Driver v Botanical Water Technologies Pty Ltd

[2025] NSWSC 566

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Driver v Botanical Water Technologies Pty Ltd [2025] NSWSC 566

Hearing dates:

30 May 2025

Date of orders:

30 May 2025

Decision date:

02 June 2025

Jurisdiction:

Equity - Commercial List

Before:

Williams J

Decision:

1. Order that the final orders made by Justice Ball on 20 December 2024 in these proceedings be stayed until 5pm on the first day of the hearing in the New South Wales Court of Appeal of Appeal proceeding 476362 of 2025 conditional upon:

A. the fifth defendant filing with this Court, a written undertaking to the Court and to the second and fourth plaintiffs that he will not deal with:

(i) the property located at 63 Albany Road, Toorak, Victoria; or 

(ii) any other property owned by the fifth defendant and for which the fifth defendant holds the beneficial interest other than in the ordinary course of business,

for the period of the stay; and

B. the fifth defendant granting to the second and fourth plaintiffs a charge in caveatable form over his property at 63 Albany Road, Toorak, Victoria securing the judgment debts arising from the orders made by this Court on 20 December 2024, subject to any contrary order of the Court of Appeal,

by 5pm on 3 June 2025.

2. Order that the stay in order 1 will take effect on and from 5pm on 3 June 2025 if the conditions set out in order 1 are complied with, and will not otherwise take effect.

3. Order that costs of the fifth defendant’s notice of motion filed 15 May 2025 are to follow the event of the appeal. 

Catchwords:

PRACTICE AND PROCEDURE – stay of enforcement of judgment and orders pending appeal – consideration of terms and conditions of stay – where the fifth defendant has been served with bankruptcy notices issued by the second and fourth plaintiffs in respect of judgment debts arising from orders made by this Court – where an interim extension of time for compliance with those notices has been granted by the Federal Court of Australia pending determination of the fifth defendant’s application for an extension of time, which has been adjourned pending the determination of the fifth defendant’s present application for a stay – where the grant of a stay would adversely affect the second and fourth plaintiffs’ ability to oppose any further extension of time for compliance with the bankruptcy notices – where fifth defendant has offered an undertaking not to deal with his property for the period of any stay – whether it should be a condition of any stay that the fifth defendant grant the second and fourth plaintiffs a charge over his real property where judgment debts may already exceed value of the fifth defendant’s property – where risk of prejudice to second and fourth plaintiffs arises from the prospect that the fifth defendant’s liabilities will increase during the period of the stay – where no evidence of prejudice to the fifth defendant of the imposition of such a condition is adduced – where fifth defendant has given evidence that he has no other current creditors.

Legislation Cited:

Bankruptcy Act 1966 (Cth), ss 40(1)(g), 41(3)(b)

Civil Procedure Act 2005 (NSW), pt 8

Uniform Civil Procedure Rules 2005 (NSW), pt 39

Cases Cited:

Driver v Botanical Water Technologies Pty Ltd [2024] NSWSC 1409

Driver v Botanical Water Technologies Pty Ltd (No 2) [2024] NSWSC 1641

Mushroom Composters Pty Ltd v IS & DE Robertson Pty Ltd [2014] NSWCA 231

Texts Cited:

N/A

Category:

Procedural rulings

Parties:

David Driver (First Plaintiff)
Ambrosios Kambouris (Second Plaintiff)
Kambouris Shares Pty Ltd (Third Plaintiff)
DJD Trading Pty Ltd (Fourth Plaintiff)
Botanical Water Technologies Pty Ltd (First Defendant)
Botanical Water Technologies Ltd (Second Defendant)
Botanical Water Technologies IP Ltd (Third Defendant)
MyCo Pty Ltd (Fourth Defendant)
Terry Paule (Fifth Defendant)
Aqua Botanical Beverages (Australia) Pty Ltd (In Liquidation) (Sixth Defendant)

Representation:

Counsel:
Mr D Birch (Plaintiffs)
Mr S Golledge SC with Mr M R Davis (Fifth Defendant)

Solicitors:
McCabes Lawyers (Plaintiffs)
Corrs Chambers Westgarth (Fifth Defendant)

File Number(s):

2021/181606

Publication restriction:

N/A

JUDGMENT

1. These are my reasons for making orders on the application of the fifth defendant on 30 May 2025, granting a stay of the execution of orders made against him on 20 December 2024 in favour of the second and fourth plaintiffs, until the conclusion of the first day of the hearing of the fifth defendant’s appeal from those orders, conditional upon: (1) the fifth defendant providing a written undertaking to the Court and to the second and fourth plaintiffs not to deal with: (a) his property at 63 Albany Road, Toorak, Victoria (the Toorak property); and (b) any other property beneficially owned by the fifth defendant (except in the ordinary course of business); and (2) the fifth defendant granting to the second and fourth plaintiffs a charge in caveatable form over the Toorak property securing the judgment debts arising from the orders made on 20 December 2024. Those conditions are required to be complied with by 5:00pm on 3 June 2025, failing which the stay will not take effect.

