RW & Me Smith Pty Ltd v Boral Resources (Vic) Pty Ltd

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S EAPCI 2022 0055

RW & ME SMITH PTY LTD (ACN 105 445 645)	Applicant
v
BORAL RESOURCES (VIC) PTY LTD (ACN 004 620 731)	Respondent

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JUDGES:	KENNEDY and MACAULAY JJA
WHERE HELD:	Melbourne
DATE OF HEARING:	1 December 2023
DATE OF JUDGMENT:	4 December 2023
MEDIUM NEUTRAL CITATION:	[2023] VSCA 296
JUDGMENT APPEALED FROM:	RW & ME Smith Pty Ltd v Boral Resources (Vic) Pty Ltd [2022] VCC 729 (Judge A Ryan)

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PRACTICE AND PROCEDURE – Stay – County Court dismissed claim for damages for wrongful termination of contract – Court of Appeal allowed appeal and remitted proceeding to County Court for assessment of damages – Application for stay of execution of judgment by staying assessment of damages pending special leave application – Whether power to stay proceeding after remittal to another court – Whether exceptional circumstances justify stay – Application dismissed.

Supreme Court (General Civil Procedure) Rules 2015, r 66.16.

Jennings Construction Ltd v Burgundy Royale Investments Pty Ltd [No 1] (1986) 161 CLR 681, applied.

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Counsel
Applicant:		LEP Magowan
Respondent:		O Fagir
Solicitors
Applicant:	Aitkin Partners
Respondent:	Australian Business Lawyers

KENNEDY JA
MACAULAY JA:

