Hoy v Hurst-Meyers (No 3)
[2023] ACTSC 6
•20 January 2023
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | Hoy v Hurst-Meyers (No 3) |
Citation: | [2023] ACTSC 6 |
Hearing Date: | 19 January 2023 |
DecisionDate: | 20 January 2023 |
Reasons Date: | 20 January 2023 |
Before: | Loukas-Karlsson J |
Decision: | See [59] |
Catchwords: | CIVIL HEARING – JURISDICTION, PRACTICE AND PROCEDURE – urgent application in proceeding – application to stay orders made by primary judge – stay application brought in circumstances where a bankruptcy application and winding-up application being heard in two federal courts – consideration of test to apply – whether appeal will be rendered nugatory if stay not granted – application granted – consideration of any conditions to attach to stay – parties to provide written submissions concerning the appropriate conditions |
Legislation Cited: | Corporations Act 2001 (Cth) s 459R |
Cases Cited: | Dreamtime Supply Company Pty Ltd v Steadfast ICT Security [2021] ACTCA 38 |
Parties: | Gavin Robert Hoy (Plaintiff) Ralph George Noel Nancy Hurst-Meyers (First Defendant) RHM Industries Pty Ltd (Second Defendant) |
Representation: | Counsel A Costin (Plaintiff) Self-represented (Defendants) |
| Solicitors Elringtons Lawyers (Plaintiff) Self-represented (Defendants) | |
File Number: | ACTSC 383 of 2019 |
LOUKAS-KARLSSON J:
Introduction
1․On 19 January 2023 I heard an urgent application filed earlier that day by Mr Hurst-Meyers and RHM Industries Pty Ltd (the applicants) in this proceeding. By that application the applicants sought a stay in relation to orders made by Elkaim J (the primary judge) on 30 March 2022 in this matter: Hoy v Hurst-Meyers (No 2) [2022] ACTSC 58. The orders relevantly included, inter alia, an order for “… judgment for the plaintiff against the defendants, jointly and severally, in the sum of $220,142.19”. I note that the applicants have filed a notice of appeal in relation to the orders of Elkaim J, with the appeal expected to be heard in April 2023.
2․Ultimately, I made orders in-chambers at 10.45am on 20 January 2023 granting the stay. These are my reasons for making those orders.
3․For convenience I shall refer to Mr Hurst-Meyers and RHM Industries Pty Ltd as the applicants throughout these reasons for judgment, and the plaintiff, Mr Hoy, as the respondent to the application.
4․The applicants were self-represented by Mr Hurst-Meyers at the hearing of the application. The applicants are similarly self-represented in their appeal. As I will come to, however, it appears that at least some legal assistance was obtained by the applicants in relation to this application.
5․The grounds of appeal in the applicants’ notice of appeal are not as clear as they may have been had they been prepared by a legal representative. However, as I previously observed in deciding a security for costs application in relation to the appeal, the central challenge in the appeal appears to be an allegation that the primary judge was biased: Hurst-Meyers v Hoy (No 2) [2022] ACTCA 38 at [16]. The applicants had sought to adduce new evidence on the appeal, but that application was dismissed by a judge of the Court sitting as the Court of Appeal: Hurst-Meyers v Hoy [2022] ACTCA 36.
6․The application was listed before me on an urgent duty basis as the underlying basis on which the application was brought was to seek to adjourn the hearing of a bankruptcy application in the Federal Circuit and Family Court of Australia in relation to the first applicant and the hearing of a winding-up application in the Federal Court of Australia in relation to the second applicant. For convenience I shall refer to these proceedings collectively as the ‘bankruptcy proceedings’ in this judgment. The time of the first return date for the hearing of the bankruptcy application in relation to the first applicant was, according to the parties’ submissions, 11.00am on 20 January 2023.
7․This created a not insignificant degree of urgency in hearing the application.
8․It became clear from the parties’ oral submissions that the ‘bankruptcy proceedings’ related solely to a claim in debt arising from the order made by the primary judge referred to above. I note that counsel for the respondent confirmed that the debt claim had not included a claim relating to the order for costs made by the primary judge. That is of no matter, in my view it is clear that if it is appropriate to stay the judgment order it would also be appropriate to stay the costs order.
