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JUDGMENT 1The appellant (which I shall call "WSA") has instituted an appeal as of right in respect of orders made against it in the Equity Division on 20 December 2013. It seeks a stay of those orders pending determination of the appeal. 2In the Equity Division proceedings, Rein J ordered judgment in the sum of $238,378.17 against WSA and in favour of the present respondent, which I shall call "Simple". There was also a costs order against WSA. 3The proceedings arose from an agreement under which WSA appointed Simple to be its distributor in Victoria and Tasmania for certain software licence packages produced by WSA. WSA sued Simple for breach of contract and Simple, in turn, brought a cross-claim alleging contravention of the Franchising Code of Conduct made under the Competition and Consumer Act 2010 (Cth). 4The claims made by WSA involved issues of construction of the parties' contract. The primary judge determined those issues against WSA and dismissed its money claims. As for the cross-claim, the judge found that the agreement was covered by the Franchising Code of Conduct and that that code had been breached. His Honour also found against WSA on a defensive contention that Simple was estopped from relying on the Code. 5WSA's notice of appeal states grounds of appeal which challenge virtually all the ultimate findings of the primary judge. 6Ms Steggall of counsel, who appeared for WSA, noted principles applicable to an application of this kind, as stated in Alexander v Cambridge Credit Corporation Ltd (1985) 2 NSWLR 685, as follows:

1. Where there is a risk that an appeal will prove abortive if the appellant succeeds and a stay is not granted, the Court will normally exercise its discretion in favour of granting a stay.
2. The onus is upon the applicant to demonstrate a proper basis for a stay.
3. It is a matter of discretion whether the Court grants a stay and, if so, as to the terms which would be fair as part of the granting of a stay.
4. What is important when considering whether or not a stay ought to be granted is the balance of convenience and the competing rights of the parties before the Court.
5. It is not necessary that special or exceptional circumstances be made out, it is sufficient for the applicant to demonstrate a reason or an appropriate case to warrant the exercise of discretion in its favour. 7Mr Ashhurst SC submitted on behalf of Simple that there is no serious question for the determination of the appellate court. He took me in some detail to the grounds of appeal and the judgment below with a view to making good that submission. 8As Ms Steggall pointed out, however, the general issue of the prospects on appeal has already received attention. On 10 March 2014, Basten JA determined an application by Simple for the provision by WSA of security for the costs of the appeal: see Workplace Safety Australia Pty Ltd v Simple OHS Solutions Pty Ltd [2014] NSWCA 55. Basten JA said at [2]: "The appellant, Workplace Safety Australia Pty Ltd, challenges that judgment. It does so on the basis of a number of grounds which need not be set out or considered. So far as they are relevant to the question of security, it is accepted on both sides that the appeal is not frivolous or vexatious and that it has arguable prospects of success." 9Ms Steggall submitted, and I accept, that, in light of the concession previously made by it, Simple should not now be heard to say that the appeal has no arguable prospects of success. In my view, the question of prospects relevant to security for costs is the same as the question of prospects relevant to the current application. I would add that, having considered the particular matters to which Mr Ashhurst took me, I am not persuaded that serious questions for the determination of this Court are entirely lacking. 10An important question relevant to the balance of convenience is whether, if the judgment debt is paid and WSA is successful on appeal, there is a risk that the money paid will be irrecoverable. On that, Ms Steggall drew attention to aspects of the evidence suggesting that Simple may carry on business as a trustee. She suggested that, for that reason, money paid to Simple might cease to be within its dominion because it becomes an asset of the trust "and the trust is not a party". The submission is devoid of merit and proceeds from the heresy to which Leeming JA recently referred when, in Kelly v Mina [2014] NSWCA 9 at [103], he spoke of "[t]he incorrect but prevalent notion that a trust is a legal person". If Simple is a trustee and money paid in satisfaction of the judgment debt becomes trust property in its hands, the trustee's right of indemnity and reimbursement out of trust property will enable it to deploy the funds in the event that it is required to refund. No other circumstance was relied on in support of the proposition that payment of the judgment debt, followed by success of WSA on appeal, would mean that the money would be irrecoverable. 