St Kilda Arts and Events Company (Vic) Pty Ltd v Apes with Wings Pty Ltd
[2015] VSCA 199
•24 July 2015
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S APCI 2015 0050
| ST KILDA ARTS AND EVENTS COMPANY (VIC) PTY LTD (ACN 162 172 465) | First Applicant |
| DAVID JOHN CARRUTHERS | Second Applicant |
| VICTORIAN PUB PROPERTIES PTY LTD (ACN 098 395 174) | Third Applicant |
| v | |
| APES WITH WINGS PTY LTD (ACN 137 553 416) | First Respondent |
| METTE SALOM | Second Respondent |
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| JUDGES: | WEINBERG JA and GARDE AJA |
| WHERE HELD: | MELBOURNE |
| DATE OF HEARING: | 24 July 2015 |
| DATE OF JUDGMENT: | 24 July 2015 |
| MEDIUM NEUTRAL CITATION: | [2015] VSCA 199 |
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PRACTICE AND PROCEDURE – Judgment and orders – Application for stay of execution of judgment – Applicants represented by pro-bono counsel – Prospect of applicants being bankrupted or wound up if judgment debt enforced – Trial judge refused applicants access to video recording of trial and judge’s notes for purposes of determining whether potential ground of appeal available – Application for leave to appeal against judge’s ruling commenced and pending determination – No appeal presently on foot in respect of underlying judgment and orders subject of stay application – Prospective appeal uncertain and wholly speculative – Stay refused.
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| APPEARANCES: | Counsel | Solicitors |
| For the Applicants | Mr P J Hayes with Mr D Yarrow | Pro Bono |
| For the Respondents | Mr L E P Magowan | Makin & Kinsey Lawyers |
WEINBERG JA
GARDE AJA:
The respondents to this application, Apes with Wings Pty Ltd and Mette Salom, were the plaintiffs in a County Court proceeding brought by them against the present applicants, St Kilda Arts and Events Company (Vic) Pty Ltd (‘St Kilda Arts’), David John Carruthers and Victorian Pub Properties Pty Ltd. The proceeding below arose out of a contract for the sale and purchase of various properties in Acland Street, St Kilda. The central issue at trial was whether a business known as the ‘Dog’s Bar’ was included in that sale, and whether the respondents were entitled to vacant possession of the relevant premises at settlement. The respondents succeeded, and on 9 February 2015 obtained judgment against St Kilda Arts and Mr Carruthers in the sum of $97,940.04 by way of damages, and a further sum of $70,751.55 as costs.
The applicants, and for this purpose essentially Mr Carruthers, have foreshadowed an appeal against that judgment. However, at this stage, no application for leave to appeal has been filed, and it is by no means clear that any such application will, in fact, ultimately be pursued.
This application is for a stay of the orders that St Kilda Arts and Mr Carruthers pay the damages awarded below, as well as costs.
It is, at the very least, unusual for an application for a stay to be considered without any indication of precisely what points would be raised during the hearing of an appeal. This case is unusual in that, and several other, respects.
The evidence points overwhelmingly towards the conclusion that none of the applicants in support of the stay have any assets. If the stay is not granted, the two corporate applicants are exposed to being wound up, statutory demands having already issued. Mr Carruthers will, no doubt, find himself faced with the possibility of bankruptcy. Indeed, at the hearing of this application, we were informed by counsel that that possibility was now imminent.[1] For that reason, he maintains that this Court should stay the judgment in favour of the respondents until he has had an opportunity to present his case on appeal. He apprehends that, if he is made bankrupt, and his companies are wound up, the appeal will never be heard. As will be seen, it is possible that that apprehension may be misplaced.
[1]See further [25]–[26].
The applicants have no funds available to retain counsel. They have, however, had the excellent assistance of two members of the Bar who have been acting pro-bono on their behalf.
The judgment in favour of the respondents has been stayed on no fewer than seven occasions. Each order was made by the judge below who heard the entire proceeding. The last such stay expired in May of this year. Accordingly, unless this Court grants the stay sought, the ordinary consequences of failure to meet a judgment debt will ensue.
What is extraordinary about this case is that there has been an indication, informal it must be said, that a possible ground of appeal will be an allegation that the judge either failed to pay proper attention to the proceeding as the trial unfolded, or perhaps even slept through parts of it. More specifically, it seems to be contended that the judge did not give appropriate attention to the evidence given by Mr Carruthers, including his demeanour when giving that evidence, during the trial.