9․It followed, in the parties’ submissions, that if the stay were granted it would have the broad effect of halting the application in the Federal Circuit and Family Court of Australia and impact in some way the application in the Federal Court of Australia. As to the latter, this is a matter that the respondent submits will cause particular prejudice. I will come to that submission later in these reasons. In determining the application, I will proceed on the basis that that understanding is correct.
10․The application was filed on 19 January 2023 and was heard that afternoon. Due to the urgent basis of the application, there was little in the way of evidence relied upon by either party to the application. That is, of course, not a critique of the respondent’s representatives who had little notice of the application, nor is it a critique of the applicants who are self-represented. This has, however, made some aspects of the applicants’ claims difficult to assess. I will note some particular matters below.
11․Before addressing the principles that I must apply and the parties’ submissions in relation to those matters there are two initial matters to deal with. First, the jurisdiction that I am exercising in hearing the application. Second, the approach taken at the hearing of the application.
12․The application was lodged by the applicants in the Court of Appeal file ACTCA 20 of 2022 (the appeal file that relates to the judgment of Elkaim J). Before I directed the Registry to accept the documents for filing, I indicated that the Registry should indicate that I would hear from the parties as to whether this should be treated as an application on the Court of Appeal file or on the original Supreme Court file.
13․During the hearing before me, counsel for the respondent indicated that the application should be dealt with on the basis that it is an application in the Supreme Court proceeding. The applicants (who are self-represented) indicated in an email to my Associate words to the effect that they had no view on whether the application should be heard by the Court of Appeal or the Supreme Court. While there was no authority that counsel for the respondent took me to in support of such a submission it is clear that a stay may be ordered by either the Supreme Court or the Court of Appeal: see r 5301 Court Procedures Rules 2006 (ACT); Dreamtime Supply Company Pty Ltd v Steadfast ICT Security [2021] ACTCA 38 (Dreamtime Supply).
14․Although the application was filed on the Court of Appeal file in my view it is more appropriate, in light of the submission from the represented party, the fact that the Court has the power to order a stay in either case and the fact that the matter came before me on a duty basis that the matter be dealt with on the basis it is an application in ACTSC 383 of 2019. As a result, I made procedural orders in-chambers regularising the file. I note that the approach I have taken also ensures that the parties’ appeal rights with respect to this judgment are retained.
15․The second matter to note is that during the hearing of the application it became apparent that neither party could assist the Court in advancing submissions directed to the test that the Court should apply in deciding whether a stay should be granted. This had the effect that some of the submissions advanced were directed to extraneous issues (such as the merits of the bankruptcy and winding-up proceedings). As I noted to the parties, this Court, self-evidently, has no jurisdiction in relation to those matters. Nothing in these reasons for judgment should be taken as a comment on the merits of the ‘bankruptcy proceedings’.
16․As I will discuss below the key question that I must determine is whether the applicants can demonstrate that there is a reason that the primary judge’s orders should be stayed. In making that assessment the Court will consider the balance of convenience and the rights of the parties (including the prima facie right of the respondent, as a judgment creditor, to seek to enforce a judgment of the Court). A significant matter relevant to the question is whether, if the stay is not granted, the appeal will be rendered nugatory.
17․It became apparent that this latter issue was central to the parties’ competing submissions. In particular, the applicants submitted that if the stay is not granted, the first applicant will be declared a bankrupt and the second applicant insolvent. The applicants submitted that if this occurred, they would no longer have control of the appeal, and the appeal may not be able to proceed. In contrast, counsel for the respondent submitted orally that even were such orders made (and again the merits of whether those orders will be made is not a matter before the Court) it would not have the effect of rendering the appeal nugatory as the trustee in bankruptcy and the liquidator would, in the exercise of their discretion, be able to decide whether to continue the appeal.
18․Following some discussion concerning the test that would apply, and in circumstances where the parties’ submissions may have been crystalised by consideration of the relevant test, I granted the parties leave to provide further written submissions to my chambers by 9.00am on 20 January 2023 on the issue and adjourned the Court. That time was later extended in chambers to 9.30am.
19․Both parties provided written submissions which I have had regard to.