Background

2. The background to the stay application may be summarised as follows.

3. On 8 November 2024, Ball J delivered reasons for judgment in these proceedings in which his Honour held that the fifth defendant had breached fiduciary duties owed to the first, second and fourth plaintiffs by his conduct in connection with a corporate restructure. His Honour found that the second and fourth plaintiffs were entitled to recover equitable compensation from the fifth defendant in respect of those breaches of fiduciary duties. [1]

   1. Driver v Botanical Water Technologies Pty Ltd [2024] NSWSC 1409.

4. On 20 December 2024, Ball J made orders requiring the fifth defendant to pay US$8,516,012.34 to the second plaintiff and US$7,467,406.41 to the fourth plaintiff, and to pay 90 per cent of the plaintiffs’ costs of the proceedings on the ordinary basis. [2]

   2. Driver v Botanical Water Technologies Pty Ltd (No 2) [2024] NSWSC 1641.

5. The fifth defendant promptly filed a notice of intention to appeal on 22 December 2024. The fifth defendant did not apply for a stay of execution of the orders made by Ball J.

6. On 6 March 2025, the fifth defendant was served with bankruptcy notices issued by each of the second and fourth plaintiffs.

7. On 19 March 2025, the fifth defendant filed a notice of appeal.

8. On 21 March 2025, the fifth defendant filed an application in the Federal Court of Australia to extend the time for compliance with the bankruptcy notices.

9. At a directions hearing in relation to those applications before a Registrar of the Federal Court on 1 April 2025, counsel for the fifth defendant confirmed that no application had been made for a stay of the orders made by this Court which had given rise to the judgment debts in respect of which the bankruptcy notices had been issued. Counsel for the fifth defendant (the applicant for an extension of time) informed the Registrar that he was “guarded about what I say in respect of that” and that there had been “some information” that had “come to light in the last few days” that “may mean that further consideration is given to that position”.

10. The application for an extension of time for compliance with the bankruptcy notice was heard by a Registrar of the Federal Court on 29 April 2025 and dismissed on 5 May 2025. Later that day, the fifth defendant filed an application to review the Registrar’s decision in respect of each bankruptcy notice. That application was heard before Stellios J on 19 May 2025, by which time the fifth defendant had filed a notice of motion in this Court on 15 May 2025 seeking a stay of the orders made on 20 December 2024 pending the determination of his appeal from those orders. His Honour adjourned that application pending the determination of the stay application in this Court. An interim extension of time for compliance with the bankruptcy notice has been operative at all times throughout the Federal Court proceedings, pending that court’s final determination of the application for an extension of time, including the determination of the review of the Registrar’s decision.

11. The appeal proceedings are listed for hearing in the New South Wales Court of Appeal commencing on 20 June 2025.

12. At the commencement of the hearing of the stay application before me on the afternoon of 30 May 2025, the fifth defendant amended the application to seek a stay only until 5:00pm on the date of the hearing of the appeal, conditional upon (1) the fifth defendant undertaking not to deal with the Toorak property, and not to deal with any other property beneficially owned by him except in the ordinary course of business, for the duration of the stay; and (2) paying into Court the sum of AU$150,000, being the amount of interest that would accrue during the period of the stay on the aggregate judgment debts arising from the orders made on 20 December 2024.

13. In support of the application for a stay, the fifth defendant relied on two affidavits of his solicitor, Mr Matthew Critchley, sworn on 15 May 2025 and 30 May 2025 together with documents exhibited and annexed to those affidavits.

14. The second and fourth plaintiffs informed the Court that they did not oppose a stay if it was conditional on the undertaking offered by the fifth defendant and subject to a further condition requiring the fifth defendant to grant a charge in favour of the second and fourth plaintiffs over the Toorak property to secure the judgment debts arising from the orders made on 20 December 2024. In support of that position, the second and fourth plaintiffs relied on an affidavit of their solicitor, Mr Andrew Lacey, sworn on 29 May 2025 together with the documents exhibited thereto.

