Rosenberg v Can't Escape Karma Pty Ltd
[2025] WASCA 83
•28 MAY 2025
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
TITLE OF COURT : THE COURT OF APPEAL (WA)
CITATION: ROSENBERG -v- CAN'T ESCAPE KARMA PTY LTD [2025] WASCA 83
CORAM: MITCHELL JA
VAUGHAN JA
HEARD: 28 MAY 2025
DELIVERED : 28 MAY 2025
PUBLISHED : 28 MAY 2025
FILE NO/S: CACV 24 of 2025
BETWEEN: LANCE MICHAEL ROSENBERG
First Appellant
ELI SHELLIM
Second Appellant
GLENEAGLE SECURITIES NOMINEES PTY LTD
Third Appellant
AND
CAN'T ESCAPE KARMA PTY LTD
Respondent
ON APPEAL FROM:
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram: HOWARD J
Citation: ROSENBERG & ORS -v- CAN'T ESCAPE KARMA PTY LTD [2025] WASC 58
File Number : COR 133 of 2024
Catchwords:
Appeals - Appeal from interlocutory order concerning examination summonses and direction to produce - Urgent application for stay pending appeal - Principles for stay pending appeal - Stay of examination summonses pending appeal granted - Stay of direction to produce refused but inspection not to occur until determination of appeal - Turns on own facts
Legislation:
Supreme Court (Court of Appeal) Rules 2005 (WA), r 43(2)(h)
Result:
Application to stay examination summonses granted
Category: B
Representation:
Counsel:
| First Appellant | : | A P Young KC & P H Murray |
| Second Appellant | : | A P Young KC & P H Murray |
| Third Appellant | : | A P Young KC & P H Murray |
| Respondent | : | J P Cook |
Solicitors:
| First Appellant | : | K & L Gates |
| Second Appellant | : | K & L Gates |
| Third Appellant | : | K & L Gates |
| Respondent | : | Mendelawitz Morton Commercial Lawyers |
Case(s) referred to in decision(s):
Apache Energy Ltd v Alcoa of Australia Ltd [2012] WASCA 201
Eastland Technology Australia Pty Ltd v Whisson [2003] WASCA 307; (2003) 28 WAR 308
Rosenberg v Can't Escape Karma Pty Ltd [2025] WASC 58
Samuels v The State of Western Australia [2005] WASCA 193; (2005) 30 WAR 473
Sino Iron Pty Ltd v Mineralogy Pty Ltd [2023] WASCA 96
Tradesman Technologies Pty Ltd v Ameduri [2012] WASCA 168
REASONS OF THE COURT:
Overview
On 28 May 2025 the court sat pursuant to a Registrar's Notice to Attend dated 22 May 2025 to consider the appellants' application in an appeal dated 21 May 2025 seeking to stay orders made by a judge of the General Division on 28 March 2025. The orders provided for examinations of the first and second appellants (respectively 'Mr Rosenberg' and 'Mr Shellim') under div 1 of pt 5.9 of the Corporations Act 2001 (Cth) together with the production of documents by Messrs Rosenberg and Shellim and the third appellant (Gleneagle) for the purpose of the examinations.
After hearing from the parties we allowed the appellants' application in part. We made orders having the effect of staying the examinations pending the hearing and determination of the appeal save to the extent as was necessary to enable the production of documents. Accordingly, the appellants are to produce documents pursuant to the examination summonses and the direction to produce. However, inspection of those documents is to be deferred pending the hearing and determination of the appeal. The court said that it would provide written reasons for those orders as soon as practicable. These are our reasons for the orders of the court made 28 May 2025.
Background
The appeal concerns proposed examinations about the examinable affairs of Atari Enterprises Pty Ltd (in liquidation) (Company).
A voluntary administrator was appointed to the Company on 1 November 2023. That date is important. It will be seen that it is the date of transactions identified at [9] - [12] below. On 4 December 2023 the Company's voluntary administration ended and the Company became subject to a creditors' voluntary winding up. On 28 March 2024 the respondent entered into a deed of assignment with the Company's liquidator. The deed, which was subject to court approval, assigned to the respondent any chose in action of the Company or its liquidator which was capable of assignment. On 18 April 2024 the court granted approval nunc pro tunc to the liquidator to enter and cause the Company to enter into the deed of assignment.