Principles relevant to the question of a stay
20․I do not understand there to be any issue between the parties as to the relevant principles that apply to the question of whether a stay should be granted. Those principles were helpfully summarised by Elkaim ACJ in Dreamtime Supply at [8] where his Honour stated:
The principles to be applied in considering a stay are well-known and were summarised in Alexander v Cambridge Credit Corporation (1985) 2 NSWLR 685 and repeated in Kalifair v Digitech Australia Pty Ltd [2002] NSWCA 383; 55 NSWLR 737, at [17]:
In Alexander v Cambridge Credit Corporation Ltd (1985) 2 NSWLR 685 this Court (Kirby P, Hope, McHugh JJA) restated the principles to be applied in exercising this Court’s jurisdiction to grant a stay pending an appeal. The Court said (694, 695):“In our opinion it is not necessary for the grant of a stay that special or exceptional circumstances should be made out. It is sufficient that the applicant … demonstrates a reason or appropriate case to warrant the exercise of discretion in his favour …The Court has a discretion whether or not to grant the stay and, if so, as to the terms that would be fair. In the exercise of its discretion the Court will weigh considerations such as the balance of convenience and the competing rights of the parties … Two further principles may be mentioned. The first is that where there is a risk that the appeal will prove abortive if the appellant succeeds and a stay is not granted, courts will normally exercise their discretion in favour of granting a stay … where it is apparent that unless a stay is granted an appeal will be rendered nugatory this will be a substantial factor in favour of the grant of a stay”
(Emphasis added)
Submissions of the parties
21․The applicants submitted that if the stay were not granted they would not be able to continue their appeal. The applicants further submitted that, in the result, the ‘bankruptcy proceedings’ were, in effect, a collateral attack on their appeal rights and would be denying them procedural fairness. As to that final submission, in my view the issue in this case is not one that raises any procedural fairness concerns.
22․The applicants’ primary contention (that they would lose their appeal rights) appeared at times to be developed on two bases:
(a)First, that if the ‘bankruptcy proceedings’ were not halted, they would not have funds in order to retain a lawyer to act in the appeal; and
(b)Second, that on advice the applicants had received from a lawyer by the name of Mr Pierre Johannessen, if the ‘bankruptcy proceedings’ resulted in orders that the applicants are bankrupt and insolvent respectively, they would be prevented from being heard on their appeal.
23․This latter submission was expanded in the applicants’ written submissions to also refer to advice the applicants claimed to have received from a lawyer by the name of Mr Martin Woods. I note that there is nothing on the Court file to indicate that either Mr Pierre Johannessen or Mr Martin Woods are solicitors acting on behalf of the applicants in this matter or the appeal.
24․In their written submissions the applicants submitted that the effect of a bankruptcy or winding-up order would be that the appeal would be automatically stayed and that the decision to prosecute the appeal would lie with the trustee in bankruptcy and with the liquidator respectively. The applicants further submitted that it was unlikely that the trustee or liquidator would prosecute an appeal. This submission was based on various circumstances including a submission that costs orders had previously been made against liquidators in some other cases, that a liquidator or trustee would not pursue a case unless they have some level of indemnity and that they would not have sufficient time to make a decision. For reasons I will come to, in light of previous judgments on the issue, there is no need to speculate as to the factors the applicants submitted would make it unlikely the appeal would be prosecuted. It is clear from those cases that the fact that the judgment creditor would have at least some influence on a liquidator or trustee is, however, a significant matter.
25․The applicants also advanced some other arguments in oral submissions, including that if the stay were not granted the first applicant would be required to sell the family home to meet his debts and that a charity the first applicant is involved in would not be able to continue in its work.
26․No evidence on either of those matters was provided by the applicants in support of their application. Indeed, the applicants did not, as one would expect, provide the Court with any clear financial evidence on this application. Rather, the supporting affidavit simply repeated the orders sought by the application. I note that the applicants had previously submitted before me (when I was sitting as the Court of Appeal) that they would have access to funds to satisfy both the original judgment order and any costs order made following the hearing of the appeal in seeking to resist a security for costs application: Hurst-Meyers v Hoy (No 2). That submission, however, was not accepted by me.