This Court has power to stay execution of a judgment. The power to do so is conferred by r 66.16 of the Supreme Court (General Civil Procedure) Rules 2015.[1]
[1]The Court may also have an inherent power: see generally Civil Procedure Victoria (LexisNexis) [I 64.34.0].
Boral[2] applied for an order pursuant to r 66.16 that ‘the execution of the judgment of the Supreme Court in the Court of Appeal made on 11 August 2023 … be stayed’. It seeks a stay pending the outcome of its application for special leave to appeal against this Court’s judgment.
[2]For convenience, we will refer to the applicant for the stay as ‘Boral’ and the respondent to the stay application as ‘Smith P/L’.
On the hearing of the application for the stay we pronounced orders dismissing the application with costs and said that we would deliver our reasons for doing so subsequently. These are those reasons.
Smith P/L is the corporate entity through which Mr and Mrs Smith — now in their mid‑80s — conducted their concrete cartage business. Boral operates a concrete plant in Swan Hill. Smith P/L brought a proceeding against Boral in the County Court claiming damages for the wrongful termination of a five year cartage contract (the ‘Agreement’) Smith P/L had made with Boral to deliver concrete in the Swan Hill region. In July 2015, Boral purported to terminate the Agreement immediately relying upon a clause in the contract enabling it to do so for cause.
Smith P/L failed at first instance but, on appeal to this Court, orders were made setting aside the orders of the County Court and giving judgment for Smith P/L for damages to be assessed. The Court further ordered that ‘[t]he proceeding be remitted to the County Court for the assessment of damages and orders as to costs’. This Court also ordered that Boral pay Smith P/L’s costs of the appeal, including the application for leave to appeal. Because the applicable scale of those costs may depend upon the amount of the judgment to be determined by the assessment of damages in the County Court, liberty was reserved to apply to this Court in respect of the scale of costs.
In its reasons for judgment on 11 August 2023, this Court made it clear that the remitter for the assessment of damages was to be on the footing that:
(a)Boral breached the Agreement by wrongfully purporting to exercise a right of immediate termination;
(b)Boral’s breach prevented Smith P/L from performing the Agreement and earning revenue from that performance;
(c)Boral failed to prove that it would have terminated the Agreement upon three months’ written notice;
(d)Smith P/L is entitled to judgment, with costs, with damages to be assessed; and
(e)the parties led the evidence at trial upon which they intended to rely for the assessment of loss and damage should Smith P/L succeed on its claim.[3]
[3]RW & ME Smith Pty Ltd v Boral Resources (Vic) Pty Ltd [2023] VSCA 182, [146].
Since then, the matter has been remitted to the County Court. The trial judge set a directions hearing and invited the parties to make submissions with respect to the evidence and portions of the trial submissions to be taken into account in the assessment of damages. The parties each filed memoranda setting out their respective positions on those questions. An examination of those memoranda reveals a degree of consensus on the evidence to be relied upon. At most, assuming Boral’s position is adopted, any further submissions will be confined to written submissions with, perhaps, confined oral argument to clarify those written submissions and to answer any questions the judge might have.
That process has presently stalled. It stalled because Boral lodged its application for special leave on 8 September 2023 and, on 21 September 2023, filed an application in this Court for a stay of the proceeding pending the outcome of that special leave application and any subsequent appeal to the High Court. The County Court judge has decided to await the outcome of the stay application in this Court before proceeding with the assessment.
Boral’s special leave application reveals that its proposed appeal does not challenge the finding that it breached the Agreement by its purported termination of it. It does not challenge the judgment given in favour of Smith P/L. Rather, it challenges Smith P/L’s entitlement to any substantive compensatory damages, conceding only an entitlement to nominal damages. It does so because it alleges — as it did in the trial and before this Court — that it could and would have lawfully terminated the Agreement by recourse to a clause by which it could terminate the Agreement, without cause, on three months’ written notice. On that basis, it argued, Smith P/L would have suffered the same loss it has suffered from the unlawful immediate termination.
Where the jurisdiction to grant a stay arises, the considerations for the exercise of the discretion whether to order a stay are well established. The principles were set out by Brennan J in Jennings Construction Ltd v Burgundy Royale Investments Pty Ltd [No 1].[4] The jurisdiction to order a stay is extraordinary and exceptional circumstances must be shown before its exercise is warranted.[5] The jurisdiction arises if an application for special leave would be futile unless a stay is granted.[6] Brennan J identified four relevant considerations in the exercise of that extraordinary jurisdiction, namely:
(a)whether there is a substantial prospect that special leave to appeal will be granted;
(b)whether the applicant has failed to take whatever steps are necessary to seek a stay from the court in which the matter is pending;
(c)whether the grant of a stay will cause loss to the respondent; and
(d)where the balance of convenience lies.[7]
[4](1986) 161 CLR 681; [1986] HCA 84.
[5]Ibid 684.
[6]Ibid 683.
[7]Ibid 685.
Boral submits that without a stay any successful appeal to the High Court would be rendered nugatory. More specifically, in written submissions Boral contended that a stay is warranted as the appeal will be rendered nugatory once any amount is paid to Smith P/L. It says so because if it pays over money to Smith P/L pursuant to an award of damages made by the County Court, and later succeeds on its appeal such that it is found that it was only obliged to pay nominal damages, its chances of ever recovering the money so paid are negligible. Given the material that has been filed by both sides in this application, we proceed on the assumption that its submission in this respect is accepted. We are also prepared to accept for the purpose of this application that there is a substantial prospect that special leave to appeal to the High Court will be granted.[8]