The respondent sought authorisation from the Australian Securities and Investments Commission to be appointed as an 'eligible applicant' in relation to the Company. In seeking such authorisation, so as to be able to apply for the issue of examination summonses under s 596A or s 596B of the Corporations Act, the respondent focused on transactions that the Company entered into on 1 November 2023. The background to and nature of those transactions is described more fully in the primary judge's reasons: Rosenberg v Can't Escape Karma Pty Ltd.[1] It is, however, necessary to briefly summarise those matters to place the present application in context.
[1] Rosenberg v Can't Escape Karma Pty Ltd [2025] WASC 58 [19] - [36] (primary reasons).
At all material times:
1.The Company was a holding company owning 100% of the issued shares in Atari Enterprises Trading Co Pty Ltd (Trading Co).
2.Scott Douglas was the sole director of the Company.
3.Mr Rosenberg was the sole director of Gleneagle.
On 25 January 2018, the Company and Gleneagle entered into an agreement described as the 'Bond Agreement'. By the Bond Agreement, among other things, the Company granted security to Gleneagle over 'all assets and inventory' of the Company. Gleneagle lent $800,000 to the Company pursuant to the Bond Agreement. One repayment was made in 2019. However, from at least 30 August 2019 the Company was in breach under the Bond Agreement.
Voluntary administrators were appointed to Trading Co on 22 August 2023.
As of 1 November 2023 Trading Co owed the Company about $4.5 million. On 1 November 2023 the Company executed two instruments - a 'Restructure Deed' and a 'General Security Deed'. The counterparties to the Restructure Deed were Gleneagle and Rampage Nominees Pty Ltd (Rampage). Gleneagle was the sole counterparty to the General Security Deed. Rampage was incorporated on 1 November 2023; Mr Shellim was its sole director. Gleneagle was the sole shareholder of Rampage holding 25% of those shares beneficially for itself and 75% of the shares on trust for a trust associated with Mr Douglas.
The Restructure Deed recited that the Company was the owner of certain 'assets'. The 'assets' as defined were the whole of the Company's assets. Three kinds of assets were specifically identified: (1) shares in Trading Co; (2) intellectual property rights including the Company's entitlement and rights to the name 'Running With Thieves', digital assets, trademarks and recipes; and (3) the intercompany debt owed by Trading Co to the Company. The Restructure Deed also recited that the Company owed a debt to Gleneagle, who held security over the assets for repayment of the debt, and that the Company was in default of its obligation to repay the debt.
In circumstances where the Company was unable to repay the debt owed to Gleneagle, the Restructure Deed provided for the Company to sell its assets to Gleneagle in consideration for a reduction of the debt in the amount of the purchase price being $330,000 (inclusive of GST). Gleneagle nominated Rampage to acquire the assets on its behalf.
By the General Security Deed, the Company acknowledged that: (1) it owed the secured money to Gleneagle; and (2) it granted an original security interest to Gleneagle under the Bond Agreement. The Bond Agreement was said to be subject to formal documentation of the parties' respective rights and obligations at a later date. The General Security Deed was intended to effect that arrangement by the Company agreeing to grant Gleneagle a security interest over all of the Company's present and after-acquired property to secure the payment of the secured money.
The orders for examination and the applications before the primary judge
On 20 August 2024 the respondent applied for the issue of examination summonses directed to, among others, Mr Rosenberg and Mr Shellim. In both cases the application was made pursuant to s 596B of the Corporations Act. The respondent also sought, under s 596D of the Act, that the summonses require the relevant recipient to produce specified books at his examination. In addition, the respondent applied, under s 597(9) of the Corporations Act, for a direction that Gleneagle produce specified books.