27․Counsel for the respondent submitted that the applicants had been on notice of the ‘bankruptcy proceedings’ for some time (since around mid-2022) and had taken no steps to bring a stay application or to seek to defend the proceedings in the Federal Circuit and Family Court or the Federal Court. In that regard I note that on 30 September 2022, Mossop J expressly noted that the judgment appealed from had not been stayed in considering whether an adjournment in the appeal should be granted: Hurst-Meyers v Hoy (No 3) [2022] ACTCA 50 at [9]. It follows that the applicants were aware from at least that date of the possibility of seeking a stay of the orders of the primary judge.
28․In the result, counsel for the respondent submitted that the delay in bringing this application is a significant matter that weighs against granting the relief sought.
29․Counsel for the respondent further submitted that the application was being brought as a collateral attack on the jurisdiction of the Federal Circuit and Family Court and the Federal Court and that, if the stay were granted, it would have the effect of halting those proceedings (with one caveat which I will come to later). Counsel submitted that the applicants would instead be able to seek an adjournment of the hearing of the bankruptcy application and that it was preferable for that course to be taken to permit the federal courts to assess the competing interests of the parties. In written submissions, counsel for the respondent indicated that the respondent would be willing to undertake to the Court (if the stay order were not made) that it would consent to an adjournment of the hearing of the creditor’s petition in relation to the bankruptcy application concerning the first applicant. That undertaking would apply until the determination of the appeal proceedings or 1 May 2023 whichever was earlier. The respondent noted that the applicants’ application for a stay could then be heard at that time if judgment was still reserved in the appeal.
30․I will address this matter later in these reasons.
31․Counsel for the respondent also submitted at the hearing that the respondent was aware of other creditors, but that counsel was not aware of any claim that had been brought by those creditors.
32․In relation to the submission by the applicants that the respondent was seeking to impugn the ACT appeal proceedings by instigating the ‘bankruptcy proceedings’, counsel for the respondent submitted that the respondent had commenced the ‘bankruptcy proceedings’ prior to receiving notice of the appeal. The applicants in written submissions contested that submission and annexed to their written submissions a document that purported to indicate that the appeal had been filed and served prior to the respondent filing the ‘bankruptcy proceedings’. The leave relating to written submissions did not extend to leave to provide evidence to chambers, and I note there is no ability to practically test the annexure.
33․In any event, as I will come to it is of no moment for the purposes of this judgment whether the ‘bankruptcy proceedings’ were commenced prior to the respondent being notified of the appeal (as contended by counsel for the respondent in oral submissions) or not (as contended for by the applicants).
Consideration
34․There are several matters that are worth noting at the outset in considering whether to grant the application. First, as I found sitting as the Court of Appeal on a security for costs application, the applicants’ prospects of success in the appeal are poor: Hurst-Meyers v Hoy (No 2) at [40]. That is not, however, a finding that the applicants have no prospects of success. Indeed, by way of a recent example of a self-represented party succeeding on an appeal for judicial bias see Gindy v Capital Lawyers Pty Ltd [2022] ACTCA 66.
35․Second, the respondent as a judgment creditor is prima facie entitled to seek to enforce the orders of the primary judge: McLean Tecnic v Digi-Tech; Kalifair v Digi-Tech [2002] NSWCA 383; 55 NSWLR 737 (Digi-Tech) at [28].
36․In relation to the parties’ submissions, I accept that the applicants’ significant delay in seeking to raise this issue is a matter that is relevant to the balance of convenience. In particular, I accept that if I grant the application, it will have a not insignificant impact on the ‘bankruptcy proceedings’.
37․In that regard, following the undertaking offered by the respondent it is clear that the central prejudice claimed is not in relation to the bankruptcy application relating to the first applicant. It is apparent that that application can be adjourned until the hearing of the appeal with little prejudice to the respondent.
38․Rather, the central prejudice now advanced by the respondent is that the winding-up application must be determined by 23 February 2023 (6 months from the date it was presented) failing which the application will be dismissed. In that regard I note that the Federal Court may “if satisfied that special circumstances justify [an] extension” make an order extending the time within which the application must be determined: Corporations Act 2001 (Cth) s 459R. While, of course, this Court cannot comment on whether an extension would be granted, the fact that there is a discretion to seek an extension is a matter that reduces the prejudice to the respondent.