We should say that there is nothing at all before this Court to substantiate that allegation. In particular, there is no affidavit from Mr Carruthers to support it, nor in our view is there any adequate explanation for the absence of such evidence.
Nonetheless, a request has been made to the judge, through pro bono counsel, for access to his Honour’s notes regarding the trial and what has been described as an ‘audio-visual recording of the trial’. That request was made on 18 May 2015.
On 22 May 2015, Mr Carruthers, on behalf of the other applicants and himself, requested a mention of this matter before his Honour on 25 May so that the applicants could be heard in support of this specific application. Written submissions were provided. The respondents neither consented to nor supported the application for access to the notes and the recording, but did not oppose it.
On 25 May 2015, the judge made orders refusing the application. His Honour’s associate sent an email to the parties stating, inter alia:
Judge … advises that he does not propose to allow the defendants’ application for access to the video recording and his notes of the trial. Following the trial, reasons for decision were given on 18 December 2014 and paragraph 9 of the final orders made on 9 February 2015 permitted access to the audio-visual recording of the trial.
Paragraph 9 of those orders, to which the associate referred, was in the following, apparently standard form, terms:
The computer discs containing the audio-visual record of the trial of the proceeding shall be released to an authorised transcriber upon the request of the defendant and upon the written understanding of the second defendant on behalf of the defendants that the defendants accept the responsibility for the costs of the audio-visual discs being transcribed by the authorised transcriber.
There is a recording available of the trial which may be of some relevance in determining whether or not there is a basis for an appeal to be brought on the foreshadowed ground. It seems that pro-bono counsel are not prepared to draft a ground in these terms unless, and until, they have had the opportunity to consider the entirety of the material, including the judge’s notes, and the recording.
The judge’s refusal to grant access to the recording, except in the circumstances set out in paragraph 9, means that as a practical matter the recording itself cannot be accessed by the applicant or his counsel. For perfectly explicable reasons, the judge is not prepared to place a recording of that kind in the hands of anyone other than an official transcriber, the risk of misuse of a recording such as that being otherwise too great.
His Honour’s decision accorded broadly with the terms of a County Court Practice Note dated August 2013 and headed ‘Release of Tape Recordings in Civil Proceedings’. Paragraph 3 of that Practice Note is in the following terms:
A person may apply to a Judge who heard a proceeding where no transcript was prepared for the release of the recording made by the Court to an authorised transcription agency for the purpose of a transcript being prepared.
Paragraphs 7 and 9 respectively provide as follows:
The request must contain reasons for requiring transcript. It must also include an undertaking in writing, or, if the presiding Judge so requires, in person in Court, by the requesting party, an authorised representative of the requesting party or the solicitor for the party that:
(a)the transcript will be used solely for the reasons outlined in the request;
(b)the transcript will not be used for the purposes of broadcast or other publication;
(c)the party will take reasonable steps to ensure the recording will be returned to the Court within 28 days of its release by the Court to the transcription agency;
(d)if a transcript is required for the purposes of an appeal, such transcript will be produced only from a copy of the recording sent directly by the Court to an authorised transcription agency and not from any other source.
…
If the presiding Judge grants the request, the requesting party must engage a suitable transcription agency to whom the tape recordings will be released. Upon notice to the Associate to the presiding Judge of such engagement, a copy of the tape recording will be provided in accordance with the above undertakings.
Self-evidently, therefore, tight control is maintained over the release of recordings of this kind. They can only be released to an authorised transcription agency, and only for the purpose of a transcript being prepared.
The applicants have already filed an application for leave to appeal against the judge’s decision refusing them access to his notes and the recording. No date has yet been fixed for the hearing of that application.
However, the application before this Court is, as we have said, for a stay of the earlier order in the substantive proceeding, and is not, in terms, specifically linked to the application for leave to appeal that is presently on foot. Nonetheless, the two matters are obviously related. The only reason why the applicants wish to gain access to the notes and the recording is to use them as a possible basis for a ground of appeal in relation to the appeal contemplated against the order that they pay damages.
