Multicoin Amusements Pty Ltd v Avel Pty Ltd
[1990] FCA 165
•16 MARCH 1990
Re: MULTICOIN AMUSEMENTS (NORTH COAST) and BRITISH AMUSEMENTS (NORTH COAST)
CORPORATION PTY LIMITED
And: AVEL PTY LTD
No. Qld G67 of 1989
FED No. 165
Practice and Procedure
COURT
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
Spender J.(1)
CATCHWORDS
Practice and Procedure - application for stay of judgment of full Federal Court pending a special leave application to the High Court
High Court Rules O. 70 r. 8
HEARING
BRISBANE
#DATE 16:3:1990
Counsel for applicants on the Motion: Ms S. Gregory
instructed by: Chambers McNab Tully and
Wilson
Counsel for respondent on the motion: Mr. K.T. Kilvington
instructed by: Greg Kelly and Co.
ORDER
The motion be dismissed with costs.
Note: Settlement and entry of orders is dealt with by Order 36 of the Federal Court Rules.
JUDGE1
This is a notice of motion by Avel Pty Ltd, who was the respondent to appeals by Multicoin Amusements Pty Ltd and British Amusements (North Coast) Corporation Pty Ltd heard by the Full Court of the Federal Court constituted by Lockhart and Wilcox JJ. and myself. The appeal was from a judgment of an acting judge of the Supreme Court of Queensland. The court in a joint judgment published on 20 December 1989 allowed the appeals.
The notice of motion seeks that part of the judgment given on 20 December be stayed. The relevant orders were:-
(a) judgment be entered for the first plaintiff
against the defendant for damages in the sum of EIGHTY-EIGHT THOUSAND FIVE HUNDRED AND SIXTY-FIVE DOLLARS ($88,565.00); and
(b) judgment be entered for the second plaintiff
against the defendant for damages in the sum of TWO THOUSAND THREE HUNDRED AND THIRTY DOLLARS (2,330.00); and
(c) the defendant pay the costs of the plaintiffs,
both in respect of the action and counterclaim; and
(d) the respondent pay to the appellants their
costs of the appeal and cross-appeal, ("the Judgment")
An order was also sought in the following terms:-
"that the first appellant and the second appellant
be restrained from taking any step to wind up the respondent on the basis of the debt arising under the Judgment pending the outcome of the respondent's application to the High Court of Australia for special leave to appeal to that Honourable Court, and where such special leave is granted, pending judgment of that Honourable Court in the respondent's appeal thereto."
It seems to me that, if a stay were granted, then it would be unnecessary for any injunctive order to be made because the basis of the application to wind up is that there is a presently existing entitlement to enforce a judgment, and that would not be the case in the circumstance of a stay having been granted.
Both counsel have been of considerable assistance in relation to this application. Really it comes down to a factual assessment of the financial position of one of the two successful appellants. It seems to me that the application for a stay, insofar as it relates to the judgment for $2,330.00 for British Amusements (North Coast) Corporation Pty Ltd was not seriously pressed.
In relation to the matter generally the position is this: by O. 70 r. 8 of the High Court Rules, unless the court or a justice otherwise orders, an appeal shall not operate as a stay of proceedings. Where an application for special leave to appeal is made to the High Court, the jurisdiction to stay may be exercised by the court below: see John Fairfax and Sons Ltd v. Kelly (No. 2) (1987) 8 NSWLR 520 and Sibuse Pty Ltd v. Shaw (No.2) (1988) 13 NSWLR 125.
In Jennings Construction Ltd v. Burgundy Royale Investments Pty Ltd (No. 1) (1986) 161 CLR 681, Brennan J. said at 684:-
"When an application for special leave to appeal is
made to this Court, a jurisdiction to stay may be exercised by the court below and it is to that court - the court in which the matter is pending and which is familiar with the matter - that an application to stay should first be made. In this case the Court of Appeal, not wishing to pre-empt the view that may be expressed in this Court, tailored its order accordingly. In future, there should be no inhibition on the court in which the matter is pending framing a stay order, if a stay be appropriate, to avoid the necessity for application to this Court."
Also, in Patton v. Minister for Defence (1987) 71 ALR 637, Pincus J. held that an application for a stay of execution pending an appeal cannot properly be described as invoking the court's appellate jurisdiction. He held further that a single judge of the court has power to make the order sought, although it is prima facie desirable that the matter be dealt with by the full court, unless convenience dictates otherwise.
Neither party contested my jurisdiction to deal with the matter, and having regard to the exigencies of the sittings of the Full Court of the Federal Court in Queensland, there are discretionary reasons why it should be entertained by a single judge of the court in Brisbane.
I was told - and it is not in dispute - that an application for special leave to appeal the judgment of the Full Court of the Federal Court given on 20 December 1989 is to be heard by the High Court on 6 April. The time frame is not an irrelevant consideration.