39․The real issue, in my view, however, is whether the appeal will be rendered nugatory if a stay is not granted. In my view it is not sufficient to deal with that issue by noting (as the respondent submitted orally) that the applicants may be successful in adjourning the application before the Federal Circuit and Family Court of Australia (even with the undertaking offered). Whether such an application would be granted (even by consent of the parties) is not a matter that this Court can assess. The Court cannot assume that such an adjournment would be granted, nor that an adjournment would be granted to a particular date (noting that the appeal in this matter will not be heard until at the earliest April 2023 and the Court may not deliver judgment until some date after that point).
40․If the bankruptcy and winding-up applications are determined against the applicants (a proposition that counsel for the respondent submitted was likely) the result will be that the applicants will no longer have control of their appeal. That position was discussed by the NSW Court of Appeal in Digi-Tech at [21]-[22] in the context of a winding-up application that had been foreshadowed by the judgment creditor:
In the present cases if stays are refused the judgment creditor would be free to serve statutory demands and proceed to winding-up. The prosecution of the appeals would then be stayed automatically and the stays would continue unless and until the liquidator elected to prosecute the appeals. The directors would lose control of the litigation and the creditors, including the judgment creditor, would have a say in any decision to proceed.
The directors would thus suffer delay and difficulty and incur additional expense in securing a decision from the liquidator to proceed with the appeals.
(Emphasis added)
41․In my view it is clear that a similar outcome will occur in relation to the personal bankruptcy application. Namely, that the appeal would be stayed unless and until the trustee in bankruptcy elected to prosecute the appeals.
42․Counsel for the respondent submitted in writing that (assuming an adjournment in the personal bankruptcy matter were granted following acceptance of the proffered undertaking) that even if the second applicant was declared insolvent it would not affect the prosecution of the appeal. This was said to be the case as the first applicant could continue to prosecute the appeal in his own name.
43․In my view, in circumstances where the order made by the primary judge was one of joint and several liability, it is not desirable to divide the proceeding in that way. Such an approach may lead to undesirable outcomes given the close financial relationship between the applicants. Indeed, it seems that to adjourn the bankruptcy application in relation to the first applicant (ie in practice a de facto staying of the order against one of the applicants) would be to treat the two applicants differently in a manner not contemplated by the primary judge.
44․Further, I note that the applicants in written submissions have indicated that they would consent to a caveat being granted over property held by the second applicant in Queanbeyan. I will turn to the matter of appropriate conditions to the order later in these reasons, but it is sufficient to note at this stage that it appears there appears to be a clear intermingling of the financial resources between the applicants. This is a matter that may then be relevant to the matter raised by the applicants orally, in that if the judgment is not stayed they may be unable to obtain legal representation if the assets held by the company are affected by the Federal Court proceeding.
45․Given the history of the matter, in my view, the proposition that the applicants will attain representation at some future date is attended with some doubt. However, taking (solely for the purposes of this judgment) the written submissions at face value, I find that the applicants have recently been in the receipt of at least some legal advice.
46․I further note the comments of the NSW Court of Appeal in Digi-Tech at [23]-[24]:
Three of the four appellants have no assets and in these cases the real purpose of any winding-up proceedings can only be to stop the appeals. However the remaining company, McLean, has assets of $1.7 million and its appeal raises different considerations which will be dealt with later in these reasons.
The judgment creditor and its solicitors evidently believe that the winding-up of the three appellants would be to their advantage. The Court should therefore infer that there is a real risk that the making of winding-up orders would prevent the prosecution of these appeals.
47․In my view, contrary to the submissions advanced by counsel for the respondent in writing similar logic must apply in this case. Even accepting that at the time of lodging the original bankruptcy applications the respondent was not aware of the appeal (and as such there must at that time have been no consideration of the possibility that the applications could impact any appeal) that position has now clearly changed.
48․It appears from counsel for the respondent’s submissions that the second applicant has already been presumed to be insolvent and may well, despite any stay, be declared insolvent. In that case it seems to me that there is some force to the NSW Court of Appeal’s observations applying in this case.