As matters presently stand, the applicants:
(a)have no application before this Court in relation to the order for damages made on 9 February 2015;
(b)have had the judge’s reasons for judgment available to them since December 2014, and have also received a transcript of the trial, but despite that fact, have been unable to identify any appealable error upon which they might choose to rely;
(c)have no draft notice of appeal in relation to that matter;
(d)have had the better part of six months to consider whether there are arguable grounds of appeal, and have had seven separate stays granted by the judge to enable them to pursue any prospective appeal;
(e)have foreshadowed only one possible ground of appeal, based upon alleged inattention on the part of the judge below;
(f)have put on no affidavit material regarding the judge’s conduct or demeanour;
(g)have formed no concluded view as to whether this foreshadowed ground is even arguable;
(h)may have to invite inferences of a dubious nature to be drawn from what if anything is contained in the judge’s notes that may be relevant; and
(i)will have to invite speculative inferences to be drawn from what, if anything, appears on the video recording of the trial.
When one bears in mind the onus that rests upon a party seeking a stay pending appeal, and the need to show special or exceptional circumstances in that regard, the obstacles confronting the applicants are obviously daunting. It is usual, where a stay is sought, to provide if not a draft notice of appeal, at least a clear indication of what the proposed grounds might be and some basis for asserting that they have reasonable prospects of success. In this case, the applicants have provided nothing of the kind. At best, their prospects are wholly speculative, and in the realms of conjecture.
There is another reason why the application for a stay should be refused. Much of the case for a stay stems from what the applicants say will be an inability on their part to pursue the appeal if they are wound up or put into bankruptcy. Yet, that matter had previously been addressed in correspondence between the parties in relation to one of the seven stays sought and obtained by the applicant from the trial judge. In an email directed to the judge’s associate, and dated 14 April 2015, the respondents’ solicitor had this to say:
Good Afternoon Associate,
Whilst the Plaintiffs respect the decision of his Honour and of the Court, I have been instructed to oppose the further stay from the Defendant and ask that you bring this email to his Honours [sic] attention.
Exactly what happened during the trial is now happening during the appeal process, with the Plaintiffs suffering as a consequence. The Defendants have not disclosed any real basis for appeal in the Affidavit, nor any tangible proof that the appeal is close to being lodged. Each request from the Defendant is simply that the appeal will soon be filed and a general comment on how the process has changed since last year …
It is not possible for the Plaintiffs to bankrupt Mr Carruthers before the appeal as that process starts with a 21 day bankruptcy notice, then a creditors petition which in my experience takes anywhere between 2 to 8 months. It is a defence to say that the debt isn’t due because the appeal will determine if the debt is due or not.
With regard to the corporate entities, a Statutory Demand can be issued and like the bankruptcy notice doesn’t give rise to a presumption of insolvency until 21 days have elapsed. The corporate entities would have more than enough time to lodge their appeal and seek a stay of any action by the Plaintiffs in the Court of Appeal (if successful. Again, a defence to the debt being due is the outcome of the appeal.
I have advised the Plaintiffs that if a Statutory Demand and Bankruptcy Notice are issued, then they should not be acted upon until the outcome of the appeal is known. The Plaintiffs do not want to waste further money and have accepted the advice from me.
We respectfully request that the extension not be granted effectively ensuring that the Defendants file their appeal within 21 days.
If the Defendants don’t file their appeal within 21 days then the Plaintiffs should be entitled to proceed with judgment
It follows from this communication by the respondents to the judge that, in effect, they were at that stage prepared not to proceed down the Statutory Demand and Bankruptcy Notice path until the applicants had had a chance to press their application for leave to appeal against the 9 February order.
It seems, however, that Statutory Demands were issued on 18 June 2015. Of course, the email of 14 April 2015 was sent before it became clear that the applicants were seeking to obtain the judge’s notes and the video recording of the trial, and that this might be the subject of a separate application for leave to appeal. That has the potential to throw the timetable for ultimate resolution into uncertainty, and the assurance given in the April email can no longer be regarded as binding, if it ever was.
In addition, we were told this morning that another creditor will be proceeding to have Mr Carruthers declared bankrupt next week and the respondents are supporting creditors in that application. The respondents say that they will suffer irremediable prejudice if a stay is granted and they lose that status.
Nonetheless, the delay in bringing this matter to a head is obviously unsatisfactory, even making allowance for the applicants’ difficulties in obtaining legal assistance.
The relevant principles governing when this Court will grant a stay of execution of a judgment pending an appeal were summarised by Dodds-Streeton JA[2] in Maher v Commonwealth Bank of Australia[3] as follows:
[2]Redlich JA agreeing.
[3][2008] VSCA 122.
The principles governing a stay of execution of judgment pending the hearing and determination of an appeal are well established.
Prima facie, a successful party is entitled to the benefit of the judgment obtained below and the presumption that the judgment is correct. The applicant for a stay therefore bears the onus of demonstrating that a stay is justified.
