Re Interesting Developments Pty Ltd (No 2)

[2009] VSC 23

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMERCIAL & EQUITY DIVISION

COMMERCIAL COURT

No. 8250 of 2007

IN THE MATTER OF INTERESTING DEVELOPMENTS PTY LTD

PITAL BUSINESS PTY LTD	Firstnamed Plaintiff by Counterclaim
v
GIUSEPPE DE SIMONE	Secondnamed Defendant by Counterclaim
and
SEACHANGE MANAGEMENT PTY LTD	Sixthnamed Defendant by Counterclaim

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JUDGE:	ROBSON J
WHERE HELD:	Melbourne
DATE OF HEARING:	30 January 2009
DATE OF JUDGMENT:	30 January 2009
CASE MAY BE CITED AS:	Re Interesting Developments Pty Ltd (No 2)
MEDIUM NEUTRAL CITATION:	[2009] VSC 23

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PRACTICE & PROCEDURE – Application for a stay pending the hearing and determination of an application for a stay to the Court of Appeal – Whether exceptional circumstances – Whether very strong and special grounds shown - Whether appeal rendered nugatory – Whether stay application rendered nugatory – Stay application refused.

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APPEARANCES:	Counsel	Solicitors
For the for the Firstnamed Plaintiff by Counterclaim (Pital Business Pty Ltd)	Dr K P Hanscombe SC with Mr J Kohn	Madgwicks
For the Secondnamed and Sixthnamed Defendants by Counterclaim (Mr Giuseppe De Simone & Seachange Management Pty Ltd)	Mr J G Santamaria QC with Mr G L Meehan	Brand Partners

HIS HONOUR:

1. In this matter, I delivered a judgment on 21 January 2009.  Pital Business Pty Ltd (Pital) moved for judgment against Seachange Management Pty Ltd (Seachange) and Mr De Simone on the basis of terms of settlement.  Seachange and Mr De Simone failed to pay the promised sum and resisted the application for judgment on the ground that they had an equitable set off.  They also resisted on the ground that the procedure moving for judgment in the existing procedure on terms of settlement was not appropriate in the circumstances.  I rejected the defences of Seachange and Mr De Simone, and in effect entered judgment for Pital Business Pty Ltd for the sum claimed, that of $4.3m plus interest.

1. I hold no doubts at all about the correctness of my decision that there was no equitable set off available.  I have now been referred to the decision of the High Court of Australia in Hill v Ziymack[1] that reinforces the views I expressed in my earlier judgment. 

   [1](1908) 7 CLR 352, 360

1. When I handed down judgment on 21 January, an application was made by Mr De Simone for a stay of execution for a short time to enable him to consider my reasons, and to consider what he should do next.  My reasons were published on 27 January. 

1. Counsel for Seachange and Mr De Simone (the applicants) informed me, and I accept, that a notice of appeal has been prepared and filed.  I have sighted that notice of appeal.  I am told the applicants sought to file an application in the Court of Appeal for a stay of execution of the judgment pending the hearing and determination of their appeal to the Court of Appeal.

1. The application was filed but it has not been issued.  The Court of Appeal Registry has not inserted in the document the date upon which it is to be returnable.  Upon doing so, the registry will seal it and deliver it to the applicants.  At that point the proceedings will have been issued.

1. I was also informed by counsel for the applicants that attempts were made to have the Court of Appeal hear the matter today and were informed by the Court of Appeal Registry that that could not be arranged and that nothing could be arranged in the next day or so.  I understand that the applicants were informed that the trial judge, being me, might be able to consider any application they may make.  

1. I accept that I do have jurisdiction to grant a stay pending the hearing and determination of their application to the Court of Appeal for a stay pending the hearing and determination of the appeal.

1. I am told that the registry informed the applicants that an application for a stay pending the hearing and determination of the appeal would not be heard until early April of this year.  The applicants propose to issue a summons, which I have a copy of, and the summons says that Seachange and Mr De Simone apply for orders that there be an interim stay of execution of Orders 1 and 2 made by me on 21 January 2009 pending the hearing and determination by the Court of Appeal of the application for a stay of execution of the orders made in Court of Appeal proceeding No 3709 of 2009.

1. The basis of the application is that expounded by the Tait principle,[2] that unless the order is made, the subject matter of the action will be lost and to do justice between the parties there is need to preserve the subject matter of the action.

   [2]See Tait v R (1962) 108 CLR 620

1. In the Tait case the subject matter was Mr Tait's life.  The High Court also granted the injunction on the basis to preserve the dignity of the court so they would have time to consider the application properly.

