International Skin Care Suppliers Pty Ltd v Whyte
[2011] NSWSC 486
•25 May 2011
Supreme Court
New South Wales
Medium Neutral Citation: International Skin Care Suppliers Pty Ltd v Whyte [2011] NSWSC 486 Hearing dates: 24, 25 May 2011 Decision date: 25 May 2011 Jurisdiction: Equity Division - Corporations List Before: Barrett J Decision: Application for stay pending appeal dismissed with costs
Catchwords: PROCEDURE - stay - stay pending appeal - whether arguable grounds of appeal shown - held not - where balance of convenience lies - given clear basis for apprehension that assets will be taken away and hidden if second defendant given possession, balance of convenience favours plaintiffs Category: Procedural and other rulings Parties: Paul Andrew Billingham and Gayle Louise Dickerson as Joint Receivers of International Skin Care Suppliers Pty Ltd - First and Second Plaintiffs
Eileen Ann Whyte - First Defendant
Industry Only Pty Limited - Second DefendantRepresentation: Counsel:
Mr J E Hynes - Plaintiff
Mr B Levet - Second Defendant
Solicitors:
Henry Davis York - Plaintiff
File Number(s): 2011/19538
Judgment
I am dealing with an interlocutory process filed in court late yesterday and adjourned to this morning.
The application is that of the second defendant, Industry Only. Its principal claim is a claim for an order that orders 1 to 6 made yesterday morning by me be stayed pending the determination of an appeal that is proposed.
The orders in question were, in summary, orders that an alienation of the business of Indio to the second defendant was void, that the assets and undertaking of the second defendant were held in trust for Indio and that the second defendant deliver up.
Two questions arise upon a stay application of this kind.. The first relates to the prospects of success on appeal or, putting this another way, the question whether arguable grounds of appeal have been shown. The second issue goes, in general terms, to the balance of convenience and the respective positions of the parties judged, first, on the basis that there is no stay and, second, on the basis that there is a stay.
The proposed grounds of appeal are set out in a draft notice of appeal annexed to the affidavit of Steven Whyte of 24 May filed in court yesterday afternoon.
The first ground is that I was in error in finding in paragraph 63 of the judgment that the absence of evidence from Mr Michaelson and Mr Ruskin strengthened the inference set out at paragraph 62. The opening words of paragraph 62 are:
"The inference is irresistible (and I find) that ... .
Paragraph 62 thus recorded a finding in terms of an inference said to be irresistible. Whether or not it was correct to say, as was subsequently said in paragraph 63, that the inference was strengthened by something else, does not in any way affect the decision. The finding was a clear finding. It is not detracted from if the strengthening referred to in paragraph 63 is erroneous and the finding and the inference from which it is drawn (both as stated in paragraph 62) are left to stand, as it were, on their own feet. This ground of appeal has no merit.
Paragraph 2 of the grounds of appeal refers to a consequence of the error set out in paragraph 1. For the reason I have just articulated, that has no merit.
Paragraphs 3 and 4 to my mind misunderstand the effect of the orders for revesting of property. The whole basis of the decision was that the transfer or alienation, whatever its precise form, and bearing in mind that it consisted in part at least of a vacating of a field of one party and the filling of it by another, was perpetrated in order to defeat or defraud creditors.
Precisely what needs to be done to implement the order for revesting, to put it in shorthand terms, is something that will be worked out in the fullness of time.
Paragraphs 5 and 6 say that there was a want of parties in two respects: first, that the licensor or grantor of a non-exclusive right to use a trademark was a necessary party and, second, that a landlord or lessor or grantor of a right to occupy premises was a necessary party.
Nothing that has been said in submissions provides any basis for a view that those parties were necessary parties. The case was concerned with rights, whatever their precise nature, derived from or under the parties in question. Maybe the rights are illusory. That too remains to be seen. The point is that, whatever they are, they have to be passed back to Indio and I see no basis at all for any argument that the grantor of the right is a necessary party in any way to a proceeding in which that result is achieved.