[8]That test does not require that the prospects of success on the application for special leave must be high: Mercanti v Mercanti (2017) 340 ALR 225, 227 [11]; [2017] HCA 1.
In oral submissions, however, Boral fairly and rightly conceded that its application for special leave would not be rendered nugatory merely by the County Court proceeding to assess damages and making orders as to costs. In that regard, Boral nevertheless submitted that there would be a risk that the costs expended and the court’s devotion of resources in undertaking that assessment may prove to be otiose if Boral is ultimately successful in the High Court.
In relation to the balance of convenience, Boral orally submitted that there were only two real issues to consider: first, the value to be attributed to the circumstance that Smith P/L would be deprived of the fruits of the litigation for a period of time; and, secondly, the prospect that Boral would be granted special leave.
As to the second issue, as we have said we proceed on the assumption that Boral’s application has a ‘substantial prospect’ of being granted.
As to the first issue, Boral conceded that the personal circumstances of Mr and Mrs Smith (as those natural persons lying behind Smith P/L) were relevant and could be taken into account in the broad exercise of the Court’s discretion. Accepting that Mr and Mrs Smith are in their mid-80s and that Mrs Smith has recently had back surgery, Boral nevertheless submitted that the value to be attributed to the circumstance that Smith P/L will be kept out of its money by reason of any stay is weakened due to a number of considerations. One is that Smith P/L, by not issuing its proceeding for nearly six years, was responsible for six of the nine years of delay from the wrongful termination of the Agreement to the present date. Another is that, apart from Mrs Smith’s back surgery and the mere fact of their advanced age, there is nothing to suggest that a delay of several more months, until the outcome of the special leave application is known, will cause Mr and Mrs Smith particular difficulties. And the final consideration is that, on the evidence at trial, Mr Smith contemplated working for a number of years after 2015, evidently believing he would be fit and well enough to do so.
Even so, and again fairly and reasonably, Boral conceded that at this point in time, there are ‘unknown variables’ that could bear upon the exercise of the discretion if it were to be exercised at the point when money might actually be paid over to Smith P/L.
In our view, a number of obstacles confronted Boral which, together, meant that its application for a stay should be dismissed. They are as follows:
(1)The proceeding is no longer in this Court. It has been remitted to the County Court. There is no proceeding pending in this Court. The County Court has the power to stay its own proceeding. We have serious doubt as to whether this Court has the power to stay a proceeding in a different court in the particular circumstances that have arisen. Further, the power of this Court to modify its order by providing for a particular scale of costs to be applied on the taxation of the costs of the appeal, after hearing submissions by a party exercising the liberty that was reserved, is unlikely to be a sufficient basis to exercise the jurisdiction to stay the proceeding in the County Court. Nor is the fact that this Court made an order for the costs of the appeal that is yet to be enforced.
(2)There is unlikely to be any power in this Court to stay its order remitting the proceeding to the County Court once the remitter has been effected and that order is spent.
(3)In any event, the mere remitter of the proceeding to the County Court for the assessment of damages and orders as to costs is not a step against which Boral requires protection in order to avoid any successful appeal to the High Court being rendered nugatory. That step will not of itself cause any irreversible loss. In oral argument, Boral sought to reframe its application as being to stay the execution of this Court’s judgment to the extent that it directed the County Court to assess the damages. Even if that were possible, it leads to the next difficulty.
(4)Even if this Court somehow retains some power to stay the proceeding in the County Court, there is no justifiable reason to stay the mere assessment of the damages and the making of orders with respect to costs. Again, it is not that step that could be productive of any irreversible loss to Boral in the event it succeeds on a High Court appeal. Boral correctly conceded that its application for special leave will not be made nugatory by the mere assessment of damages.
(5)To the extent that the assessment of damages will require the parties to spend some additional costs which may be otiose or later not be recoverable by Boral if it succeeds, there is no prospect that this Court (if it had the power to do so) would order a stay to preserve those costs alone. They will be de minimis and there is a question as to the extent to which those costs, if due to Boral, might be offset anyway by other costs orders made against Boral. Indeed, even if Boral succeeds in the High Court, the whole issue of costs (at trial and on appeal) is complicated by the fact that Smith P/L will ultimately have succeeded on its claim, albeit only for nominal damages.
(6)Finally, the occasion for an informed exercise of the discretion has not yet arisen. Especially on the facts of the current case, to exercise it now would be premature. Factors affecting the balance of convenience include the actual amount of damages assessed (which is not yet known), and the financial circumstances of Mr and Mrs Smith at the time when the enforcement of the judgment is imminent. That is because, as Smith P/L’s solicitor, Mr Paolo Tatti, has explained, the value to be placed upon the right of Smith P/L (and through it, Mr and Mrs Smith) to enjoy the fruits of the litigation is fluid. It will at least depend on the size of the award and Mr and Mrs Smith’s personal financial needs at the time when the award might realistically be available to them. Boral’s various arguments for depreciating the weight to be given to Smith P/L’s right to enjoy the fruits of litigation can be considered at that time. In their mid-80s and experiencing some medical issues, Mr and Mrs Smith’s situation could conceivably change from month to month.
Even if this Court had a proper basis to stay the assessment of damages and award of costs in the County Court after the remitter of the proceeding to that Court — which we seriously doubt — we would refuse to exercise the jurisdiction to do so for the reasons given.
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[2023] VSCA 296

4 December 2023