Digi-Tech (Aust) Ltd & Ors v Kalifair Pty Ltd & Ors

[2003] HCATrans 587

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S506 of 2002

B e t w e e n -

DIGI‑TECH (AUSTRALIA) LIMITED

First Applicant

DIGI‑TECH EQUITIES LIMITED

Second Applicant

DIGI‑TECH COMMUNICATIONS LIMITED

Third Applicant

JOHN ANTHONY REID

Fourth Applicant

and

KALIFAIR PTY LIMITED

First Respondent

KALINICK PTY LIMITED

Second Respondent

DIVOME PROPERTIES PTY LIMITED

Third Respondent

TOLTEX HUMAN RESOURCES PTY LIMITED

Fourth Respondent

Office of the Registry
  Sydney  No S507 of 2002

B e t w e e n -

DIGI‑TECH (AUSTRALIA) LIMITED

First Applicant

DIGI‑TECH EQUITIES LIMITED

Second Applicant

DIGI‑TECH COMMUNICATIONS LIMITED

Third Applicant

JOHN ANTHONY REID

Fourth Applicant

and

McLEAN TECNIC PTY LIMITED

First Respondent

A.I. McLEAN PTY LIMITED

Second Respondent

Applications for expedition

McHUGH J

(In Chambers)

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON TUESDAY, 18 FEBRUARY 2003, AT 9.30 AM

Copyright in the High Court of Australia

MR M. CHRISTIE:   May it please your Honour, I appear for the applicants in both matters.  (instructed by Blake Dawson Waldron)

MR A.J. SULLIVAN, QC:   In each matter, your Honour, may it please you, I appear with my learned but absent friend, MR H.W.D. STOWE, for the respondents.  (instructed by Atanaskovic Hartnell)

HIS HONOUR:   Yes.  I might call the matter of Dovuro first as well.

AT 9.31 AM THE MATTER WAS ADJOURNED
UNTIL LATER THE SAME DAY

UPON RESUMING AT 9.35 AM:

HIS HONOUR:   Yes, Mr Christie.

MR CHRISTIE:   Thank you, your Honour.  There should be before your Honour a summons filed on 24 December 2002 in each matter.

HIS HONOUR:   Yes, I have read those.

MR CHRISTIE:   As well as affidavits by Jemaya Leanne Mackie.

HIS HONOUR:   Yes, I have read those.

MR CHRISTIE:   Your Honour also ought have an outline of submissions in relation to each summons.

HIS HONOUR:   Yes, I have read those as well.

MR CHRISTIE:   Those submissions are virtually identical your Honour would have noted.  Your Honour should also have a copy of an application for special leave filed on 24 December ‑ ‑ ‑

HIS HONOUR:   Yes, I have read that.

MR CHRISTIE:   ‑ ‑ ‑ together with an outline of argument in support of that application.

HIS HONOUR:   Yes, I have read that.

MR CHRISTIE:   Your Honour, the applicants in each matter seek orders that the special leave application be expedited and, secondly, that the application for special leave and the proposed appeal be heard together.  In essence, the applicants submit that unless such a course is adopted and the matter is dealt with expeditiously, any relevant rights relating to the special leave application or arising from them will be rendered nugatory.

Your Honour will note that the respondent judgment debtors owe the first applicant, Digi‑Tech Australia, judgment sums totalling in excess of $42 million.  In a practical sense, if special leave were granted and if the appeal were upheld, the result would be that there would either be a stay in favour of the respondent judgment debtors subject to them providing substantial security or no stay.  So in those circumstances it is respectfully submitted that the case has a significant practical element to it insofar as the applicants are concerned.  Your Honour will also note that the special leave application raises discrete and narrow questions of law, albeit of fundamentally ‑ ‑ ‑

HIS HONOUR:   Well, you contend they raise questions of law.  I remain unconvinced that there is any question of law involved in the case.  I mean, there are hardly any principles applicable in applications for a stay.  The most that can be said is that an applicant for a stay must be able to point to some reason or reasons why the interests of justice require the Court to grant a stay of a judgment with the result that the judgment creditor is deprived of the immediate benefit of its or his or her judgment.  But that said, other matters that are taken into account are simply factors that weigh in the balance. 