As to the discretion conferred by r. 8, it is to be exercised only where special circumstances exist. In Jennings Construction v. Burgundy Royale Investments (No. 1) (supra), Brennan J. said at 685:-
"In exercising the extraordinary jurisdiction to
stay, the following factors are material to the exercise of this Court's discretion. In each case when the Court is satisfied a stay is required to preserve the subject-matter of the litigation, it is relevant to consider: first, whether there is a substantial prospect that special leave to appeal will be granted; secondly, whether the applicant has failed to take whatever steps are necessary to seek a stay from the court in which the matter is pending; thirdly, whether the grant of a stay will cause loss to the respondent; and fourthly, where the balance of convenience lies."
In Federal Commissioner of Taxation v. Myer Emporium Ltd (No. 1) (1986) 160 CLR 220, Dawson J. said at 222-223:-
"It is well established by authority that the
discretion which it confers to order a stay of proceedings is only to be exercised where special circumstances exist which justify departure from the ordinary rule that a successful litigant is entitled to the fruits of his litigation pending the determination of any appeal: see, e.g., The Annot Lyle (1886) 11 PD 114, at p 116; Scarborough v. Lew's Junction Stores Pty Ltd
(1963) VR 129 at 130. Special circumstances justifying a stay will exist where it is necessary to prevent the appeal, if successful, from being nugatory: see Wilson v. Church (No. 2) (1879) 12 Ch D 454 at p 458; Klinker Knitting Mills Pty Ltd v. L'Union Fire Accident and General Insurance Co Ltd (1937) VLR 142. Generally that will occur when, because of the respondent's financial state, there is no reasonable prospect of recovering moneys paid pursuant to the judgment at first instance. However, special circumstances are not limited to that situation and will, I think, exist where for whatever reason, there is a real risk that it will not be possible for a successful appellant to be restored substantially to his former position if the judgment against him is executed:"
He referred to McBride v. Sandland (No. 2) (1918) 25 CLR 369 at 375. That principle has been followed in Deputy Commissioner of Taxation v. Alberto Fontana (1989) WAR 262: see also Patton v., Minister of Defence (supra) and J.C. Scott Constructions v. Mermaid Waters Tavern Pty Ltd (No. 2) (1983) 2 Qd R 243.
The onus is on the person seeking the stay to show exceptional circumstances; the onus is not lightly discharged. In Hackney Tavern Nominees Pty Ltd v. McLeod (1984) 33 SASR 590, in the context of O. 58 r. 38 of the Supreme Court Rules of South Australia which is in similar terms to O. 70 r. 8 under consideration here, White J. said at 594:-
"Rule 38(6) states quite clearly that the
institution of an appeal does not operate as an automatic stay. On the contrary, it states quite clearly, as does rule 22, that 'an appeal shall not operate as a stay' unless a judge so orders. The norm is no stay. If there is to be a stay, cause must be shown. The onus is upon the person seeking stay and the onus is not lightly discharged."
As to whether there is a real risk, Adam J. in Scarborough v. Lew's Junction Stores Pty Limited (1963) VR 129, said at 130:-
"The rule says that an appeal does not operate as a
stay of execution. That is so, and an application for a stay of proceedings is not granted as of course. There must be special circumstances existing to justify an order staying the execution of the judgment - some special circumstances which must be relevant to the purpose for which the stay is granted. Such circumstances would exist where a successful appellant would be deprived of the fruits of his appeal if a stay of execution were not granted. It has been stated that the applicant for a stay of execution should show that he will 'probably' not be able to recover from the other party the amount of judgment which he has been compelled to pay under execution, in order to satisfy the court that a stay should be granted. I do not think that the word 'probably' has any particular merit. The test, I think, is, whether there is a real risk that the appeal would prove abortive if the applicant were not granted a stay. It does not really matter what expression is used, whether 'probably' or 'real risk'. In this case, I think, it is reasonably clear that there is a risk that if the applicant is successful in its appeal it would not be able to recover from the plaintiff the amount which it would be required to pay under this judgment as it stands at present."
This is the primary basis on which the application for motion of stay is brought.
I now turn to the evidence to determine whether in fact there is such a real risk as would entitle the applicant on the motion to the stay sought.
Essentially, the application on the motion relies on certain statements expressed by Mr. Vincent Ditton, the managing director of Multicoin Amusements, where he says that being kept out of a judgment has caused Multicoin some difficulties by inhibiting its plans for expansion. Mr. Ditton said at paragraph 3 of his affidavit sworn on 15 March 1990:-
"...Multicoin Amusements Pty Ltd has continued to
grow over the years of this dispute and is a profitable organization which continues to expand and which remains a healthy organization as at the date of this my Affidavit."
He continues:-
"Multicoin Amusements Pty. Ltd. opposes the stay on
execution of the Judgment of the Full Court in this matter as it has been held out of the profits to which it would have earned for long enough."
