FEDERAL COURT OF AUSTRALIA
Australian Executor Trustees Ltd v Provident Capital Ltd (No 2)
[2012] FCA 754
Citation: Australian Executor Trustees Ltd v Provident Capital Ltd (No 2) [2012] FCA 754 Parties: AUSTRALIAN EXECUTOR TRUSTEES LIMITED v PROVIDENT CAPITAL LIMITED File number: NSD 808 of 2012 Judge: RARES J Date of judgment: 3 July 2012 Catchwords: PRACTICE AND PROCEDURE – stay – principles applying to grant of a stay Legislation: Corporations Act 2001 (Cth) ss 283HB(1), 283HB(1)(c), 283HB(1)(d), 283HB(2)(c) Cases cited: Alexander v Cambridge Credit Corp Ltd (1985) 2 NSWLR 685 applied
Australian Trustee Executors Ltd v Provident Capital Ltd [2012] FCA 728 referred to
Australian Workers’ Union v Pilkington (Aust) Ltd (2000) 101 FCR 35 appliedCommonwealth v McCormack (1984) 155 CLR 273 applied
Paringa Mining & Exploration Co plc v North Flinders Mines Ltd (1988) 165 CLR 452 applied
Perpetual Trustees WA Ltd v Elderslie Finance Corporation Ltd [2008] FCA 1068 applied
Philip Morris (Aust) Ltd v Nixon [1999] FCA 1281 appliedDate of hearing: 3 July 2012 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 21 Counsel for the Plaintiff: Mr A W Street SC with Mr J Hynes Solicitor for the Plaintiff: Henry Davis York Counsel for the Defendant: Mr P Brereton with Ms B Nolan Solicitor for the Defendant: Baker & McKenzie
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 808 of 2012
BETWEEN: AUSTRALIAN EXECUTOR TRUSTEES LIMITED
PlaintiffAND: PROVIDENT CAPITAL LIMITED
Defendant
JUDGE:
RARES J
DATE OF ORDER:
3 JULY 2012
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.Leave be granted to the defendant to vary undertaking 3 c given by it by its counsel to the Court on 29 June 2012 so as to allow it to make arrangements for payment of its reasonable legal costs and disbursements to bring an interlocutory application on 3 July 2012 to seek an extension of the stay pending the hearing of an appeal from orders 1 and 2 made on 29 June 2012.
2.Upon the defendant, by its senior counsel, undertaking to the Court to pay all appropriate filing and hearing fees, leave be granted to the defendant to file in Court the notice of acting: change of lawyer, the interlocutory application initialled by Rares J and dated 3 July 2012 and the affidavit in support, such interlocutory application to be returnable instanter.
3.The interlocutory application be dismissed.
4.Pursuant to s 283HB(1)(c) of the Corporations Act 2001 (Cth), any security held by the plaintiff for the debentures issued by the defendant pursuant to the trust deed dated 11 December 1998 as amended, be enforceable immediately.
5.The defendant pay the plaintiff’s costs of the interlocutory application filed on 3 July 2012.
6.The order made earlier on 3 July 2012 extending order 3 made on 29 June 2012 until midnight on 3 July 2012 be vacated.
Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH…
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- AGLC
- Australian Executor Trustees Ltd v Provident Capital Ltd (No 2) [2012] FCA 754
- Case
- [2012] FCA 754
- Decision Date
CaseChat Overview and Summary
The central legal issue before the court was whether the grant of a stay would prevent an appeal from being rendered nugatory. The court had to consider whether Provident, or its shareholders, would be unable to finance an appeal if the stay was not granted, and whether the enforcement of the security would irreparably harm Provident to the extent that an appeal would be futile.
In delivering the judgment, the court found that Provident’s evidence did not demonstrate that it or its shareholders would be unable to finance an appeal if the stay was not granted. The court was not persuaded that the failure to continue the stay would render an appeal nugatory, as it believed that an appeal could be conducted with appropriate expedition if Provident’s shareholders were willing to finance it. The court also noted that it could undo any harm caused if the orders appointing a receiver had been wrongly made. Consequently, the court refused the application for a stay and ordered that the security for the debentures be enforceable immediately.