I do not see anything in Advanced that could possibly be seen as stating any principles of law.  There were just a number of factors.  It was a very special case.  You had related companies.  Advanced was itself insolvent but it had got 6 million or so from its related companies.  It seemed to be able to operate.  Justice Lockhart had refused a stay, Master Macready had refused a stay and I refused a stay.  As it turned out, they found the money and they succeeded in their appeal.  So it was a very special case.

MR CHRISTIE:   With respect, your Honour, the applicants’ case, or should I say the respondent judgment debtors’ case, before Justice Meagher was placed on a very narrow footing, namely that the appeal, or proposed appeal, would be rendered nugatory unless a stay were granted.  Justice Meagher held that as a matter of law that was simply wrong.  His Honour applied the principle in Sali v SPC, the decision of Justice Brennan, and it is only because the Court of Appeal held that High Court decision to be in error that the matter ever went beyond Justice Meagher.  So, with respect, it is not simply a matter of quibbling over weighing discretionary matters.  The Court of Appeal, the Full Court, held that his Honour Justice Meagher made an error of law and that the High Court authority upon which he relied was wrongly decided.

HIS HONOUR:   Yes.  Well, Justice Meagher appears to have taken the view that Sali was definitive.  The Court of Appeal said it was not.  They looked at other factors.  In any event, the principles that apply at an intermediate court level are totally different from the principles that this Court applies.  There are no rights until special leave is granted.  At the intermediate appeal level a party has a right of appeal, a statutory right.  Until special leave is granted, there is no proceeding in this Court.  There is an application to commence proceedings in the Court.  That has been pointed out again and again.

MR CHRISTIE:   In my respectful submission, that was not material to Sali and nor was it obviously material to Advanced Building because that was a post‑special leave case.

HIS HONOUR:   Exactly.

MR CHRISTIE:   In my respectful submission that aspect of the case really was immaterial to the decision of Justice Meagher.

HIS HONOUR:   But, in any event, we are not here dealing with your special leave application.  You are dealing with an application for expedition ‑ ‑ ‑

MR CHRISTIE:   That is so, your Honour.

HIS HONOUR:   ‑ ‑ ‑ and in a civil case a very strong case is required to get expedition in this Court for a special leave application.  I gave the reasons for that in SDN’s Case, which we heard last May when we had a series of applications.  I mean, your client is protected to some extent at all events.  It has an order that assets are not to be disposed of except in the course of business.

MR CHRISTIE:   Three of the four respondents are $2 companies, your Honour.

HIS HONOUR:   Yes.

MR CHRISTIE:   The fourth has assets in excess of $1 million ‑ ‑ ‑

HIS HONOUR:   Yes, 1.8 million, is it not?

MR CHRISTIE:   ‑ ‑ ‑ in relation to debts of $24 million.  So, in a practical sense, if, as the applicants seek, any stay should be conditional on those standing behind those companies providing substantial security ‑ ‑ ‑

HIS HONOUR:   But where does that principle come in?  There is no such principle.  I mean, you will not get it out of Advanced.  Advanced was a very special case.  Advanced was a case where you have a front company which is being financed by other people in the group and the other companies in the group were obviously going to get the benefit of the appeal if it succeeded.  That was the view Justice Lockhart had taken and it was the view that I took and, in all the circumstances, we held that a stay should not be granted.  But that is quite different from saying that an insolvent company cannot get a stay unless the directors are prepared to put up the money.  I mean, they may be in a particular case.

MR CHRISTIE:   With respect, your Honour, I do not propose to take your Honour to the judgment of Justice Einstein, which exceeds 800 pages, but in truth the analogy your Honour just gave is very close to this case.  These are front companies, behind which, according to Justice Einstein, stand people of substantial means.  They are truly front companies, incorporated purely as investment vehicles for very major transactions, incurring debts of $42 million.

HIS HONOUR:   I know, but you have an order that protects the assets to some extent and there are two concessions, as I understand it.  One is that it is arguable that Justice Einstein erred – I thought I saw that somewhere – and the second one seems to be that you would not suffer any prejudice as a result of the stay.  Did I read that in the respondents’ special leave application?

