ACN 057 690 034 Pty Limited v Wykrota (No 2)

[2020] NSWSC 1780

Supreme Court

New South Wales

Medium Neutral Citation:

ACN 057 690 034 Pty Limited v Wykrota (No 2) [2020] NSWSC 1780

Hearing dates:

20 November 2020

Date of orders:

20 November 2020

Decision date:

20 November 2020

Jurisdiction:

Equity

Before:

Rees J

Decision:

Pay monies out of court; orders stayed for 21 days to permit defendant to pay additional monies into court to secure adverse costs orders; on payment, stay granted until determination of appeal.

Catchwords:

STAY – principles at [9]-[12] – judgment and costs orders in plaintiff’s favour – plaintiff has substantial assets and income – $270,000 paid into court in respect of judgment – application to set aside judgment failed – appeal – costs estimated to be $133,000 – stay granted on further $100,000 being paid into court, else payment out to plaintiff.

Legislation Cited:

Uniform Civil Procedure Rules 2005 (NSW), rr 41.3, 51.54

Civil Procedure Act 2005 (NSW), s 67

Cases Cited:

ACN 057 690 034 Pty Limited v Wykrota [2020] NSWSC 1430

ACN 057 690 034 Pty Ltd v Mick Wykrota [2019] NSWSC 197

Alexander v Cambridge Credit Corp Ltd (1985) 10 ACLR 42; (1985) 2 NSWLR 685

D v P [2020] NSWCA 255

Hickie v Land and Enviro Corp Pty Ltd [2014] NSWSC 472

Secretary, Department of Family and Community Services v Smith (2017) 95 NSWLR 597; [2017] NSWCA 206

Tringali v Stewardson Stubbs & Collett Pty Ltd [1966] 1 NSWR 354

UGL Rail Pty Ltd v Wilkinson Murray Pty Ltd (No 2) [2015] NSWSC 23

Woolworths Ltd v Strong (No 2) [2011] NSWCA 72; (2011) 80 NSWLR 445

Texts Cited:

Taylor P, E Elms E, Justice G Bellew and M Meek, Ritchie's Uniform Civil Procedure NSW (Looseleaf, LexisNexis)

Category:

Principal judgment

Parties:

ACN 057 690 034 Pty Limited (Plaintiff)
Mick Wykrota (First Defendant)
Arrowfab Pty Limited (Second Defendant)
Arrowcon Construction Pty Limited (Third Defendant)

Representation:

Counsel:
Mr EC Muston SC / Mr S Jayasuriya (Plaintiff)
Mr JM Ireland, solicitor (First Defendant)

Solicitors:
Swaab Attorneys (Plaintiff)
Hall & Wilcox (First Defendant)

File Number(s):

2017/337742

EX TEMPORE JUDGMENT

1. HER HONOUR: This is an application by the first defendant, Mick Wykrota, for a stay of enforcement of the judgment and orders of Emmett AJA made in February 2019 in ACN 057 690 034 Pty Ltd v Mick Wykrota [2019] NSWSC 197 and my judgment and orders made more recently in October 2020: ACN 057 690 034 Pty Limited v Wykrota [2020] NSWSC 1430.

2. The first defendant relies on the affidavit of his solicitor, Mark Petrucco, who deposes that an application for leave to appeal has been filed, together with a summary of argument. Mr Petrucco also points to the fact that a bankruptcy notice was served on his client by the plaintiff in July 2011. The first defendant has also offered to pay some $5,000 into Court to allow for interest which will continue to accrue on Emmett AJA’s judgment and orders between now and the end of March 2021, when the application for leave to appeal is expected to be listed for hearing.

3. In opposition to the stay and in support of orders seeking payment of the monies already in Court out to the plaintiff, the plaintiff relies on three affidavits of its solicitor, Sean Greenwood, who points to the costs which have been incurred in this litigation to date, including costs of the proceedings before Emmett AJA of some $52,000; costs of seeking to enforce his Honour's orders of some $52,000; and costs of the motion which I heard being some $85,000. The plaintiff's total costs are some $190,000, including GST. Mr Greenwood says, and I agree, that in determining costs on the party/party basis, 70% is a reasonable figure. By my calculations, 70% of $190,000 is $133,000.