The court’s decision hinged on the assessment of Provident’s financial position and the strength of its proposed grounds of appeal. The court did not find Provident’s grounds of appeal to be sufficiently arguable to warrant a stay, as they did not address key evidence and reports that supported the court’s earlier findings. The court concluded that Provident had not shown that an appeal would be rendered nugatory without the stay, and therefore, the application was refused. The court also made several ancillary orders, including allowing Provident to vary its undertakings, dismissing its interlocutory application, and ordering it to pay the plaintiff’s costs.
Orders
Orders of the court
1. Leave be granted to the defendant to vary undertaking 3 c given by it by its counsel to the Court on 29 June 2012 so as to allow it to make arrangements for payment of its reasonable legal costs and disbursements to bring an interlocutory application on 3 July 2012 to seek an extension of the stay pending the hearing of an appeal from orders 1 and 2 made on 29 June 2012.
2. Upon the defendant, by its senior counsel, undertaking to the Court to pay all appropriate filing and hearing fees, leave be granted to the defendant to file in Court the notice of acting: change of lawyer, the interlocutory application initialled by Rares J and dated 3 July 2012 and the affidavit in support, such interlocutory application to be returnable instanter.
3. The interlocutory application be dismissed.
4. Pursuant to s 283HB(1)(c) of the Corporations Act 2001 (Cth), any security held by the plaintiff for the debentures issued by the defendant pursuant to the trust deed dated 11 December 1998 as amended, be enforceable immediately.
5. The defendant pay the plaintiff’s costs of the interlocutory application filed on 3 July 2012.
6. The order made earlier on 3 July 2012 extending order 3 made on 29 June 2012 until midnight on 3 July 2012 be vacated.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Ratio Decidendi
Legal Principle Established
I had not understood Provident to have done so conditionally during the course of the three day hearing last week. I had put to senior counsel during the course of argument last week that Provident’s application, made in draft short minutes of order and its written submissions filed immediately prior to the hearing, seeking a moratorium amounted to an admission by it that there was a need for the Court to intervene at that point under s 283HB(1)(b). Senior counsel then appearing for Provident accepted that this was its position. In my opinion, that was a proper concession and reflected the reality of Provident’s financial position.CONSIDERATION OF THE STAY APPLICATION The undertakings given by Provident, that it continues to proffer, would only allow Provident’s money to be used in the prosecution of the appeal but would otherwise leave the company unable to transact any business or incur any other liabilities. I said in my earlier reasons it was a difficult task to weigh the competing factors so as to arrive at the orders that I made. In my opinion, if I granted the application for a further stay by Provident the effect of that would be to leave the company in a paralysed position until such time, at least, as an appeal could be argued. Only after the argument and the views of the Full Court had crystallised, would a decision then be made as to who should take charge of Provident’s business. Provident has not given any evidence that an appeal would be rendered nugatory without the stay, if a Full Court later determined that the orders appointing a receiver had been wrongly made. There is no doubt that the Court could undo any harm caused and order, so far as was necessary, that the trustee give restitution if those orders had been wrongly made at the trustee’s behest: Commonwealth v McCormack (1984) 155 CLR 273 at 276-277 per Murphy, Wilson, Brennan, Deane and Dawson JJ. I have, of course, given as objective consideration as I am able bearing in mind the disadvantage I am at in evaluating the strength of Provident’s proposed, if not yet exhaustive grounds of appeal. I am not persuaded that they sufficiently raise any argument that has any substantial prospects of success. The first ground contended that, among other things, Mr O’Sullivan’s credit was not sufficiently put in issue to justify my finding that he deliberately omitted to put matters before the Court. Having regard to counsels’ and my own review of the transcript today, my recollection of his evidence and the attack made on him in cross-examination, I am not satisfied that that ground is sufficiently arguable. The second ground contended that I mistook Provident’s financial position. The ground singularly omitted to deal with PPB’s supplementary report of 8 June 2012. There PPB opined that, based on the three recent valuations to which I referred in my earlier reasons, Provident would be required to raise provisions and/or expense impairment charges in a substantial sum against the FTI portfolio for the financial year ended last Saturday, 30 June 2012. I did not come to the same ultimate valuation of those provisions or expense impairment charges as PPB. However, I made findings that some significant provisions were likely to be required. Importantly, I found that it was likely that Provident would not be able to meet its debts as and when they fell due. The application made at the trial by Provident for the moratorium reinforced that finding: Provident [2012] FCA 728 at [52]-[57], [68], [83]-[84].