15. The fifth defendant submitted that his undertaking not to deal with the Toorak property at all, and not to deal with any other property except in the ordinary course of business, was sufficient to preserve the status quo if the orders were stayed until 5:00pm on the day of the hearing of the appeal, and that the Court should not impose any additional condition for the grant of a charge over the Toorak property in favour of the second and fourth plaintiffs.

Consideration and determination

16. The applicable principles are well established. They were summarised by Gleeson JA in Mushroom Composters Pty Ltd v IS & DE Robertson Pty Ltd [2014] NSWCA 231 at [7]-[8]:

“[7]Prima facie the successful party is entitled to the benefit of a judgment, but a stay may be granted where an applicant demonstrates an appropriate case to warrant the exercise of discretion in its favour. The mere filing of the appeal is insufficient, of itself, to demonstrate such a case. Usually it is demonstrated by showing that there are arguable grounds of appeal and that there is a significant risk that if money is paid it will be unable to be recovered if the appeal succeeds or by demonstrating that unless a stay is granted the appeal will be rendered nugatory: TCN Channel 9 Pty Ltd v Antoniadis (No 2) (1999) 48 NSWLR 381 at 385 [15]. It is for the applicant to demonstrate a proper basis for a stay that will be fair as between the respective interests of the parties: see Alexander v Cambridge Credit Corporation Ltd at 694; Adeels Palace Pty Ltd v Moubarak [2009] NSWCA 130 at [2].

[8]A successful party is entitled to be protected, as far as practicable, from the risk that if the appeal fails assets which earlier were available to satisfy the judgment will no longer be available for that purpose. It is for this reason that an appellant may be required to provide appropriate security as the price of a stay which may make the judgment creditor a secured creditor. Nonetheless a requirement for security is only intended to protect the status quo, that is the existing value of the judgment, and not to improve the position of the judgment creditor by increasing that value: Kalifair at [28].”

17. As was submitted on behalf of the fifth defendant, his appeal proceedings have been commenced and prosecuted expeditiously. The successful plaintiffs do not contend for the purpose of this application that the appeal has not been brought in good faith, or that it is not arguable.

18. The basis of the application for a stay is the fifth defendant’s contention that there is a real risk that any payment that he may make to the second or fourth plaintiff in satisfaction of the judgment debts would be immediately dissipated and that those funds would not be recoverable by the fifth defendant if his appeal succeeds. In other words, there is a risk that the appeal will be rendered nugatory unless the Court grants a stay in respect of the final orders made by Ball J on 20 December 2024. For the purpose of this application, the second and fourth plaintiffs do not contest the existence of such a risk.

19. The evidence presently before the Court establishes that the fifth defendant owns the Toorak property unencumbered, and that it has a value of between AU$15,000,000 and AU$28,000,000. The parties do not ask me to make any finding about the value within that range for the purpose of determining the stay application. The fifth defendant’s only other assets are five motor vehicles, which he has estimated have a combined value of $1,165,000, and furniture and household effects with an estimated value of $750,000. The fifth defendant has given evidence to the effect that he has no current liabilities, other than his liability to the second and fourth plaintiffs under the orders made on 20 December 2024 which are the subject of his appeal. As the second and fourth plaintiffs submitted, the total amount of the fifth defendant’s liabilities under those orders, including interest accrued to date, will be approximately US$17,000,000 (or AU$26,000,000) by the time the appeal is heard. If the appeal fails, the fifth defendant’s liabilities to them will almost exceed the value of his assets if the value of the Toorak property is at the upper end of the range (AU$28,000,000) or will significantly exceed the value of those assets if the value of the Toorak property is at the lower end of the range (AU$15,000,000), even if the fifth defendant has incurred no further liabilities in the meantime.

20. The second and fourth plaintiffs do not challenge the fifth defendant’s evidence that he has no current liabilities other than his liability to them under the orders made on 20 December 2024. However, they have tendered evidence establishing that the fifth defendant has a contingent liability under a guarantee and indemnity in favour of the National Australia Bank in respect of moneys owing by TZP Pty Limited up to an amount of AU$1,760,000 (plus interest, costs and taxes that TZP Pty Limited is liable to pay). The fifth defendant’s solicitor deposed that the fifth defendant is a “well-known businessman and, amongst other things, is the Chairman and Co-Founder of Findex, Australia’s fifth largest accounting and financial advisory firm (by revenue)”. Bank statements of the fifth defendant that were tendered by the second and fourth plaintiffs suggest that the fifth defendant’s affairs are structured so that his income is paid to him by TZP Pty Limited. An ASIC extract for that company records that the fifth defendant is the sole director and shareholder of the company, although he does not hold those shares beneficially.