4. Mr Greenwood also deposed that the plaintiff is the owner of industrial real estate worth some $8.5 million, which is unencumbered. The property has a number of commercial tenants and enjoys rental income of some $400,000 a year.

Submissions

5. The first defendant submits that the appeal is bona fide and arguable and the monies should stay in Court with the additional $5,000 for further interest. The first defendant also proffered, if I thought it necessary, to pay an additional $15,000 into Court to reflect costs thrown away by reason of the uncontested hearing before Emmett AJA.

6. The plaintiff submitted that there is no proper basis to stay the judgment of Emmett AJA or myself. It is for the first defendant to demonstrate a proper basis for a stay. He has not done so. None of the principles governing stays set out in Alexander v Cambridge Credit Corp Ltd (1985) 10 ACLR 42; (1985) 2 NSWLR 685 were engaged. There is no evidence that if a stay is not granted and the first defendant’s appeal is successful, the appeal will be abortive: Alexander v Cambridge Credit at 695. The judgment only relates to the payment of money. When a judgment that has been paid in whole or part is reversed on appeal, the appellant is entitled as of right to restitution of the sum paid, with interest: Woolworths Ltd v Strong (No 2) [2011] NSWCA 72; (2011) 80 NSWLR 445 at [25]. The Court of Appeal may make such orders for reinstatement or restitution as it thinks fit: rule 51.54 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR). There is no evidence that the plaintiff could not return the judgment sum if the first defendant’s appeal were successful, and, indeed the evidence is to the contrary. The Court would be comfortably satisfied that the plaintiff’s assets vastly exceed $270,000, being the maximum amount which the plaintiff would be required to repay if the first defendant’s appeal was successful.

7. The plaintiff further submitted that Emmett AJA’s judgment has been extant since 28 February 2019. Until the first defendant filed the Notice of Motion on 4 August 2020, no attempt had been made by the first defendant to stay that judgment, which the plaintiff had diligently tried to enforce. The first defendant only sought to stay the judgment pending the hearing of the motion, which I dismissed. It was submitted that there was no reason why a stay should now be granted.

8. The plaintiff kindly submitted that first defendant’s prospects of success in appealing my judgment were very low. Leave to appeal was unlikely to be granted as my judgment did not involve an issue of principle, a question of general public importance or a reasonably clear injustice: Secretary, Department of Family and Community Services v Smith (2017) 95 NSWLR 597; [2017] NSWCA 206 at [28]. If leave were granted, the plaintiff submitted that the prospects of succeeding on appeal were very low.

Consideration

9. The Supreme Court has inherent power to stay execution of a judgment or order “in any situation where the requirement of justice demands it”: Tringali v Stewardson Stubbs & Collett Pty Ltd [1966] 1 NSWR 354 at 360. Section 67 of the Civil Procedure Act 2005 (NSW) also confers a general power on the Court, subject to the Uniform Civil Procedure Rules 2005 (NSW), to stay proceedings.

10. The onus is upon an applicant to demonstrate a proper basis for a stay that will be fair to all parties. The principles were stated in Alexander v Cambridge Credit Corp Ltd at 694-695:

The mere filing of an appeal will not, of itself, provide a reason or demonstrate an appropriate case, nor will it discharge the onus which the applicant bears: see Supreme Court Rules, Pt 51, r 10; Waller v Todorovic (Court of Appeal, 21 December 1979, unreported).

…

Even where no order is made for the payment of part of a verdict, it is not at all unusual for the Court, in the exercise of its discretion, to grant a stay on terms that the appellant give to the judgment creditor security in terms defined by the Court as appropriate to the fair adjustment of the rights of the parties.

