DAVIES v Delta Corporation Ltd

[2001] WADC 245

JURISDICTION     :   DISTRICT COURT OF WESTERN AUSTRALIA

IN CHAMBERS

LOCATION:   PERTH

CITATION:   DAVIES -v- DELTA CORPORATION LTD [2001] WADC 245

CORAM:   JENKINS DCJ

HEARD:   27 SEPTEMBER 2001

DELIVERED          :   Delivered Extemporaneously on 27 SEPTEMBER 2001 typed from tape and edited by Trial Judge

FILE NO/S:   CIV 759 of 1998

BETWEEN:   MARK ANTHONY DAVIES

Plaintiff

AND

DELTA CORPORATION LTD
Defendant

Catchwords:

Procedure - Appeal - Stay of execution pending appeal to Supreme Court

Legislation:

Supreme Court Rules, O 47, r 13 and O 63, r 15

Workers' Compensation and Rehabilitation Act 1981

Result:

Conditional stay granted pending the hearing of the appeal to the Supreme Court or further order

Representation:

Counsel:

Plaintiff:     Mr G Droppert

Defendant:     Mr D R Clyne

Solicitors:

Plaintiff:     James McManus & Associates

Defendant:     Civitella Smith

Case(s) referred to in judgment(s):

Federal Commissioner of Taxation v Myer Emporium Ltd No 1 (1986) 160 CLR 220

Franich v Swannell & Ors, unreported; SCt of WA; Library 940025; 28 January 1994

Case(s) also cited:

Alexander v Cambridge Credit Corportation Ltd (1985) 2 NSWLR 685

Cox v Simeon, unreported; SCt of WA; Library No 5063; 7 September 1983

Croney v Nand [1999] 2 Qd R 342

Hamersley Iron Pty Ltd v Lovell (No 2) (1998) 20 WAR 79

Scott Constructions v Mermaid Waters Tavern Pty Ltd No 1 [1983] 2 Qd R 243

1. JENKINS DCJ:  This is an application by the defendant for a stay of execution of a judgment of this court pending an appeal to the Full Court of the Supreme Court of Western Australia.  On 10 August 2001 the plaintiff was awarded the sum of $725,184.60 by way of damages for personal injuries received in an accident in the course of his employment on 29 July 1993.

2. The judgment sum includes some $227,000 of payments made by Allianz Australia Insurance Ltd, the defendant's indemnity insurer, in favour of the plaintiff in workers compensation payments pursuant to the Workers Compensation and Rehabilitation Act 1981 and special damages.  It includes $119,048 paid directly to the plaintiff in weekly payments of compensation.  This means that the plaintiff has an expectation of receiving $497,643.75 to satisfy the judgment.

3. On 31 August 2001 the defendant filed a notice of appeal to the Full Court of the Supreme Court.  The notice of appeal is against the trial Judge's findings on liability, quantum and the award of aggravated damages.  In substance, with respect to liability, the defendant's contention is that the plaintiff failed to prove that his injuries occurred as a consequence of an accident at work on 29 July 1993.

4. In so finding, it is alleged that the trial Judge failed to properly apply the legal principles related to causation, misapplied the burden and standard of proof and made findings of fact that were against the weight of evidence or were not open on the evidence.

5. In substance, in respect to quantum the defendant contends that if, as it alleges, the plaintiff failed to prove that his injuries occurred on 29 July 1993, no allowance ought to be made for past or future loss of earning capacity.

6. The applicant originally applied for a stay of the execution of the judgment under Supreme Court Rules O 63 r 15. As I have discussed with counsel, I have some difficulty in accepting that that is the power under which I should act. The parties agree that O 47 r 13 of the Supreme Court Rules is an appropriate power to act in this case. That O 47, r 13 provides:

   "The court may stay the execution of a judgment for such period and on such terms as the court thinks fit if it is satisfied that by reason of special circumstances it is inexpedient to enforce the judgment or order."

7. The second limb of that Rule is not relevant.  The defendant contends that there are special circumstances that make it inexpedient to enforce the judgment pending the appeal.  The special circumstances upon which the defendant relies are that the plaintiff is unemployed and is not the owner of any property.  The defendant says that therefore if the judgment amount was paid and the defendant was successful on appeal, the plaintiff would be unable to repay the defendant the substantial amount of any amount paid to him.

8. The legal principles applicable to an application for a stay either under Order 47 or Order 63 are similar to those applicable in the case of an application for a stay pending an application for special leave to appeal to the High Court. These principles are well established. The competing interests that the principles try to balance are the right of the successful party to the fruits of the litigation and, secondly, that an appeal, if successful, should not be rendered nugatory by the inability of the successful party to obtain repayment of the judgment; Federal Commissioner of Taxation v Myer Emporium Ltd No 1 (1986) 160 CLR 220 at 221‑223. In the same case the then Dawson J said:

   "Generally, specially circumstances will exist when, because of the respondent's financial state, there is no reasonable prospect of recovering moneys paid pursuant to the judgment at the first instance; see pages 222 to pages 223."

9. The question then for me is whether I am satisfied that in the hands of the plaintiff, pending the determination of the appeal, the amount of judgment or some substantial portion of it will be irretrievably lost; Franich v Swannell & Ors, unreported; SCt of WA; Library 940025; 28 January 1994.

10. The evidence before me consists of the affidavit of Steven Alan Fong, the defendant's insurer's litigation manager, sworn 11 September 2001, in support of the application, the affidavit of the plaintiff sworn 11 September 2001, the affidavit of Malcolm Keith Davies, the plaintiff's father, sworn 11 September 2001, and the affidavit of James Cornelius Ronald McManus, the plaintiff's solicitor, sworn 20 September 2001.  Today I was handed a second affidavit of Mr McManus sworn 27 September 2001.  Taking into account all of these affidavits, I am satisfied that if the judgment sum is paid unconditionally, it will be progressively expended on the plaintiff's and his dependants' living expenses and in providing purchase moneys for their new home.