1. In Jennings Construction Ltd v Burgundy Royale Investment Pty Ltd,[3] Brennan J, sitting as a single judge of the High Court of Australia, said after quoting from the judgment in Marconi’s Wireless Telegraph Co Ltd v Commonwealth (No 3)[4], that such orders as sought by the applicants are only granted in exceptional circumstances and unless there are very strong and special grounds shown.[5]

   [3](1986) 161 CLR 681

   [4](1913) 16 CLR 384

   [5]Jennings Construction Ltd v Burgundy Royale Investment Pty Ltd (1986) 161 CLR 681, 684

1. Further, Brennan J stated:

“In exercising 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.”[6]

[6]Ibid 685

1. I do not think I am being unfair to counsel for the applicants when I say that there were no submissions made asserting that those principles were not correct nor was I taken to any authority to suggest that they are not the correct principles to apply.

1. In my opinion, there is not a substantial prospect that the Court of Appeal will grant a stay. 

1. In light of the High Court decision in Jennings v Burgundy Royale[7] and Rawson's case,[8] there is nothing in equity which suggests it is inequitable that Seachange and Mr De Simone should pay what they promised to pay when the only issue is that if submissions and propositions of law and facts are held to be correct contrary to what Seachange and Mr De Simone say is the case, there theoretically might be a breach of the warranty clause.

   [7]Ibid

   [8]Rawson v Samuel (1841) Cr & Ph 161

1. In my judgment I accepted every factual matter Seachange and Mr De Simone put forward.  I accepted them for the purpose of testing the legal basis of the argument presented.  My judgment was not based upon any adverse findings of fact against Seachange or Mr De Simone.  I had reservations about whether one could trace the units from Mr McLeod to Mr Brereton to Mr Griffiths (stripping away the corporate entities) but I accepted Seachange’s and Mr De Simone’s argument that one could do so for the purposes of testing the argument.  The first hurdle is not overcome.

1. The applicant has taken whatever steps are necessary to seek a stay.  I accept that. The third point referred to by Brennan J is whether the grant of a stay will cause loss to the respondent.  There is no evidence it will cause any loss to Pital.  If the moneys are ordered to be repaid, interest can be paid.  On the other hand, Pital has been without moneys promised for some time and, whilst it is true Pital can be paid interest, in today’s economic climate I think that the court can safely take notice of the fact that money in the bank is far more valuable than a promise to pay with interest.

1. Where does the balance of convenience lie?  If Seachange and Mr De Simone are successful in their appeal and the Court sets aside the judgment that I entered, then the Court may order that the moneys be repaid with interest.  I do not see any prejudice to Seachange or Mr De Simone.  Their appeal will not be rendered nugatory by the fact that they pay over the promised moneys.

1. The Court should also always keep at the forefront of its mind that a successful plaintiff is entitled to the fruits of victory and it is only in exceptional circumstances where a plaintiff will be denied those fruits.  Those circumstances include if the appeal will be rendered nugatory.

1. In this case, there is no suggestion that the appeal will be rendered nugatory.  The only suggestion is that the application for a stay will be rendered nugatory because the benefits of the stay may well be lost between now and when the Court of Appeal hears the application for a stay in early April 2009.  There are plenty of other opportunities to apply to the Court for a stay if there is some damage to be done.  For example if there is a winding up application, the Court can be prevailed upon to defer making orders.  I do not need to go into these aspects, but if there is any special damage that Seachange or Mr De Simone is going to suffer which has not been put before me, there are opportunities to raise it.  There has been nothing put before the Court to show that there is any inconvenience or damage or other consequences flowing from Seachange or Mr De Simone paying the moneys they promised to pay.  Amongst the material which is put before the court it is relevant to note that that has never been suggested.

1. I accept that, on the other hand, unless I grant a stay pending the hearing of the Court of Appeal of the stay application, the stay application may be rendered nugatory.  When one analyses such an argument one can see that such a point can be made at any stage and would virtually render useless a single judge’s right to refuse a stay application.  To illustrate; if a judge of the Trial Division refuses a stay one merely need then to apply to the Court of Appeal for a stay and then go to the judge and say:  “Well, unless you give us a stay, our application for a stay will be rendered nugatory.”  One of the effects of following exclusively the dictates of that logic, is that it would severely undermine the power of a judge to make sure that a successful plaintiff does receive the fruits of his or her victory.

1. On balance, therefore, and after taking into account all those matters, I refuse the application of Seachange and Mr De Simone.