On 3 October 2024 Master Russell made orders for the issue of examination summonses to Mr Rosenberg and Mr Shellim. The master also made an order that a direction be issued to Gleneagle to produce books at the examinations. In due course the examination summonses and the direction to produce were served on the appellants. The appellants each applied individually, by interlocutory process, to discharge the examination summons or direction to produce that had been issued in relation to them. The interlocutory processes also sought an order that the affidavit filed in support of the respondent's application for the issue of examination summonses and the direction to produce be made available for inspection by the relevant appellant.
The primary judge (Howard J) heard the appellants' applications on 19 February 2025. The grounds advanced by each of the appellants were substantially the same. Essentially:
1.The appellants' primary ground was that there was no utility in the summonses and the direction to produce remaining on foot. It was contended that none of the mooted claims in respect of the 1 November 2023 transactions were sustainable. This was because, according to the appellants:
(a)those controlling the Company as at 1 November 2023 did not owe, and could not owe, any general law or statutory duties to any party other than Gleneagle; and
(b)the Company and its creditors had suffered no loss because, effectively, no property of the Company was dealt with within the 1 November 2023 transactions - the appellants argued that the Company's property was effectively the property of Gleneagle prior to 1 November 2023.
2.The appellants also contended that the summonses and the direction to produce were oppressive and issued for an improper purpose. Moreover, according to the appellants, there was a lack of disclosure by the respondent in applying for the issue of the examination summonses and the direction to produce. These arguments relied, at bottom, on the proposition that the summonses and the direction to produce were without utility.
Separately, as mentioned, the appellants sought to inspect the affidavit filed in support of the application for the issue of the examination summonses and the direction to produce.
The respondent sought to justify the summonses and the direction to produce by reference to the 1 November 2023 transaction.
The primary judge published written reasons dismissing the appellants' applications on 4 March 2025: Rosenberg v Can't Escape Karma Pty Ltd. The primary judge considered that he did not need to come to a final view as to the legal effect of the Bond Agreement and the 1 November 2023 transactions. This was because, in his Honour's view, to set aside the examination summonses and the direction to produce, it would be necessary to reach a state of satisfaction as to the correctness of the appellants' contentions in support of their primary ground such that it would not be appropriate for the summonses and the direction to produce to remain on foot. The primary judge characterised the appellants' contentions as being no more than arguable - indeed, according to the primary judge, the appellants' contentions did not appear to him to be the better view [57] - [59], [64].
The primary judge held it was arguable that:
1.The 1 November 2023 transactions disposed of the Company's assets [60] - [61].
2.Mr Douglas breached a general law or statutory duty to the Company in disposing of its assets to a purchaser in which he, Mr Douglas, had an interest [61].
3.Mr Rosenberg and Mr Shellim were knowingly involved in Mr Douglas' actions in a way that would have consequences in terms of accessorial liability either under the general law or the Corporations Act [62].
In any case, according to the primary judge, it was plain that Mr Rosenberg and Mr Shellim may have information which would be relevant to the enquiries into Mr Douglas' conduct as the Company's director [63]. The primary judge said that the summonses and the direction to produce could be justified by the respondent seeking them for the purpose of facilitating the administration or enforcement of the law concerning the public dealings of the Company and its officers [65].
The alternate contentions as to oppression and improper purpose failed because the primary judge did not accept the summonses and the direction to produce to be obviously or necessarily without utility [70], [72]. The primary judge was not persuaded that he should draw an inference that the disclosure to the court was materially insufficient [77]. As to inspection of the affidavit in support of the application to issue the summonses and the direction to produce, the primary judge queried the generally applicable test where the basis for challenging the issue of the summonses and the direction was a lack of utility [80] ‑ [81]. In any case, having concluded that the summonses and the direction were not oppressive or an abuse of process, the primary judge did not accede to the application to inspect the supporting affidavit [82] ‑ [83].
On 28 March 2025 the primary judge made orders. The examination summonses were amended in a way that is immaterial for present purposes. While expressly unstated it is implicit in the orders that the appellants' applications to discharge the examination summonses and the direction to produce were dismissed. The primary judge also ordered that:
3.The examination of [Mr Rosenberg] and [Mr Shellim] be listed on a date fixed by the Registrar (Return Date).
