Norris v Hanson & Anor No. Scgrg-98-901 Judgment No. S32

NORRIS v HANSON & ANOR
[1999] SASC 32

Magistrates Appeal
Nyland J

This is an appeal against the order of a magistrate refusing an application for stay of execution of judgment. The appellant (Norris) was the defendant in the original proceedings before the magistrate and the respondents (Hanson) were the plaintiffs. For convenience I will refer to the parties hereafter as Norris and Hanson.
Hanson issued proceedings against Norris for moneys due for work carried out in 1995 on behalf of Norris with respect to the building of an airstrip and the construction of a dam. Norris denied liability and sought damages by way of counterclaim.
The hearing of the trial was somewhat protracted. On 24 June 1998, the magistrate gave judgment in favour of Hanson in the sum of $14,480, together with costs and interest. On 8 July 1998, Norris filed a Notice of Appeal against the finding of liability. On 9 October 1998, a judge of this Court delivered a judgment in which he dismissed the appeal. Hanson had not taken any immediate enforcement action against Norris but upon the dismissal of the appeal, Hanson demanded that Norris pay the judgment sum together with interest and threatened to issue a bankruptcy notice. Norris filed a Notice of Appeal to the Full Court of the Supreme Court on 23 October 1998. On 2 November 1998, Hanson issued a bankruptcy notice against Norris seeking the payment of $14,480. I understand that a creditors’ petition against Norris seeking this sum, together with costs and interest, is returnable before the Federal Court on 15 February 1999. On 5 November 1998, Norris applied to the Adelaide Magistrates Court seeking a stay of execution of judgment. That application was made pursuant to s17 of the Enforcement of Judgments Act 1991, which provides:
“The party against whom a judgment has been given may apply to the court for a stay of execution and the court may if satisfied that there is a proper reason for granting the stay, grant the stay on such terms as it considers appropriate.”
After hearing argument the magistrate refused the application for stay and on 26 November 1998 delivered reasons with respect to his ruling.
Norris then lodged the present appeal against the magistrate’s refusal to grant a stay. On appeal it was not disputed that the appeal against the judgment did not operate as a stay of proceedings. Mr O’Brien who appeared for Norris did not dispute that he bore the onus of persuading the court that circumstances existed which justified a stay but submitted that the magistrate had erred in his understanding of the nature of the onus borne by the applicant when he said that “the applicant seeking the stay had the onus of establishing that if the judgment were executed the plaintiff would be unable to repay”.
Mr O’Brien submitted that all the applicant had to show was that there was a “real risk” that the judgment sum could not be repaid in the event that the appeal was successful. He referred to Duke Group Limited v Pilmer (Mullighan J, 15 June 1998, SASC S6716, unreported) wherein Mullighan J said (at p2):
“If there is a risk that the appeal will prove abortive or nugatory if the appellant succeeds and a stay is not granted, the discretion will normally be exercised in favour of granting a stay.”
Mr O’Brien also referred to Beasley v Marshall (1985) 41 SASR 299 wherein Lunn AJ at 304 referred to a “sufficient risk”, and to Scarborough v Lew’s Junction Stores Pty Ltd [1963] VR 129, wherein Adam J said (at 130):
“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 that case, the plaintiff was an American citizen, retired on a US pension. He had been involved in an accident in Australia and was proposing to return to the United States. The Court inferred that if the plaintiff recovered satisfaction of the judgment he would return to the United States leaving no assets in Australia and the appellant would therefore have not had any real chance of getting his money back if a stay were not granted. Mr O’Brien also referred to Cellante v Kallis [1991] 2 VR 653, wherein Young CJ (at 657), cited the test formulated by Adams J in Scarborough v Lew’s (supra) with approval.
The magistrate, in reaching his decision, referred to Henderson & Ors v Amadio Pty Ltd & Ors 136 ALR 593, wherein Heerey J formulated the relevant principles (at 594) as follows:
“On its face the discretion to grant a stay is unfettered. In Alexander v Cambridge Credit Corp Ltd (1985) 2 NSWLR 685 at 694 the New South Wales Court of Appeal held that it was not necessary for the grant of a stay that ‘special’ or ‘exceptional’ circumstances be made out. The court said that it was :
‘... sufficient that the applicant for the stay demonstrates a reason or an appropriate case to warrant the exercise of discretion in his favour’.
The court referred with approval to a statement of Mahony JA in Re Middle Harbour Investment Ltd (in liq) (CA (NSW), 15 December 1976, unreported). With the concurrence of the other members of the court, Mahony JA there said:
‘Where an application is made for a stay of proceedings, it is necessary that the applicant demonstrate an appropriate case. Prima facie, a successful party is entitled to the benefit of the judgment obtained by him and is entitled to commence with the presumption that the judgment is correct. These are not matters of rigid principle and a court asked to grant a stay will consider each case upon its merits, but where an applicant for a stay has not demonstrated an appropriate case but has left the situation in the state of speculation or of mere argument, weight must be given to the fact that the judgment below has been in favour of the other party’.”
Heerey J went on to refer to a number of Victorian cases including Cellante v Kallis (supra) in which the court had held that the power to order a stay should be exercised only in special or exceptional circumstances, and he said (at 595):