11. The filing of an originating appellate process does not operate as a stay of the judgment: r 51.44 of the UCPR. The applicant must identify the circumstances that warrant a departure from the general rule that the judgment below should be presumed to be correct and is appropriate to be enforced: Hickie v Land and Enviro Corp Pty Ltd [2014] NSWSC 472 at [17]; Taylor P, E Elms E, Justice G Bellew and M Meek, Ritchie's Uniform Civil Procedure NSW (Looseleaf, LexisNexis) at at [UCPR 51.44.15] and the cases cited therein. A party is entitled to the fruits of its victory unless the unsuccessful party can demonstrate that sufficient reasons exist for the granting of a stay: UGL Rail Pty Ltd v Wilkinson Murray Pty Ltd (No 2) [2015] NSWSC 23 at [10].

12. The Court has discretion as to the terms on which a stay is granted. 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 v Cambridge Credit at 694. The Court may make a preliminary assessment of the merits of the appeal: D v P [2020] NSWCA 255 at [7].

13. As matters presently stand, each of these judgments and orders of Emmett AJA and myself are presumed to be correct. As such, the plaintiff is presently entitled to the $270,000, paid into Court by the first defendant on 14 September 2020. The damages awarded by Emmett AJA, with interest, now eclipse the amount in Court by some $3,000. Further interest will continue to accrue whilst the application for leave and, if leave be granted, the appeal is being determined. Further, the plaintiff is presently entitled to its costs, estimated to be $133,000 on a party and party basis.

14. It is correct to say that the first defendant has done little to discharge the onus on him, beyond pointing to the fact that an appeal has been commenced. There has been nothing further advanced as to why a stay should be granted. The plaintiff has substantial assets, both real property and rental income, and could readily repay $270,000 if called upon to do so. Therefore, it cannot be said that, if the monies presently in Court are paid to the plaintiff, then the plaintiff will not be able to repay those monies if the first defendant’s appeal meets with success.

15. There are three options. The first option is to permit the first defendant to “top up” the amount in Court by $5,000 or perhaps an additional $15,000. This does not seem to me to pay adequate regard to the presumption that the existing judgments and orders are correct. The conditions of the stay proffered by the first defendant are adequate.

16. The second option is that the monies presently in Court be paid out to the plaintiff directly; the plaintiff is presently entitled to those funds.

17. The third option is to give the first defendant an opportunity to keep the monies in Court by paying in a further sum to reflect the rights of the parties as determined, including costs orders in the plaintiff’s favour. If I was minded to go down this path, then the plaintiff's solicitor suggested that a further $100,000 should be paid into Court. That seems to be a modest proposal as it does not take into account the enforcement costs incurred by the plaintiff of some $50,000. It seems likely that the plaintiff would be entitled to have the enforcement costs as costs thrown away, even if the first defendant succeeds on appeal.

18. I am minded to give the first defendant 21 days to pay a further $100,000 into Court; I say 21 days because we are approaching the end of court term and, if the first defendant is unable to pay these monies, then I want to leave sufficient time for the officers of this Court to attend to the necessary paperwork to ensure that the money which is presently in Court is paid out before the end of court term. That is the condition of the stays sought by the first defendant, having regard to the matters advanced by each parties and their competing rights.

19. For these reasons, I make the following orders and directions:

1. Pursuant to rule 41.3 of the Uniform Civil Procedure Rules 2005, order that the monies paid into Court by the first defendant on 14 September 2020 in the amount of $270,000 be paid to the plaintiff.

2. Stay Order 1 until 4.00 pm on 11 December 2020.

3. Direct the first defendant to pay into Court the sum of $100,000 on account of the plaintiff’s costs in these proceedings by 4.00 pm on 11 December 2020.

4. In the event that the first defendant complies with Order 3:

1. further stay Order 1 until determination of the first defendant’s application for leave to appeal and, if leave is granted, determination of the appeal; and

2. make no order in respect of the costs of the first defendant’s motion filed on 16 November 2020 or the plaintiff’s application for an order that the monies in court be paid out.

5. In the event that the first defendant does not comply with Order 3:

1. vacate Order 4(b); and

2. order that the first defendant pay the plaintiff’s costs of the first defendant’s motion filed 16 November 2020 and the plaintiff’s application for an order that the monies in court be paid out.

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Decision last updated: 09 December 2020