclusion that is insulting to the defendant without any foundation.
I am, therefore, not satisfied that there is a real risk that the plaintiff will suffer prejudice. The plaintiff, therefore, fails at the first hurdle. It is not necessary to address other considerations with respect to the merits of the plaintiff's claim.
Accordingly, I make the following orders:
1. The plaintiff's claim for a stay is refused.
2. The plaintiff pay the defendant's costs on the motion.
[2]
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Decision last updated: 02 August 2023