“The difference may be more apparent than real since on any approach the party seeking a stay needs to show some reason the stay should be granted. I do not think, however, the circumstances need to be ‘special’ or ‘exceptional’ in the sense of being unusual or rare. For example, where the judgment sought to be stayed is for payment of a money sum and costs, as is the case here, the appellant will often be concerned with the prospect that without a stay the proceeds of the judgment may be dissipated or seized by other creditors or for some other reason be impossible or very difficult to recover. In such a case the appellant has to show there would be no reasonable probability of getting back moneys paid under the judgment if the appeal succeeds: see Andrews v John Fairfax & Sons Ltd [1979] 2 NSWLR 184 at 189 citing Bridges v Australian Consolidated Press Ltd (CA (NSW), 16 June 1970, unreported). However, this could hardly be considered a special, exceptional, rare or unusual situation. It is an everyday occurrence for appeals to be brought against judgments in favour of parties who have little in the way of assets, especially in personal injury litigation. The Victorian cases erect as a precondition for the exercise of the discretion a criterion which does not appear in the language of the rule. In my respectful opinion, the Cambridge Credit approach is preferable and I shall follow it.”
And at 601 (a further passage cited by the magistrate):
“In the case of the applicants who are individuals as distinct from corporate entities, the onus is on the respondents to show that, in the absence of the stay, money paid under the judgment could not be recovered back if the appeal succeeds. There was no attempt to make out such a case. The most that was said was that I should be ‘entitled to infer that the moneys paid were likely to disbursed and that there was no undertaking to secure repayment’.”
It is clear that the magistrate, to a large extent, relied upon the decision in Henderson v Amadio in approaching the matter as he did. I think there is much to commend that approach. The Victorian cases cited by Mr O’Brien were discussing rules which required an applicant to show “special or “exceptional” circumstances. Section 17 of the Enforcements of Judgment Act 1991 simply refers to a “a proper reason for granting the stay”. I do not think it is necessary to define it as precisely as Mr O’Brien has suggested. What is a proper reason will vary from case to case and each should be looked at on its own merits.
On the hearing of this appeal, however, Mr Botten for Hanson did not take particular issue with approaching this matter on the basis of a “real risk”. In the course of argument it became obvious that the real problem confronting the magistrate related to the paucity of the evidence produced by Norris to support his application.
Norris did not put any evidence before the court as to Hanson’s financial position. The application was based on the fact that the judgment sum was $14,480 and the anticipated costs order about $36,000, making $52,000 in all. Mr O’Brien submitted, therefore, that there was a real risk that the money would not be repaid. If the risk did not exist it would be a simple matter for Hanson to provide information to the court to allay Norris’ concern. In the absence of the provision of such information an inference should be drawn that the risk existed.
It is obviously difficult for anyone in the position of Norris to obtain information relating to the financial circumstances of the opposing party. In this matter, however, Mr O’Brien acknowledged that there had not been any enquiries made by Norris at all. There had not been any searches carried out at the Lands Titles Office, there did not appear to have been any credit checks, nor even any requests directed to Hanson’s solicitors to provide relevant information. The sole basis of the application was the quantum of the judgment debt. The magistrate in this case conducted a lengthy trial. That trial included evidence concerning Hanson’s business. The magistrate appeared to take the view that Hanson was a person of substance. He was not persuaded that this was an appropriate case in which to order a stay.
Norris may have a difficult onus to discharge but he does bear the onus. To rely simply on the judgment amount with nothing more is to reverse that onus and, adopting the words of Mahoney JA in the passage from Re Middle Harbour cited above, it is to leave the situation in a “state of speculation”. If the approach commended by Mr O’Brien is correct, it would effectively reverse the onus in just about every case in which judgment was for more than a nominal amount.
At the hearing before the magistrate there was some issue concerning Norris’ financial position and his ability to repay the judgment sum other than by the sale of assets. That has since been resolved to the extent that on the hearing of this appeal, Mr O’Brien informed the court that Norris had realised sufficient moneys to pay the judgment sum and costs which he was prepared to pay into Court pending the final resolution of his appellate rights. Hanson was not prepared to resolve this matter on the basis of that understanding. I do not consider that that particular matter takes the issue for determination on the appeal any further. In addition I do not I think it necessary to consider issues relating to the possible success of the appeal in reaching a conclusion with respect to this matter.
The debt which is the subject of the judgment has been outstanding since 1995. In my view, Norris has failed to establish that this is an appropriate case to make an order for stay. I consider the decision of the magistrate to be correct. The appeal will therefore be dismissed.

[1999] SASC 32

9 February 1999