4.The date for production of documents by [Gleneagle] be listed for 4.00 pm on a date that is 14 days prior to the Return Date.
On 12 May 2025, Registrar Jennings listed the examinations for 10.00 am on 4 June 2025. Accordingly, the production of documents by Gleneagle was fixed for 21 May 2025 at 4.00 pm. Mr Rosenberg and Mr Shellim were also obliged to produce specified books pursuant to their respective examination summonses at 4.00 pm on 21 May 2025.
The application for leave to appeal and the application to stay the examinations
On 11 April 2025 the appellants filed an appeal notice seeking leave to appeal. The appellants should have filed their appellant's case by 28 April 2025. The appellants failed to do so. An appellant's case was not filed until 15 May 2025 (after Registrar Jennings fixed the dates for production of documents and the examinations). In that respect the appellants have delayed in prosecuting their appeal.
The appellants notionally advance four grounds of appeal. The grounds are poorly drafted and, in many respects, do not comply with r 32(4) of the Supreme Court (Court of Appeal) Rules 2005 (WA). While the grounds are arranged around four topics, many of the topics have alternatives or further alternatives such that, in truth and reality, there are multiple intertwined grounds without clear specification of the intended legal target. The grounds are not stated succinctly with concise particulars. They wander over some six pages of single‑spaced text and reproduce substantial extracts from decided cases and the facts as found, while tending to obscure the precise error that the primary judge is said to have made.
In substance, doing the best we can after considering the grounds, the appellants allege that the primary judge erred as follows:
1.The primary judge allegedly erred in law in refusing to allow the appellants to inspect the affidavit sworn in support of the application for the issue of the examination summonses and the direction to produce (pars 1 - 3). (Ground 1)
2.The primary judge allegedly erred in law in not concluding that the examination summonses should be discharged as an abuse of process on the basis that the summonses were: (a) misconceived and inutile; (b) oppressive and vexatious; or (c) issued for an improper purpose (pars 4 - 5). (Ground 2 pt 1)
3.The primary judge allegedly erred in law in concluding that the examination summonses and the direction to produce could be justified as facilitating the administration or enforcement of the law concerning the public dealings of the Company and its officers (par 6). (Ground 2 pt 2)
4.The primary judge allegedly erred in law, alternatively in mixed law and fact, in not concluding that the examination summonses should be discharged for non-compliance with the obligation to make full and frank disclosure to the court on the ex parte application for orders to issue the summonses (pars 7 ‑ 8). (Ground 3)
5.The primary judge allegedly erred in law by denying the appellants a fair hearing attended by procedural fairness and natural justice (par 9). (Ground 4)
After the appellants served their appellant's case, there was conferral between the parties' solicitors about the upcoming listing for production of documents before the registrar as fixed for 21 May 2025 at 4.00 pm. On 20 May 2025, at 3.17 pm, the appellants' solicitors asked the respondent's solicitors whether the respondent would consent to orders vacating the registrar's orders fixing the time for production of documents and the examinations. The respondent's solicitors sought to engage on the orderly production of the documents. At that point, the appellants' solicitors asked the respondent's solicitors to confirm that the respondent did not consent to a stay on the basis that the appeal would otherwise be rendered nugatory. The respondent's solicitors informed the appellants' solicitors that no compelling reason had been advanced for a stay. This was on the basis that the appeal was doomed to fail. Further correspondence then passed without agreement being reached between the parties.
The appellants' solicitors were aware from 6.34 pm on 20 May 2025 - having only raised the possibility of a stay at 3.41 pm that afternoon - that the respondent would not consent to an order having the effect of staying the examinations and the production of documents pursuant to the examination summonses and the direction to produce.
At about 12 noon on 21 May 2025 (only four hours before the production of documents was due) the appellants filed an application in an appeal dated 21 May 2025 seeking orders that pars 3 and 4 of Howard J's orders made 28 March 2025 be stayed until the hearing and determination of the appeal. The application was supported by the affidavit of Nicholas Brown sworn 21 May 2025. Mr Brown is a partner of the firm of solicitors acting for the appellants.