MR CHRISTIE:   Yes, there is a concession that there is an arguable appeal point or appeal points.  That is conceded.  There is a prima facie case.  Yes, that is not in dispute, your Honour.

HIS HONOUR:   But even if you had a good arguable case, that is not sufficient to get you expedition.  I mean, there seems to be a complete misunderstanding about expedition of special leave applications in this Court.  An application for expedition of special leave in this Court is not comparable with an application for expedition of proceedings in other courts.  There are many reasons for that.  I mean, first of all, no special leave application should be lodged in this Court unless there is a reasonably arguable point involving a miscarriage of justice or public importance.  Therefore, we have to assume that all the pending applications in the Court are of that character.  You have to show something special why you should jump the queue.  Many of the cases pending in this Court concern the

liberty of the subject:  refugee cases and criminal cases.  You want to jump over them in a case concerned with money.

MR CHRISTIE:   Only because, your Honour, unless expedition is granted, it may mean that the special leave application is rendered nugatory before it is considered on its merits.

HIS HONOUR:   That may be but, after all, judgments of the courts below are to take effect until they are set aside by this Court and they are to be given effect to.  We can only hear a handful of cases each year and ordinarily cases end in the intermediate appellate courts.  But, anyway, I have put to you what my view is about the matter.  I have read your submissions.  I have read the affidavit.  Is there anything further you want to say?

MR CHRISTIE:   No, your Honour, nothing to add, other than to say that, in my respectful submission, if special leave were granted, it may be a case appropriate to be heard by a Bench of three rather than five.  I have in mind your Honour’s comments about the resources of the Court.  It is a case concerning practice and procedure, albeit one which, we say, raises ‑ ‑ ‑

HIS HONOUR:   That makes it all the more difficult to get special leave, as I pointed out in Collier v Sengos some years ago.

MR CHRISTIE:   I have nothing further to add.

HIS HONOUR:   No.

MR CHRISTIE:   Thank you, your Honour.

HIS HONOUR:   Thank you.  I do not want to hear you, Mr Sullivan.

MR SULLIVAN:   Thank you, your Honour.

HIS HONOUR:   In these matters, the applicants seek two orders:  first, that their applications for special leave be expedited and, second, that the applications for special leave and the proposed appeals be heard together.  The background to the proceedings is that the applicants, Digi‑Tech Australia Ltd and Others, obtained judgments against the respondents in the Supreme Court of New South Wales.  The judgments in their favour exceeded $42 million.

The respondents have instituted appeals in the Court of Appeal against those judgments.  They are not expected to be heard until some time in either June or July 2003.  The judgment of the trial judge, Justice Einstein, was extremely lengthy, consisting, I have been told, of over 800 pages.  As a result, the decision of the Court of Appeal would not be expected, in the ordinary course, to be handed down until late in 2003, or perhaps even some time early in 2004.

The respondents applied for a stay of the execution of the judgment.  The application came before Justice Meagher, who dismissed the application on 17 October 2002.  However, in early December 2002, the Court of Appeal set aside the orders made by Justice Meagher and granted the stay sought by the respondent. 

The Court of Appeal found that his Honour had erred in following the decision of Justice Brennan in Sali v SPC Limited (1993) 67 ALJR 515. The Court of Appeal held that that decision was out of line with decisions of other single Justices of the High Court, including a judgment of mine in Advanced Building Systems Pty Ltd v Ramset Fasteners (Australia) Pty Ltd (1997) 71 ALJR 814.

The Court of Appeal also held that his Honour's judgment was contrary to the principles formulated by the Court of Appeal in Alexander v Cambridge Credit Corporation Ltd (1985) 2 NSWLR 685. The Court of Appeal said that that judgment was binding on his Honour and that the principles in that case required that a stay be granted.

The applicants had sought to have the stay granted on the term that the respondents provide substantial security for the judgment against them.  However, the Court of Appeal refused to impose such a term.  But it did impose a term in respect of one company which has the effect of preventing it from using its funds other than in the ordinary course of its business.