The matter was dealt with at an early stage of the hearing and a ruling was made. It cannot be the case that whenever a lessee deals with the leasehold estate and some dispute arises and results in proceedings between the lessee and somebody else, the lessor must be a party.
Grounds 7, 8 and 9 are omnibus grounds, as one might call them. They are to be judged in the light of the following statement made by counsel for the second defendant on 13 May 2011. I quote from the transcript of that day, page 1, line 35:
"In general terms there is a concession made that, subject to two exceptions which we say should be carved out, there is an entitlement to orders in the terms sought in relation to declarations and transfer of property. Those two exceptions are trademark and the lease..."
The grounds are not supportable in light of that concession.
My conclusion with respect to the first matter germane to the present application is accordingly that the applicant has not shown arguable grounds of appeal. That notwithstanding, I move to the balance of convenience.
The general proposition is that the beneficiary of a judgment is entitled to the benefit of the judgment unless some good reason be shown to the contrary. The second defendant says that it will be harmed financially if it is not allowed to continue to conduct the business.
In the present case, the stay orders that are sought involve reversal of the order that Indio have possession of the relevant property. The property would be put back into the hands of the second defendant under the orders that are sought. That to my mind creates a very significant risk that the benefit of the judgment would be dissipated from Indio's point of view. I refer to evidence now before me of events that occurred after the receivers of the assets and undertaking of Indio attempted yesterday to enter the premises and take possession of assets.
Evidence about that has been given by Mr Whyte in an affidavit read by the second defendant and also by one of the receivers, Miss Dickerson, in an affidavit read by the plaintiffs. Mr Whyte, however, left the premises at a time which his affidavit does not allow me to pinpoint but must have been before about 12.30 since he arrived at the solicitor's office in the city at about 1.15.
Mr Whyte's account speaks of conversations between himself and Miss Dickerson during which she gave him a document and told him of the orders that had been made yesterday morning. Mr White then spoke to his solicitor who confirmed that orders had been made granting possession to the plaintiffs and that there was a need to let the receivers in and not to hinder them.
It was in the course of that conversation with the solicitor that Mr Whyte was asked to go to the city immediately to provide instructions. As I have said he arrived at the city and met with the solicitor at approximate 1.15.
There is no evidence from the second defendant about events of yesterday at the business premises after the point at which Mr Whyte left to go to the city. Such evidence is, however, given by Miss Dickerson. I will not repeat everything said in her affidavit. She went to the premises with a colleague. She had a conversation with Mr Whyte and her description of which generally corresponds with his account. She adds details, however, about having been shouted at aggressively by Mr Whyte and Mr Michaelson who told her to get out of the premises. She did so and the police were called by her.
At about 12.15pm she observed another person who she understood to be Mr Ruskin drive into the premises. Her account from that point on does not refer to Mr Whyte presumably because, as he says in his affidavit, he went at about that time to the city.
Ms Dickerson's affidavit goes on to give what is, quite frankly, an appalling account of conduct on the part of Mr Ruskin and Mr Michaelson as she renewed and continued her attempts to obtain possession of the premises and its contents as the court orders entitled her to do. She was shouted at. She was sworn at. She was pushed on her shoulder, as was her colleague. Steps were taken to lock the premises against her (they had been open when she arrived). She found it necessary to employ a locksmith to gain access. When she obtained access she compared the contents of the premises with photographs of the contents she had taken in January this year. She found that numerous items shown in the photographs were no longer there. She found partially disassembled computers and evidence that might well lead to a conclusion that hard drives had been removed.
If the second defendant were given possession of the assets again, there is on the evidence before me a very strong likelihood that those assets would be dissipated, in the sense of being taken away and hidden.
Counsel for the plaintiffs referred to the events to which Miss Dickerson deposed as having occurred yesterday as a "sordid display". That is an apt description which I endorse.
The balance of convenience strongly favours the plaintiffs and the maintenance, pending any appeal, of the position in which the plaintiffs have possession of the business and the other subject matter of the orders.
The application of the second defendant by interlocutory process filed in court yesterday afternoon is dismissed with costs.
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Decision last updated: 26 May 2011
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