Mr Brown's affidavit is perfunctory. Having dealt with introductory matters, and mentioning the registrar's orders and what is sought in the appellant's case, the affidavit simply states:
6.In their appeal, the appellants argue that the summonses are inutile and should be set aside or otherwise discharged for they constituted an abuse of process.
7.If the appellants' application for a stay of orders 3 and 4 of the Orders of the Honourable Justice Howard made on 28 March 2025 were not granted, the appellants would be obliged to comply with the orders to produce books and records and attend examinations, and the appeal would be rendered nugatory.
8.Attached and marked 'NHB-1' is a copy of a chain of emails passing between my office and the office of the solicitors for the respondent on 20 May 2025 concerning this application.
Mr Brown then wrote to the associate to the Court of Appeal registrar requesting that the court list the application for a stay on an urgent basis. The letter referred to the time fixed for production of documents as 4.00 pm that afternoon. Mr Brown's letter was sent by email at 1.05 pm on 21 May 2025. Given the court's electronic filing system, Mr Brown's letter was the first time that the application was brought to the attention of a court officer. In substance, in circumstances where production was due at 4.00 pm that day, the appellants sought that the court accommodate an immediate hearing that afternoon - the urgency being entirely one of the appellants' own making.
The appellants' delay in applying to stay the primary judge's orders made 28 March 2025 is egregious and unexplained.
It is well understood that the mere filing of an appeal notice does not result in an automatic stay of the primary court's judgment or order. Rather, a successful litigant is ordinarily entitled to enforce a judgment pending the determination of any appeal. Here the appellants did not seek a stay until approximately four hours before they were due to give production of documents on 21 May 2025. That timing is inexplicable in circumstances where: (1) the primary judge's reasons were handed down on 4 March 2025; (2) the orders appealed from were made on 28 March 2025; (3) an appeal notice was filed on 11 April 2025; and (4) the registrar's orders fixing the dates and times for the examinations and the production of documents was made on 12 May 2025.
It is unclear whether this inaction is attributable to the appellants or their solicitors. In either case it is deeply unsatisfactory. The application for a stay should have been brought shortly after the appeal was commenced rather than the day the appellants were due to comply with their production obligations. The delay has resulted in a waste of the court's resources and unnecessary attendances on the part of the respondent's solicitors.
The appellants' application for a stay was listed urgently before a single judge of appeal for 4.30 pm on 21 May 2025. To accommodate that listing the registrar adjourned the time for production of documents until later on 21 May 2025. Under questioning by the court, it became apparent that, as at 21 May 2025, the necessary steps had not been taken by the appellants to compile the documents that they were required to produce pursuant to the examination summonses and the direction to produce. At the hearing on 21 May 2025 the then counsel for the appellants informed the court that he was not in a position to give production - counsel said that his 'naïve assumption' was that, once the appeal was on foot, the respondent would not be pressing for the examination summonses to be progressed.[2]
[2] Appeal ts 2 - 4.
The court, for reasons given on 21 May 2025, was not minded to grant an interim stay in the terms sought by the appellants. The court instead ordered that the documents to be produced pursuant to the examination summonses and the direction to produce were not to be available for inspection until determination of the appellants' application for a stay. The court also made programming orders for the urgent determination of the appellants' application for a stay. The hearing before the registrar then resumed. The appellants, by their counsel appearing before the registrar, were not in a position to give production of the documents to be produced pursuant to the examination summonses or the direction to produce. The registrar ordered that the production of documents by Gleneagle be adjourned to a date to be fixed pending resolution of the appeal.
There has subsequently been production of some documents. The court's file records production on behalf of Gleneagle. At the hearing on 28 May 2025 senior counsel for the appellants informed us that in fact the production had been on behalf of all the appellants. Senior counsel said that there had been two tranches of documentary production and a third was contemplated. Insofar as, in the circumstances, the requirement to give production of documents has not yet been satisfied in full, in what follows we will generally focus on the document production obligations under the examination summonses.