11On the other hand, WSA has adduced evidence of its own financial situation showing that it has not sufficient liquid assets to pay the judgment debt. I shall refer to WSA's financial position presently. 12The particular matter to which WSA points in attempting to obtain a stay of the judgment below is service on it by Simple of a statutory demand under s 459E of the Corporations Act 2001 (Cth). WSA has filed an application in the Equity Division seeking an order setting aside the statutory demand. It no doubt apprehends that, if this Court makes an order staying the judgment below, its prospects of obtaining an order setting aside the statutory demand will be enhanced: see, for example, Scope Data Systems Pty Ltd v BDO Nelson Parkhill [2003] NSWSC 137; 199 ALR 56. By contrast, if there is no stay, the prospects would be much reduced and, since it seems that WSA does not have immediately available funds to the extent necessary, Simple would be put into a position where it could petition for the winding up of WSA on the grounds of deemed insolvency arising from non-compliance with the statutory demand. 13The position is complicated, to some extent, by the fact that an order was made on 31 March 2014 in the Equity Division for payment of the judgment debt by instalments. The application made by WSA in that regard involved instalments of $10,000 per month. The order, as made, is for instalments of $10,000 per week. The order was made by a registrar in chambers on the ex parte application of WSA. There was no hearing but the registrar apparently received and had regard to not only WSA's application but also a letter submitted by Simple. WSA has taken steps to seek a review of the registrar's decision. 14The first instalment to be paid under the existing order was, it seems, due on 2 April 2014 but, as of 4 April 2014, no payment had been made - and as a result, I infer, any stay in respect of the judgment that the making of the instalment order caused to arise by operation of s 107 of the Civil Procedure Act 2005 (NSW) and provisions in rule 37 of the Uniform Civil Procedure Rules 2005 (NSW) is no longer operative. 15This leads me to return to the financial position of WSA. 16In that connection, I note that Basten JA's order of 10 March 2014 required that WSA provide security for the costs of the appeal in the sum of $40,000. His Honour ordered that the proceedings in this Court be stayed pending provision of the security but that order was subject to an exception allowing WSA to prosecute the application with which I am now dealing. The security has now been provided in the form of two payments into court, each of $20,000, the second of which was made yesterday. 17The evidence includes financial statements of WSA for the year to 30 June 2013 and the half-year to 31 December 2013. For the earlier of those periods, there was an after-tax profit of some $8,600 on turnover of some $1,020,000, with legal expenses accounting for $148,000 out of total expenses of about $1,007,000. In the later period (a period of six months), there was an after-tax profit of about $15,700 on turnover of approximately $624,000, with legal expenses accounting for $90,000 of total expenses of about $602,000. It is said that the legal expenses in each period related mainly to the Equity Division litigation and that, if legal expenses are considerably reduced, there will be a healthier profit performance. 18That may well be so but the fact that this motion, the appeal, the statutory demand proceedings and the application for review of the registrar's decision concerning the instalment order are all current does not permit any particularly favourable prediction of reduced legal expenses. 19Ms Schekeloff, the sole director and shareholder of WSA, has given evidence to the effect that she does not have assets of any real value and that an attempt to raise a bank loan for WSA has been unsuccessful. She has also given evidence, however, of expense reductions that have enabled her to raise within WSA the $40,000 required to provide the security for costs ordered by Basten JA. 20It was submitted on behalf of Simple that, if economies were feasible to allow $40,000 to be assembled to meet the order for security for costs, further application of those economies ought to be able to generate, if not enough to pay the full judgment sum into court, at least sufficient to allow payments on account of the judgment to be made at the rate of $25,000 per month, should a stay be granted. WSA's position is that it could not manage more than $10,000 per month. 