21. I reject the fifth defendant’s submission that any stay of the orders made on 20 December 2024 will not prejudice the second and fourth plaintiffs as the judgment creditors because their position is protected by the fifth defendant’s undertaking not to deal with the Toorak property and not to deal with other property except in the ordinary course of business. As the fifth defendant submitted, that undertaking will ensure that, if the appeal is dismissed, the pool of assets available for satisfaction of the judgment debts will not have diminished during the period of the stay. However, as the second and fourth plaintiffs submitted, the risk of prejudice to them arises from the prospect of the fifth defendant’s liabilities increasing during the period of the stay, in which case the second and fourth plaintiffs would be claiming against the Toorak property and other assets in competition with other creditors following the prospective dismissal of the appeal. If no stay is granted, the second and fourth plaintiffs would presently be in a strong position to oppose any further extension of time for the fifth defendant to comply with their bankruptcy notices, and then to commence recovering the judgment debts by filing creditors’ petitions if the fifth defendant fails to comply with those bankruptcy notices, with no other creditors claiming against the fifth defendant’s estate (assuming that a sequestration order is made). A stay will not only preclude the second and fourth plaintiffs from enforcing the judgment debts by any of the means provided for in Part 8 of the Civil Procedure Act 2005 (NSW) and Part 39 of the Uniform Civil Procedure Rules 2005 (NSW), but will also very likely result in the fifth defendant being granted an extension of time to comply with the bankruptcy notices because the stay, if granted prior to the issue of the notices, would have precluded them from issuing the notices at all. This will result in the act of bankruptcy constituted by any failure to comply with the bankruptcy notices occurring at a later time when, if the fifth defendant’s liabilities have increased, the second and fourth plaintiffs’ claims will be competing with the claims of other creditors for payment out of the same pool of assets if a sequestration order is made against the fifth defendant: Bankruptcy Act 1966 (Cth), ss 40(1)(g), 41(3)(b).

22. In my opinion, the prospect of the second and fourth plaintiffs – the judgment creditors – being so prejudiced by an increase in the fifth defendant’s liabilities is a real risk for the following reasons:

1. the fifth defendant has adduced no evidence of the financial position of TZP Pty Limited, and I therefore proceed on the basis that there is some risk that his contingent liability under the guarantee and indemnity given favour of National Australia Bank may give rise to an actual liability to pay an amount of up to AU$1,760,000 (plus interest and costs etc) if TZP Pty Limited fails to pay that amount and if National Australia Bank requires the fifth defendant to pay within seven days pursuant to clause 3 of the guarantee and indemnity during the period pending the hearing of the appeal;

2. the fifth defendant’s assets as disclosed to this Court do not include any cash reserves, [3] so any outlays that cannot be funded out of income, or any investments that the fifth defendant wishes to make during the period pending the hearing of the appeal, would be likely to result in a corresponding increase in his liabilities;

3. even modest liabilities incurred to third party creditors during the period pending the hearing of the appeal would reduce the asset pool available to satisfy the judgment debts owed to the second and fourth plaintiffs and those additional creditors in a manner that would be likely to be prejudicial to the second and fourth plaintiffs in the event that the appeal fails; [4] and

4. the fifth defendant has not offered any undertaking not to increase his liabilities during the period pending the hearing of the appeal in respect of which he seeks to stay the execution of the orders made on 20 December 2024.

   3. See [19] above.

   4. Ibid.

23. In those circumstances, the practicable means of protecting the fifth defendant from the risk of his appeal being rendered nugatory if he is required to pay the judgment sums before the appeal is heard and, at the same time, protecting the second and fourth plaintiffs from the risk of prejudice referred to above, is to grant the stay conditional not only on the fifth defendant’s undertaking not to deal with the Toorak property but also on the fifth defendant granting a charge over that property in caveatable form to secure the judgment debts owing to the second and fourth plaintiffs. It is true that this will change their status from unsecured creditors to secured creditors, but that is entirely consistent with the established principles as explained in Mushroom Composters,[5] and I reject the fifth defendant’s submission to the contrary. That change in the status of the second and fourth plaintiffs will not prejudice any other unsecured creditor because, on the fifth defendant’s own evidence, he presently has no other current creditors, secured or unsecured. The fifth defendant opposes the stay being conditional upon the grant of a charge over the Toorak property, but he adduced no evidence of any prejudice to him that would flow from the granting of a charge.

    5. See [16] above.

23. For all of those reasons, I made orders to the effect referred to at [1] above at the conclusion of the hearing on 30 May 2025.

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Endnotes

Amendments

03 June 2025 - typographical errors in paragraphs 14, 20 and 21.

Decision last updated: 03 June 2025