In Cellante and Ors v G Kallis Industries Pty Ltd (Cellante), Young CJ (with whom Brooking J agreed), cited with approval the observation of Mahoney JA (with whom Moffit P and Glass JA agreed) in Re Middle Harbour Investments Ltd (in liq) that:
“… 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.”
Young CJ concluded that an applicant for a stay under r 66.16 must show special or exceptional circumstances to take the case out of the general rule that an appeal does not operate as a stay.
The Court has a wide discretion, which is not circumscribed by rigid rules. It should take into account all the circumstances of the case.
In Scarborough’s v Lew’s Junction Stores Pty Ltd (approved in Cellante), Adam J recognized that special circumstances might exist where a successful appellant would be deprived of the fruits of the appeal if a stay of execution were not granted. In such a case, the appeal might be rendered nugatory.
In Cellante, Young CJ stated that special circumstances would ‘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’.
An appeal could be rendered nugatory in that sense in a variety of ways. The test could be satisfied where a defendant appeals and there is a real risk that the plaintiff would remove the proceeds of the judgment from the jurisdiction. Similarly, special circumstances may be recognised where, for example, although the respondent is solvent, the subject matter of the appeal is, in substance, irreplaceable.
The prospect that the appeal may be rendered nugatory must be balanced against the principle that the successful party is entitled to the fruits of the judgment. A stay should not be granted unless there is at least an arguable ground of appeal, although otherwise speculation as to the ultimate prospects of success is usually inappropriate.[4]
[4]Ibid [19]–[27] (citations omitted). See also Gangemi v Osborne [2008] VSCA 221.
One of the matters to which her Honour referred was the prospect that an appeal could be rendered nugatory by virtue of the inability of a respondent to repay monies it receives pursuant to the judgment being appealed. Of course, no such concern is alleged in the present case. Rather, the relevant prejudice which the applicant contends will arise if the judgment below is not stayed relates to the effect that the enforcement of that judgment will have upon his own financial position.
Such a situation was recently considered by Tate and McLeish JJA in Saville v Hallmarc Constructions Pty Ltd.[5] Their Honours said the following as to the applicable principles:
[5][2015] VSCA 144.
Many of the cases on the principles relating to a stay are concerned with the prejudice arising from the inability of a respondent to repay monies paid pursuant to a judgment, rather than the effect of such a payment on the financial position of the applicant. There is here no live question concerning [the respondent’s] capacity to repay. Although similar concerns were at the forefront of the court’s mind in Federal Commissioner of Taxation v Myer Emporium [No 1], Dawson J also observed that:
‘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.’
This court has held that the prospect of bankruptcy in respect of a judgment debt may constitute special circumstances. So in Narain v Euroasia (Pacific) Pty Ltd Ashley JA said:
‘The foreshadowed making of a bankruptcy order, by its effect upon the ability of an appellant to prosecute an appeal, and by its reputational impact, may have the effect of rendering the appeal nugatory and so constitute special circumstances justifying a stay on execution.’
It is significant, in our view, that in Narain, Ashley JA referred to bankruptcy as involving reputational damage as well as damage to a litigant’s capacity to prosecute a claim.
In Li v Herald & Weekly Times Pty Ltd the same approach was adopted. Maxwell P and Ashley JA referred to the remarks of Ashley JA in Narain and described this ‘as an instance of what Young CJ referred in Cellante v Kallis Industries Pty Ltd, as “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”.’[6]
[6]Ibid [20]–[23] (citations omitted).
On any view, this Court must consider the application for a stay in relation to the 9 February order on the basis that the applicants carry a heavy burden of persuasion, if the respondents are to be denied the fruits of their victory below. There is nothing before this Court, at present, which comes close to discharging that burden. There is only speculation and conjecture.
In addition, it is clear that even if Mr Carruthers is bankrupted next week, it is open to the trustee in bankruptcy to permit the application for leave to appeal against the May orders to proceed. It may be that that application would not incur any additional costs, since pro bono counsel, who are presently assisting the applicants, may well wish to assist in that application as well. Moreover, the respondents do not oppose the application, and have indicated that they would be unlikely to appear at any future hearing of that matter, at least to the point of the applicants seeking leave to appeal.
We should add that nothing said in this judgment should be understood as indicating a view, one way or the other, as to whether the application for leave to appeal against his Honour’s May orders has any merit. That matter is not before this Court, and we have had no argument properly addressed to it.
The application for a stay must be dismissed with costs.
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