In the matter of Auzhair Supplies Pty Ltd (In Liquidation) ACN 085 159 280 (No 3)
[2013] NSWSC 561
•11 April 2013
Supreme Court
New South Wales
Medium Neutral Citation: In the matter of Auzhair Supplies Pty Ltd (In Liquidation) ACN 085 159 280 (No 3) [2013] NSWSC 561 Hearing dates: Thursday 11 April 2013 Decision date: 11 April 2013 Jurisdiction: Equity Division - Corporations List Before: Brereton J Decision: Upon the defendants giving the usual undertaking as to damages and upon execution by the defendants of a fixed and floating charge over all of their assets and undertaking, and upon the defendants filing an affidavit setting out in full their assets including particulars of their location and an estimate of their value and liabilities in a form acceptable to the plaintiff as security for the judgment debt and costs, execution of the judgment given by this Court against the second, third and fourth defendants on 4 March 2013 be stayed until the hearing of the appeal
Catchwords: PRACTICE & PROCEDURE - Application for stay of execution of judgment pending determination of appeal - where seriously arguable ground of appeal - where bankruptcy proceedings are on foot against defendants - where defendants have not made proper disclosure of their financial position - whether refusing stay would be oppressive or cause hardship - stay granted upon defendants giving appropriate securities to plaintiff Category: Consequential orders Parties: Auzhair Supplies Pty Ltd (in liquidation) ACN 085 159 280 (plaintiff)
Auzhair 1 Pty Ltd (ACN 105 126 869) (first defendant)
Mr Roy Gerace (second defendant)
Mr Ilario Gerace (third defendant)
Mr Domenico Gerace (fourth defendant)Representation: Counsel:
Mr JT Johnson (plaintiff)
Mr D Ash (defendants)
Solicitors:
Carroll & O’Dea (plaintiff)
Sachs Gerace Lawyers (defendants)
File Number(s): 2012/ 80701
Judgment (Ex tempore)
HIS HONOUR: On 25 January 2013, I published reasons for judgment in the substantive proceedings, and on 4 March 2013, I made orders giving effect to that judgment, inter alia including a judgment against the second, third and fourth defendants that they pay the plaintiff the sum of $749,447.32. On 28 March, the second, third and fourth defendants filed a notice of appeal from that judgment in the Court of Appeal. That notice of appeal is listed for directions on 29 May 2013.
It is common ground and, in any event I would accept, that there is at least one seriously arguable ground of appeal which, if successful, would result in the reversal of the judgment against the second, third and fourth defendants.
On 3 April 2013 the plaintiff procured bankruptcy notices to be issued addressed to each of the second, third and fourth defendants which were served on those defendants on or about 5 April 2013. Unless set aside by the Bankruptcy Court, those notices will expire and the defendants will commit acts of bankruptcy on 24 April 2013. By interlocutory process filed in court today, the second, third and fourth defendants seek a stay of enforcement of the judgment of this Court against them pending the determination of their appeal.
In circumstances where I readily accept that there is a seriously arguable ground of appeal, and where the defendants otherwise face the potential of proceedings against them for a sequestration order, one approaches such an application somewhat benevolently. However, it is not sufficient to overcome the prima facie position that a successful plaintiff is entitled to the fruits of its judgment pending appeal simply to show that there is a seriously arguable ground of appeal. In addition, there has to be some evidence of prejudice, hardship or irreversibility of consequences associated with it.
The only evidence to which the defendants have descended is a statement by their solicitor, on information and belief, that they have been served with bankruptcy notices and are not in a position to comply with the notices. On 2 April 2013 the defendants' solicitors wrote to the plaintiff's solicitors serving a copy of the notice of appeal and requesting "within three business days whether your client consents to a stay until the appeal is determined". The plaintiff's solicitors replied in a timely manner on 3 April 2013, noting the request and "to assist our client in considering your request" seeking evidence of the financial position of the relevant defendants, and indications as to whether they were willing to furnish security for costs and as to whether they were willing to pay into court the judgment sum pending the outcome of the appeal. Somewhat remarkably, there has been no response to that request, and save for the assertion to which I have referred, no better evidence of the defendants' position has been proffered. To the contrary, it has been left to the plaintiff to conduct searches and adduce evidence that the defendants, or some of them, have interests in no less than seven parcels of real property, of which at least some appear to be unencumbered.
The granting of a stay of enforcement of the judgment of this Court will not affect the bankruptcy notice and the committal of an act of bankruptcy on 24 May, unless the Bankruptcy Court, on application, sets aside or extends time for compliance with the notice. Because no stay had been granted at the time when the bankruptcy notice was served, it was validly served and will run its course and non-compliance with it will found an act of bankruptcy, whether or not a stay is now granted by this Court. However, should a creditors' petition be filed reliant on any such act of bankruptcy, it is, in the insolvency jurisdiction, a relevant consideration on any application for adjournment of that petition pending the hearing of the appeal is to show not only that an appeal is pending, but that the Court in which the substantive judgment was given has stayed execution pending the outcome of the appeal: where there is a stay, the case for an adjournment of the petition is significantly stronger.
Where, as here, the defendants have not deigned to make any proper disclosure of their financial position to this Court, they cannot expect much understanding from this Court so far as hardship to them is concerned from the imposition of conditions on any stay. In circumstances where they plainly do have interests in property, and there is at least some suggestion that they have interests in businesses, it seems to me that the status quo could be preserved by their being required to make full disclosure of their assets, and executing fixed and floating charges over all of their assets and undertaking, such as would put the plaintiff in a position of having a caveatable interest in respect of the defendants' real property and security over their personal property. That course would, it seems to me, avoid any detriment that otherwise might arise to the plaintiff from granting a stay at this stage while at the same time preserving for the defendants, if they wish to comply with the conditions I propose to impose, the ability to prosecute their arguable appeal.
Upon the second, third and fourth defendants by their counsel giving to the Court the usual undertaking as to damages, and upon condition that the second, third and fourth defendants execute and deliver to the plaintiff a fixed and floating charge over all of their assets and undertaking and uponeach of the defendants filing and serving on the plaintiff an affidavit setting out in full their assets including particulars of their location and an estimate of their value and liabilities by 24 April 2013 in a form acceptable to the plaintiff as security for the judgment debt and costs herein, I order that execution of the judgment given by this Court against the second, third and fourth defendants on 4 March 2013 be stayed until the hearing of appeal 2013/94955 in the Court of Appeal or earlier further order of this Court or of the Court of Appeal. I reserve liberty to apply in the event of any difficulty arising in the settling of the form of the said charge. I order that costs of this application be costs in the appeal.
**********
Decision last updated: 17 June 2013
0
0
0