11. I am further satisfied that the plaintiff in the foreseeable future is without means of earning any substantial income and neither does he have any property of any value, so that whatever money he does spend is likely to be irretrievably lost.  As the defendant says, money from the judgment expended on real property in the construction of a home is not safeguarded from such potential loss; for example, money may be given to another person for the expenditure on real property or, alternatively, the money may be lost due to a slump in the property or other contingencies.

12. Given the plaintiff's impecuniosity, there is genuine doubt as to the ability of the plaintiff to repay the judgment if the appeal was successful.  I find in this regard that this case can be distinguished from the case of Franich (supra)  in at least two ways:  first, in that case safeguards were offered so as to ensure that large parts of the judgment would be available in the event that the appeal was successful; second, the judgment was for a much smaller amount, so that the potential loss was much smaller and the ability of the plaintiff in that case to repay the money was greater.

13. I also note that that was a case where the plaintiff had already been successful on appeal to the Full Court of the Supreme Court and the defendant was yet to obtain leave to appeal to the High Court.  In such a case there is greater scope for more weight to be put on the plaintiff's right to the fruits of the litigation.

14. I do not find the offer of guarantee by the plaintiff's father to be of any comfort.  It is vague and not supported by any valuation of the property or evidence as to what the plaintiff's father's equity in the property is.  I am therefore satisfied that special circumstances prima facie exist for the grant of a stay.

15. However, as was said by Murray J in Franich's (supra) case, there are other matters that I must now take into account.  These are whether the defendant has an arguable case on appeal, the hardship caused to the plaintiff consequent upon a stay and the need to ensure that the judgment sum is preserved pending the appeal.

16. In respect to the defendant's case on appeal, I note the plaintiff's concession that the defendant has a weak arguable case on appeal.  The issues raised in the grounds of appeal are questions of mixed fact and law.  Although the defendant must first show error on behalf of the trial Judge, there appears to be evidence in respect of the issues raised by the defendant which, if accepted by the Full Court, may result in the appeal being allowed.  I therefore am of the view that the appeal is arguable and I go no further than that.

17. The plaintiff stresses the fact that a stay will exacerbate the financial hardship that he is under as a consequence of the accident, which of course the trial Judge found was caused by the negligence of the defendant and resulted in his current disabilities.  The plaintiff refers in particular to his reliance on social security and the goodwill of his family for financial support, and the fact that his partner is pregnant and is now also dependent on the plaintiff, as will of course their child be.  The plaintiff says that his financial difficulties should be viewed in the light of his prima facie rights to the fruits of the litigation.  This factor leads me to the view that I should make allowance for the plaintiff's living expenses whilst the appeal is pending.  Such an amount, in my view, because it will be relatively modest, would be an amount that should be able to be repaid should the defendant be successful on appeal.

18. I note that the evidence before the trial judge was that the plaintiff's current estimated earnings should he have continued in employment would be approximately $690 per week.  I am therefore satisfied that I should allow the plaintiff an amount of $25,000, which would be equivalent to some 9 or 10 months' wages, which is a reasonable time to allow for the prompt prosecution of this appeal.

19. The plaintiff also raises the issue as to whether the defendant will be able to satisfy the judgment if the plaintiff is successful on appeal, having regard to the recent collapse of one major Australian insurer and the potential liability of insurers due to the World Trade Centre bombing in New York earlier this month.  There is no evidence before me that the defendant is directly affected by these events.  Nonetheless, the court in exercising a discretion to protect the rights of one party should not overlook the possibility that it may adversely affect the rights of the other party.

20. With respect to my comment that there was no evidence before me that the defendant is directly affected by these events, I do have regard to the evidence in the affidavit of Mr McManus, which was handed up to me today, to the effect that the German parent company of the defendant's insurer would have its profit forecast downgraded as a result of those events.  Nonetheless, there seems to be an indirect relationship, if one at all, to the financial position of the defendant's insurer in Australia such that it is not possible for me to directly take that information into account.

21. Nonetheless, I do take into account the general position of the insurance industry having regard to, as I said, the recent collapse of one major Australian insurer and the potential liability of insurers due to the World Trade Centre bombing in New York.  This factor leads me to the view that I should ensure that the balance of the judgment sum is isolated so as to ensure that the defendant will be in a position to pay the balance of the judgment, together with interest, if the appeal is unsuccessful.

22. Taking all these matters into account, I am satisfied that special circumstances exist which warrant the grant of a stay pending the hearing of the appeal or further order of this court as to the amount of the judgment sum that the plaintiff now expects to receive.  However, this stay should be conditioned, as I have said, upon the payment to the plaintiff of the sum of $25,000 and also conditioned upon the defendant paying the balance of the judgment sum into an interest‑bearing account.

23. I will hear the parties with respect to the exact orders that I should make.  I am of the view that the $25,000, as I have indicated, should be paid by the defendant to the plaintiff within 7 days, and it may be appropriate, just to make it clear, that that sum of course will be taken into account as part of the judgment in any accounting between the parties at the conclusion of the appeal or the lifting of the stay.  The balance of the judgment sum should be paid within 7 days into an interest‑bearing account.  I would be happy to leave what bank that money should be paid into to the agreement of the parties, with liberty to apply if necessary.

24. The sum that should be paid into an interest‑bearing account should be the sum of $472,643.75.  That is the amount that the defendant has put forward in the affidavit of Mr Fong as being the amount due.  That is based on the figures provided by the defendant which weren't taken issue with in the plaintiff's affidavits or oral submissions.