49․There is, however, no need to decide that issue. It is sufficient to note that if the stay is not granted and the applicants are declared bankrupt and/or insolvent there is at least a risk the appeal will be rendered nugatory. Although the respondent is entitled to the fruits of the judgment, that entitlement cannot come at the cost of the applicants’ right to prosecute their appeal.
50․While I note (as counsel for the respondent submitted) that the prospects of success of the appeal can only be described as poor, the respondent did not submit to me that the applicants have no prospects of success. In that regard I note that prior to the hearing of this application the applicants have been wholly self-represented. While they were not represented before me it is clear that they obtained at least some form of legal advice and the submissions advanced before me may speak to an improved coherence of argument in later hearings. In any event, in my view while the prospects are poor, noting that the applicants are self-represented I am not prepared to find that the case can be relevantly distinguished from Digi-Tech on that basis.
51․I further note as relevant to my decision the fact that security for costs has already been ordered. This goes at least some way to protecting the respondent’s interests (albeit only in a fixed amount for costs and not in terms of protecting their broader judgment debt). I note the comments of the NSW Court of Appeal in Digi-Tech at [28] in relation to ensuring that, as much as possible, the respondent is not placed in a worse position following an unsuccessful appeal as a result of dissipation of assets if a stay is ordered.
52․As I noted above, the applicants in written submissions proposed that they would “undertake and consent to a [c]aveat being place[d] … to secure the [e]quity of $200,000 [plus various matters]”. In contrast, the respondent submitted that, if the Court was minded to grant a stay, the Court should make orders in more onerous terms, including imposing conditions removing the ability of the applicants to “sell, charge, mortgage or otherwise deal with or dispose of, or cause or permit to be sold, charged, mortgaged or otherwise dealt with or disposed of, all or any of their assets”.
53․As I will discuss in more detail below the preferred form of the condition is in issue, however, it is clear that the parties are in agreement that a condition can be imposed that will go some way to mitigating the prejudice suffered by the respondent.
54․In my view, while the applicants should have brought this application with more notice, especially as they were aware of the impending ‘bankruptcy proceedings’, the fact the applicants are self-represented goes some way to explain why they may well have not been aware of or understood the full implications of those proceedings.
55․In my view, given the risk I have identified above that the appeal may be rendered nugatory if the stay is not granted, the fact that the prejudice against the respondent can be mitigated by a condition being attached to the order and the fact that the primary prejudice now advanced by the respondent appears to be in relation to a winding-up application which the respondent can at least seek an extension of time (and consequential adjournment in) while the matter is finely balanced I am satisfied that a stay should be granted.
56․In relation to the proposed conditions the Court has not had the opportunity to hear from the parties in relation to the different proposed options and their competing merits. The parties will have leave to provide written submissions to my chambers by email within two business days of the receipt of these reasons for judgment. The order I made was expressly on the basis that it would be “subject to further order or direction”.
57․I pause to note that while of course it would have been preferable to settle the condition prior to granting the stay, in the particular circumstances of the case to delay the decision to hear from the parties on the issue would have had the potential to defeat the underlying purpose of the application.
58․In relation to costs, the applicants have succeeded in their application. However, the exercise of the costs discretion is broad. In my view, given the delay in bringing the application and the fact that the applicants are self-represented (and could not, in any event recover a significant amount of costs) my preliminary view is that each party should pay its own costs. If any party seeks a different order they may make that indication in the written submissions concerning the appropriate condition to be imposed.
Orders
59․For the reasons outlined above, I made orders in the following terms in-chambers:
(a)Subject to further order or direction, the orders of Elkaim J made on 30 March 2022 in ACTSC 383 of 2019 be stayed until the delivery of orders in ACTCA 20 of 2022.
(b)The parties have leave to provide to the Associate to Loukas-Karlsson J by email a short written submission limited to two pages in length addressing any conditions the order should be subject to.
(c)The time for compliance with order 5 shall be two business days after the publication of reasons by email to the parties.
(d)Subject to further order or direction each party is to pay its own costs own costs of the application filed on 19 January 2022.
| I certify that the preceding fifty-nine [59] numbered paragraphs are a true copy of the Reasons for Judgment of her Honour Justice Loukas-Karlsson Associate: Andrew Ray Date: 23 January 2023 |
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