Then in paragraph 4 of the same affidavit he says:-
"In the event of the Appellant paying the Judgment
debt in accordance with the Judgment it is my intention that those monies would be put to use in the business of Multicoin Amusements Pty Ltd. It is probable that a large portion of the funds would be used immediately to reduce the overdraft facility of Multicoin Amusements Pty Ltd. As at the 13th March, 1990 the overdraft facility stood at an $80,000.00 limit with the ANZ Bank in Surfers Paradise and of that facility $66,161.00 was drawn."
He goes on to say that that account varies periodically from a credit balance in favour of Multicoin to being nearly fully drawn on occasions. The interest paid on the facility is currently 22.5% and I note that this is in excess of the judgment rate of interest under the Federal Court Rules. He says that the interest payments are causing some strain on Multicoin Amusements and that, if the judgment funds were available, he would apply them in the first instance so as to reduce the interest being paid on that facility and that the balance would be used as working capital.
In the event of a successful appeal by Avel Pty Ltd Mr. Ditton says that Multicoin would simply have to avail itself again of its overdraft facility to release the funds necessary to repay to the respondent its full judgment debt.
A more general assessment of the financial position of Multicoin was given by Mr. Cyril John Skimmings, an accountant for Multicoin for three and a half years, who has sworn to the financial position of Multicoin as at the end of the financial year 1988/89 and as at 31 December 1989. At the end of the tax year the financial records show that Multicoin had a profit before tax of $81,721.00 which, after tax, was $49,363.00. Its balance sheet shows that as at 30 June 1989 the net asset position was $48,740.00.
These financial records were available to the applicant on the motion but, in addition to that material, Mr. Skimmings deposes to the position as at December last year. These financial statements indicate that the business has in fact been expanding. In terms of gross revenue there has been a significant increase, and the six months net profit to 31 December 1989 was $94,786.00, and the net asset position had markedly improved from the $48,740.00 shown at the end of June 1989 to $143,527 at the end of December. The December financial statements show that the overdraft then was $81,192.82, and as at 13 March Mr. Ditton has sworn that it stands at around $66,000.00. There is no material to suggest from the way Multicoin has been operating that its position might deteriorate to such an extent as to put at risk any order made by the High Court on a successful appeal.
There is nothing in the evidence to suggest that Multicoin will so conduct its business that it will dissipate its present asset backing as well as any sums paid pursuant to the judgment in its favour.
In my view, it has not been shown that there is a real risk that, in the absence of a stay, Avel might not be able to recover moneys ordered to be paid to it on a successful appeal to the High Court.
This in itself is sufficient to dispose of the motion, but I ought to refer to some further considerations. If I were satisfied that a stay were required, other considerations are relevant as Mr. Justice Brennan has indicated in the passage to which I have already referred.
It seems to me that there is at least some prospect of special leave, particularly in relation to the onus of proof on the issue of the consent of the copyright owner. On this point observations by certain judges in the Interstate Parcel Express Co. Pty Ltd v. Time-Life International (Nederlands) B.V. (1977) 138 CLR 534 should be compared with the judgment of the Full Court of the Federal Court in Computermate Products (Aust.) Pty. Ltd. v. Ozi-soft Pty Ltd and Ors. (1988) 12 I.P.R. 487, which was followed by the Full Court in Multicoin. The significance of s. 202 is also to be considered in this context. In my opinion, it is not correct to say, nor was it in fact submitted, that the application for special leave was hopeless, at least in that respect. The tendency of the courts, and one with which I happily agree, has been to decline to express any opinion as to the merits of the appeal provided it is not hopeless.
It is, of course, notorious that the majority of applications for special leave fail, but that is simply one integer in a complex equation. As to the consideration expressed by Brennan J. whether the grant of a stay would cause loss to the respondent, it seems to me that presently there is a disparity in the interest to which it is entitled on the judgment and the interest it is paying on the overdraft account. Multicoin is thus incurring a small loss by not being paid the moneys to which it is presently entitled.
As to the balance of convenience, I accept there is hardship being caused to the respondent, although it is of a small measure. The fact is that the applicant has ample capacity to pay. The material shows it has net assets in excess of $3,000,000.00 and, in my opinion, any balance of convenience lies in favour of the judgment not being stayed.
Finally, I want to make specific reference to the ground urged by counsel for the respondent to the motion that there was in this case a further consideration not referred to in Jennings Construction Ltd. v. Burgundy Royale Investments (No. 1) (supra) which ought to influence the decision of the court. It was submitted by the respondent on the motion that the appeal machinery was being used as an instrument of oppression or as a delaying tactic or as part of a commercial attempt to stifle competition from Multicoin.
I do not accept that that is the case. There is nothing to suggest that the appeal is not being prosecuted with expedition. Avel Property Limited was successful at first instance, and is seeking to have the High Court restore the primary judgment in its favour.
In the circumstances, I propose to dismiss the motion with costs.
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