Applicable principles for a stay pending appeal
The appellants state that their application invokes r 44 of the Supreme Court (Court of Appeal) Rules 2005 (WA). The correct provision is in fact r 43(2)(h) (as read with par (b) of the definition of 'interim order').
The appellants are correct to focus on the power under the Rules - or alternatively the court's general power to make interlocutory orders as are necessary to preserve the integrity of or to ensure the effective exercise of its appellate jurisdiction - given that the examination summonses do not fit comfortably within the conception of a 'judgment' or 'enforcement' to which s 15(1) of the Civil Judgments Enforcement Act 2004 (WA) applies. However, the source of the power does not matter for the purpose of the determination of the appellants' application. The organising principles on which this court determines whether it will grant or refuse a stay are well established and apply equally to the various available sources of power to order a stay. See generally Eastland Technology Australia Pty Ltd v Whisson[3] and Tradesman Technologies Pty Ltd v Ameduri.[4]
[3] Eastland Technology Australia Pty Ltd v Whisson [2003] WASCA 307; (2003) 28 WAR 308 [9].
[4] Tradesman Technologies Pty Ltd v Ameduri [2012] WASCA 168 [22] - [23].
Broadly speaking, there are three primary considerations. First, whether a stay is necessary to preserve the subject matter of the appeal - ie whether, without the stay, the appeal might be rendered nugatory. In this respect the term 'nugatory' is used in the sense of indicating that a stay is necessary to preserve the subject matter or the integrity of the litigation or as indicating that, at the least, refusal of a stay could create practical difficulties in respect of the relief which may be granted on the appeal. Second, whether the appeal has reasonable prospects of success. Third, whether the balance of convenience favours the grant of the stay.
The central issue will generally be whether the grant of a stay is perceived to be necessary to preserve the subject matter or the integrity of the litigation. In this respect, speaking broadly, the essential question is whether - having regard to the likely practical consequences as well as the legal consequences - the appeal would be futile unless a stay was granted: Sino Iron Pty Ltd v Mineralogy Pty Ltd.[5]
[5] Sino Iron Pty Ltd v Mineralogy Pty Ltd [2023] WASCA 96 [44] - [45].
Disposition
The respondent accepted that the appeal would be rendered nugatory in the absence of a stay. The respondent's concession was correct as to the proposed examinations. In the absence of a stay, the examinations of Mr Rosenberg and Mr Shellim will proceed on 4 June 2025. That will render the appeal against the primary judge's decision nugatory in the relevant sense. Once the examinations have occurred the appeal on the part of Mr Rosenberg and Mr Shellim will be futile so far as they have been compelled to attend before the court to be examined on oath or affirmation about the affairs of the Company. Absent the examination summonses Mr Rosenberg and Mr Shellim have a right to refuse to answer any of respondent's questions about the Company's affairs. However, having done so - under the compulsion of the examination summonses at the examinations fixed for 4 June 2025 - it will not be possible for Mr Rosenberg and Mr Shellim to be restored substantially to their former positions even if the appeal succeeds.
The application for a stay seemingly contemplated that the appeal would also be rendered nugatory without a stay of the document production requirements provided for in the examination summonses.
We accept that, absent a stay, the appellants will have to comply with the document production obligations in the examination summonses. This will necessitate the appellants reviewing their records and compiling the documents for production. However, in circumstances where no stay had been sought, that task should have been performed well before 21 May 2025 so that the appellants were in a position to comply with the summonses as ordered. Once the documents are produced to the court it will be possible for the court to prevent the respondent from inspecting the documents. If the appeal is successful this court may order that the documents are to be returned to the appellants. In that circumstance the appellants' right (as established by their successful appeal) to exclude the respondent from inspecting the documents, will not be adversely affected or impaired in any way.
So understood, refusal of a stay as to the document production requirements under the examination summonses will not render the appeal nugatory provided that a restriction is imposed on inspection of the documents pending determination of the appeal. Whether the court should take this course, as opposed to a complete stay, is bound up with consideration of the balance of convenience. However, before considering the balance of convenience it is necessary to consider the appellants' prospects of success.