Subsequently, the applicants filed special leave applications in this Court which argue that special leave questions arise as to whether Justice Meagher erred in following Sali v SPC Limited and whether the Court of Appeal, in granting the stay and in declining to make the stay conditional upon the respondents putting up substantial security for costs, correctly understood and applied the principles in Advanced Building Systems Pty Ltd v Ramset Fasteners (Australia) Pty Ltd.

The applicants now apply for expedition and for the hearing of the special leave application as if it was an appeal on the ground that, unless expedition is granted and the appeal determined before the Court of Appeal's judgment, the application for special leave and any subsequent appeal would be rendered nugatory.

Without wishing to prejudge the special leave application, I think it is fair to say that there are a number of difficulties in the way of it being granted.  First, it is an application against an interlocutory order and, as I pointed out in Collier v Sengos (1993) 67 ALJR 810, this Court has always been reluctant to grant special leave to appeal against interlocutory orders. Second, there are no principles concerning stays sought by "$2 companies" or insolvent companies, as the applicants contend in their submission. All that can be said is that an applicant for a stay must be able to point to some reason or reasons why the interests of justice requires an appellate court to stay the judgment with the result that the judgment creditor is prevented from having the immediate benefit of the judgment.

Arguably, both Advanced and Sali deal with particular factual situations.  What are said to be principles applicable generally in stay applications and applied in those cases were, in my view, at least arguably no more than factors that influenced the decision in those cases and made it appropriate to refuse the stays.

Even if I was more confident than I am that special leave was likely to be granted, the applicants face the formidable hurdle of persuading the Court that an application for the expedition of the special leave should be granted. As I pointed out during argument, an application for expedition of a special leave application in this Court is not comparable with an application for expedition of a proceeding in other courts. First, an application for special leave is an application for permission to commence proceedings in the Court. For that reason, there are no parties, in the proper sense of that word, to an application for special leave to appeal. Nor is there any "matter" within the meaning of section 73 of the Constitution until leave is granted. Second, there is no right to special leave. Third, no special leave application ought to be brought unless it involves some matter of public importance or a miscarriage of justice. There is no miscarriage of justice in the relevant sense merely because it is arguable that the decision below was wrongly decided. If arguable error constituted a miscarriage of justice for the purposes of the Judiciary Act, every arguably wrong decision would be a candidate for special leave to appeal.

In hearing an application for expedition of a special leave application, the Court must proceed on the basis that other pending applications are either of public importance or involve a miscarriage of justice.  It is, of course, true that perhaps more than 85 per cent of applications for special leave to appeal, when examined, do not have those qualifications.  But in considering an application for expedition, the Court can only proceed on the basis that all pending applications for special leave in the Court are arguably of public importance or involve some miscarriage of justice.  Furthermore, many of the cases pending in the Court involve the liberty of the subject.  They concern persons serving gaol sentences or being detained in refugee detention centres. 

If an application for expedition is successful, it means that another application, including those applications concerned with the liberty of the subject, must lose its relative priority.  For that reason, strong grounds, particularly in a civil case, are needed before an application for expedition can succeed.  In addition, the need to maintain the temporal priority of applications is reinforced by the increasing number of special leave applications in this Court.  The number of special leave applications has increased some 787 per cent since 1984, yet the Court has the same number of Justices as it did in 1984.  As a result of the increasing number of applications, the time between filing and the hearing of applications continues to increase.  This makes it all the more important that an application for special leave not lose its temporal priority unless the application seeking expedition has some urgent aspect or need that is different in kind from that of other pending special leave applications.

In my view, the facts I have referred to concerning this case leave this application well short of showing any urgent aspect or need that is different in kind from that of other pending special leave applications in this Court.  All that the stay does is to maintain the status quo until the appeal is heard.  It will not cause any irremediable prejudice to the applicants.  Accordingly, for those reasons, these summonses should be dismissed and must be dismissed with costs.

Is there anything further counsel ‑ ‑ ‑

MR SULLIVAN:   No, thank you, your Honour.

MR CHRISTIE:   No, your Honour.

HIS HONOUR:   I certify for counsel.

AT 10.05 AM THE MATTERS WERE CONCLUDED