IceTV Pty Ltd v Duncan Ross
[2011] NSWSC 1093
•09 September 2011
Supreme Court
New South Wales
Medium Neutral Citation: IceTV Pty Ltd v Duncan Ross & Ors [2011] NSWSC 1093 Hearing dates: Friday, 9 September 2011 Decision date: 09 September 2011 Jurisdiction: Equity Division - Duty List Before: Brereton J Decision: Motion for stay of execution of final orders dismissed.
Catchwords: PRACTICE AND PROCEDURE - Application for stay of execution of judgment - defendants have cross-claim against plaintiff on foot - defendants claim cross-claim may be stultified as execution of judgment will render them bankrupt -defendants/cross-claimants claim relief under oppression provisions of (CTH) Corporations Act 2001 - oppression claim should be directed at plaintiff's directors - claims cannot result in plaintiff becoming liable to pay defendants money - no mutuality - stay refused. Legislation Cited: (CTH) Corporations Act 2001, s 233 Cases Cited: IceTV Pty Ltd v Ross & ors [2008] NSWSC 1321 Category: Principal judgment Parties: IceTV Pty Ltd (plaintiff)
Duncan Ross (first defendant)
Peter Vogel (second defendant)
Vogel Ross Pty Ltd (third defendant)Representation: Counsel:
Mr J. M. Ireland QC (plaintiff)
Mr P. Vogel (defendants in person)
Solicitors:
Bartier Perry (plaintiff)
File Number(s): 2004/254759
Judgment (ex tempore)
HIS HONOUR: By notice of motion filed on 23 August 2011, the defendants seek orders to stay the execution of the final orders made by Rein J on 18 September 2009 disposing of the plaintiff's claims and the first cross-claim. The orders made by his Honour were as follows:
1. Judgment be given for the plaintiff on its claim in the amount of $35,000 plus interest in the amount of $8,488.19.
2. Judgment be given for the cross defendant on the first cross-claim.
3. The defendants to pay the plaintiff's costs of the claim and the first cross-claim as agreed or assessed.
Those orders survived an appeal to the Court of Appeal and an application for Special Leave to Appeal to the High Court. There remains on foot between the parties a second cross-claim brought by the defendants against the parties that include, but are not limited to, the plaintiff, in which the defendants/cross-claimants' claim:
1. An order under the (CTH) Corporations Act, s 233(1)(f), that the plaintiff discontinue proceedings No. 2577 of 2007.
2. An inquiry into damages pursuant to the undertaking as to damages by the fourth cross-defendant.
3. Orders under the Corporations Act:
a) section 233(1)(d) that the first, second and third cross-defendants acquire the shares of the first and second cross-claimants, or alternatively
(b) section 233(1)(e) that IceTV Holdings Pty Ltd CAN 117 626 338 acquire the shares of the first and second cross-claimants, or alternatively,
(c) section 233(1)(a) that IceTV Holdings Pty Ltd CAN 117 626 338 and IceTV Pty Ltd CAN 003 552 216 be wound up.
4. Indemnity costs.
5. Such other orders as the Court sees fit.
So far as concerns the claim in paragraph 1 for an order that the plaintiff discontinue the substantive proceedings, as those proceedings have now been prosecuted to completion, it cannot succeed.
So far as concerns the claim for an inquiry into damages, application for such an inquiry was made before Rein J, who refused it, and an appeal from that refusal formed part of the proceedings in the Court of Appeal and was unsuccessful. Although it has been argued that there are grounds for an inquiry as to damages other than those which were agitated before Rein J and in the Court of Appeal, it seems to me that those grounds had to be brought forward, if at all, when the application was made to his Honour, and that it is too late to support that application on new and different grounds now. Accordingly, the claim for an inquiry into damages cannot succeed.
So far as concerns the claims under (CTH) Corporations Act , the pleading, in a previous form, was reviewed by me when leave to file it was sought, in IceTV Pty Ltd v Ross & ors [2008] NSWSC 1321. Although finding untenable many of the claims advanced in the draft pleading, in respect of the oppression claim, I concluded (at [18]) that I was unable to say that the case was unarguable. Nothing has been put before me to change that position. The plaintiff has filed a notice of motion, returnable today, for summary dismissal or striking out of the oppression claim but it has not been argued today. If ultimately it succeeds, then if I were otherwise to grant a stay, it would lapse when the cross-claim was struck out or dismissed. But I would not at present conclude that the oppression case was unarguable. The second cross-claim does not include any claim for relief that would result in the plaintiff becoming liable to pay the defendants any sum of money. In other words, there is no possibility of "mutuality", in the sense that the cross-claim might extinguish or reduce the defendants' liability under its judgement to the plaintiff.
The defendants have foreshadowed an application for leave to amend the cross-claim, to add a claim for compensation. It is said that this could be authorised by the Corporations Act, s 233(1), and although I doubt that that section authorises an award of monetary compensation for oppression, I will proceed for present purposes on the basis that it might. The question would remain, against whom would an order for monetary compensation be made. It would be unthinkable that it would be made against the company, because to do so would simply further reduce the value of the company. Any such order would presumably be made against the oppressing directors. Again, the result would be no element of mutuality, in that no sum would become owing by the plaintiff to the defendants to be set-off against the judgment.
As I have indicated in argument, failure to grant a stay is likely to have the effect of stultifying the cross-claim, because it can be expected that the defendants/cross-claimants will soon be bankrupted. This is a matter of no little significance, in circumstances where it has not yet been found that the cross-claim is unarguable and where, after all, the defendants were in the first place brought to court by the plaintiff. But against their right to prosecute their cross-claim must be weighed the plaintiff's right to enforce a judgment, which it has successfully upheld on appeal, and which there is no prospect of the defendants extinguishing or releasing by success on the cross-claim. Although the absence of any such prospect would be fatal to the application for a stay, in this case there are some countervailing considerations.
The first is that, although the relief sought in respect of oppression will not result in a mutuality judgment against the plaintiff, the plaintiff is under the control of those against whom orders might be made. Secondly, no particular prejudice to the plaintiff from a stay has been identified. Thirdly, whatever the cross-claimants' financial positions might be (and it may be accepted that this is marginal, in the sense that their liabilities exceed their assets), it is manifest that the plaintiff has a relatively very large deficiency of funds: the most recent available evidence indicates that it has assets of $250,000, against liabilities in excess of $3.8 million.
But while it might often be significant on a stay application that the judgment moneys, if paid, would not be recoverable in the event of a cross-claim succeeding, in this case, for the reasons I have already explained, the cross-claim cannot result in moneys becoming payable by the plaintiff/judgment creditor to the defendants. That deprives the stay of much of its supposed utility.
Once that is appreciated, and although I have not found the conclusion an easy one, it seems to me that the plaintiff ought not be held out of its judgment, just to permit a cross-claim against third parties not to be stultified.
I am afraid, therefore, that I must dismiss the motion for a stay, with costs.
**********
Decision last updated: 21 October 2011