The respondent submitted that the appeal was without reasonable prospects of success.
What is sufficient to amount to reasonable prospects of success for the purpose of a stay application is ordinarily not a high hurdle. It will usually be enough to show that the grounds of appeal have a rational and logical prospect of succeeding: Apache Energy Ltd v Alcoa of Australia Ltd;[6] Sino Iron Pty Ltd v Mineralogy Pty Ltd [50]. Grounds of appeal that have a rational and logical prospect of succeeding are grounds that are not irrational, fanciful or absurd: Samuels v The State of Western Australia.[7] Accordingly, this consideration is concerned with unmeritorious appeals. It means that the court may refuse a stay in circumstances where it is plain that the appeal is without merit and was brought merely for the purpose of delaying compliance with the judgment or order under appeal: Apache Energy Ltd v Alcoa of Australia Ltd [27].
[6] Apache Energy Ltd v Alcoa of Australia Ltd [2012] WASCA 201 [27].
[7] Samuels v The State of Western Australia [2005] WASCA 193; (2005) 30 WAR 473 [56].
On an application of the present kind it is not appropriate to embark on a detailed consideration of the merits of the grounds of appeal. We acknowledge the force of the matters raised by the respondent. They are, in substance, the matters that were accepted by the primary judge. Aspects of the grounds appear weak. However, having considered the appellant's case, we are unable to conclude that the grounds as a whole are irrational, fanciful or absurd. In particular, we are satisfied that ground 2 has a reasonable prospect of success in the relevant sense.
The circumstance that refusal of a stay will render an appeal nugatory, in whole or in part, will ordinarily weigh heavily in the balance of convenience in favour of the grant of a stay - at least to the extent that the stay is necessary to preserve the subject matter or integrity of the appeal. There will be countervailing factors. One is the general acceptance that a successful litigant is ordinarily entitled to enforce a judgment pending the determination of any appeal. In a specific case there may be other factors. For example, the stay may prejudice the successful litigant. The extent of that prejudice may depend on the time that is likely to pass before the determination of the appeal. Also relevant is whether there has been delay on the part of the applicant for a stay in commencing or prosecuting its appeal. It is for the applicant for a stay to move the court to a favourable exercise of its discretion.
In contending that the balance of convenience favoured the grant of a stay, senior counsel for the appellants emphasised that refusal of a stay would impair the appellants' appeal right. As has been seen, we accept this submission, but only up to a point. The refusal of a stay will render the appeal nugatory to the extent that Mr Rosenberg and Mr Shellim seek to avoid being examined as to the Company's affairs.
It is likely that this appeal could be heard in the first week of September 2025. There is a general prejudice to any litigant in the resolution of its litigation being delayed. However, the respondent did not point to any substantial prejudice that it would suffer if the examinations were deferred until after determination of an appeal to be heard in September 2025. In these circumstances we were and are satisfied that the balance of convenience favours an order having the effect of staying Mr Rosenberg's and Mr Shellim's examinations pending the hearing and determination of the appeal. In coming to this conclusion we were conscious of, and took into account, the appellants' egregious and unexplained delay in applying to stay the primary judge's orders made 28 March 2025. That was, in our view, a significant factor against the favourable exercise of the discretion. Ultimately, however, we were and are satisfied that the interests of justice tipped in favour of what was necessary to preserve the subject matter or integrity of the appeal.
We took a different view with the document production requirements under the examination summonses.
For reasons already explained, provided that a restriction is imposed on inspection pending determination of the appeal, refusal of a stay as to the document production requirements will not render the appeal nugatory. To our mind, there was and is a considerable practical benefit in the appellants being required to comply with the document production requirements despite the pending appeal. The appellants' failure to take prompt steps - indeed to take any steps - to meet their obligations under the examination summonses and the direction to produce by 21 May 2025 is stark. If that position continued the respondent would not be able to proceed with the examinations in a timely way (assuming that it is successful in the appeal). After the appeal is determined the respondent would have to wait for the appellants to comply with document production requirements that should largely have been met at the time of filing the application for a stay. If, however, the appellants were required to comply with the document production requirements before the appeal hearing, but inspection was prohibited pending determination of the appeal, the examinations would be able to proceed very soon after the appeal is resolved.