21I return to the matter of the statutory demand and the circumstance that Simple has embarked on a course of action the logical conclusion of which is the making of an application for winding up of WSA on the grounds of insolvency. WSA's position is that it should be inferred that Simple's purpose in seeking to pursue winding up proceedings is to stifle WSA's appeal to this Court since, if a winding up order is made and a liquidator is appointed, pursuit of WSA's appeal will be put out of the hands of its current director and under the control of a liquidator who may be less willing and less able (in financial terms) - or both - to prosecute the appeal than the director is. 22Reference should be made to the decision of this Court in Kalifair Pty Ltd v Digi-Tech (Australia) Ltd [2002] NSWCA 383; 55 NSWLR 737. The Court there made orders staying all proceedings on certain judgments until determination of the appeal. An apprehension that the judgment debtor might be put into liquidation because of the judgment debts featured prominently in the Court's assessment. The joint judgment of Handley JA, Sheller JA and Ipp JA contains, at [21] - [23], the following passage: "[21] In the present cases if stays are refused the judgment creditor would be free to serve statutory demands and proceed to winding-up. The prosecution of the appeals would then be stayed automatically and the stays would continue unless and until the liquidator elected to prosecute the appeals. The directors would lose control of the litigation and the creditors, including the judgment creditor, would have a say in any decision to proceed. [22] The directors would thus suffer delay and difficulty and incur additional expense in securing a decision from the liquidator to proceed with the appeals. [23] Three of the four appellants have no assets and in these cases the real purpose of any winding-up proceedings can only be to stop the appeals. . . ." 23Central to the decision of the Court in the Kalifair case was the possibility that the judgment below might be overturned on appeal; and it was that possibility that was in turn central to the finding that consequences, in terms of resort to winding up proceedings against the judgment debtor based on the judgment debt, ought to be postponed until it was seen whether the judgment survived the appeal. The decision was, in reality, a decision about preservation of the subject matter of the pending appeal. 24The same considerations are at work here. Mr Ashhurst pointed to the fact that Ms Schekeloff, in her affidavits, refers only to concern that resort to winding up proceedings will affect WSA's reputation and goodwill and that there is no reference to other consequences. However, the fact that Ms Schekeloff did not refer to them in evidence does not mean that consequences of the kind that were influential in Kalifair are not at work and should not be taken into account. Clearly, they are at work and should be taken into account. 25I have referred to the contention of Simple that any stay in respect of the judgment below should be on terms as to the payment of $25,000 per month into court until the hearing of the appeal. I have also referred to the fact that WSA does not oppose such a regime if the monthly sum is $10,000. The evidence about financial matters shows, in my view, that it a requirement for $25,000 per month would be very unlikely to be met and that there are prospects that a requirement at a lower level would be met. There is merit in Mr Ashhurst's submission that economics should allow monthly payments of more than WSA proposes. A sum of $15,000 per month is appropriate. Of course, if payments of the judgment debt by instalments were being made, they would have to be regarded as, in effect, substitutes for the monthly payments into court. 26Finally, I note that Ms Schekeloff has, through counsel, proffered an undertaking to cause the appeal to be prosecuted with reasonable diligence. 27On balance, I am persuaded that the status quo should be maintained pending determination of the appeal, but with WSA making payments into court as I have indicated. 28I make the following orders:
6. On (a) the undertaking of Kim Kerri Ann Schekeloff, given to the Court through counsel, that she will cause the appeal instituted by notice of appeal filed on 20 December 2013 to be prosecuted with reasonable diligence; and (b) condition that the appellant, as security for the judgment debt under the judgment subject to appeal, pays into court, not later than three business days after the end of each and every month commencing with April 2014 up to and including the month immediately before commencement of the hearing of the appeal, a sum of $15,000 (less such sum, if any, as has been paid in that month in part satisfaction of the judgment sum, whether under an order for payment by instalments or otherwise), order that the operation of Orders 2 and 4 made in the Equity Division on 20 December 2013 be stayed pending determination of the said appeal.
7. Order that the costs of the stay application determined by me be costs in the appeal.