It should be remembered that the respondent was the successful party in the litigation below. That success is a material factor in weighing the balance of convenience. In considering what, if any, interim intervention is necessary to preserve the integrity of or to ensure the effective exercise of its appellate jurisdiction, it is appropriate that the court has due regard to practical measures that might minimise the impact of its intervention on the respondent as the presently successful party.
In our view, having regard to the considerations we have mentioned together with the appellants' delay in applying for a stay and in prosecuting the appeal, the balance of convenience was and is firmly against permitting further inaction on the part of the appellants so far as the production of the documents is concerned. The parties' interests and other differing considerations as inform the question of whether to stay the document production requirements were appropriately balanced by requiring production in accordance with the examination summonses and the direction to produce, but preventing inspection of the documents so produced pending the hearing and determination of the appeal. In the latter respect we acknowledge that the appellants have belatedly produced pursuant to the direction to produce and the examination summonses.
We acknowledge that compliance with the document production requirements will involve wasted efforts - and some wasted expenditure - if the appeal is successful. But the appellants adduced no evidence in support of the application in an appeal dated 21 May 2025 as to what efforts or expenditure might be involved in complying with the document production requirements under the examination summonses or the direction to produce. The appellants bore the onus in moving the court to a favourable exercise of its discretion. The deficiency in this aspect of appellants' evidence in support of their application diminished the weight to be given to this factor.
Conclusion and orders
We were, for these reasons, satisfied that the court should make an order having the effect of staying Mr Rosenberg's and Mr Shellim's examinations pending the hearing and determination of the appeal. However, we were not satisfied that the court should make an order having the effect of staying the document production requirements. We instead concluded that the appellants should comply with those requirements but that their interests, and the subject matter and integrity of the appeal, would be preserved by preventing inspection of the documents pending the hearing and determination of the appeal.
As the documents are to be produced at the examinations our conclusion necessitated allowing the examinations to proceed to a limited extent as is necessary to enable the production of the documents.
The court ordered that:
1.Paragraph 1 of the order of the court made 21 May 2025 is revoked.
2.Subject to further order of the court and pars 3 and 4 below, the examinations of:
(a)the first appellant, Lance Michael Rosenberg, pursuant to the amended examination summons issued in accordance with par 1 of the orders of Howard J made 28 March 2025; and
(b)the second appellant, Eli Shellim, pursuant to the amended examination summons issued in accordance with par 2 of the orders of Howard J made 28 March 2025;
are stayed until the hearing and determination of the appeal.
3.Notwithstanding par 2, there is to be production of documents by:
(a)the first appellant, Lance Michael Rosenberg, pursuant to the amended examination summons issued in accordance with par 1 of the orders of Howard J made 28 March 2025;
(b)the second appellant, Eli Shellim, pursuant to the amended examination summons issued in accordance with par 2 of the orders of Howard J made 28 March 2025; and
(c)the third appellant, Gleneagle Securities Nominees Pty Ltd ACN 150 259 877, pursuant to the direction to produce issued in accordance with par 3(b) of the order of Master Russell made 3 October 2024;
on a date and time to be fixed by Registrar Jennings (and the examination summonses are to be returnable at that time, for the examination of the first and second appellants, for the limited extent as is necessary to enable the production of the documents).
4.The documents produced in accordance with par 3 above are not to be available for inspection until the hearing and determination of the appeal.
5.The parties are to contact the associate to Registrar Jennings as soon as practicable to request a hearing at which the registrar will fix a date and time for production of documents in accordance with par 3 above.
The costs of the application were reserved. Other orders were made for the progress of the appeal. No reasons are required for those orders.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
SD
Associate to the Hon Justice Vaughan
28 MAY 2025
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