Tianqi Lithium Kwinana Pty Ltd v MSP Engineering Pty Ltd - [2021] WASCA 63

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA
TITLE OF COURT :   THE COURT OF APPEAL (WA)
CITATION:   TIANQI LITHIUM KWINANA PTY LTD -v- MSP ENGINEERING PTY LTD [2021] WASCA 63
CORAM:   MURPHY JA
MITCHELL JA

HEARD:   1 APRIL 2021
DELIVERED          :   1 APRIL 2021
PUBLISHED           :   19 APRIL 2021
FILE NO/S:   CACV 14 of 2021
BETWEEN:   TIANQI LITHIUM KWINANA PTY LTD
Appellant
AND
MSP ENGINEERING PTY LTD
Respondent

FILE NO/S: CACV 15 of 2021
BETWEEN: TIANQI LITHIUM KWINANA PTY LTD
Appellant
AND
MSP ENGINEERING PTY LTD
Respondent

ON APPEAL FROM:
Jurisdiction              :   SUPREME COURT OF WESTERN AUSTRALIA
Coram:   MASTER SANDERSON
Citation: MSP ENGINEERING PTY LTD -v- TIANQI LITHIUM KWINANA PTY LTD [No 2] [2021] WASC 39
File Number            :   CIV 1318 of 2020, CIV 1319 of 2020

Catchwords:

Practice and procedure - Disputes between principal and contractor under building contracts - Application by principal to stay primary court's orders in favour of contractor pending appeal - Where primary court granted contractor's summary judgment applications - Where principal contended stay required because appeal would be rendered nugatory - Where evidence that principal in financial difficulty

Legislation:

Nil

Result:

Stay granted on terms that the judgment debt be paid into court

Category: B

Representation:

CACV 14 of 2021

Counsel:

Appellant	:	J K Taylor SC & R O'Brien
Respondent	:	G R Donaldson SC & J R C Sippe

Solicitors:

Appellant	:	Clayton Utz
Respondent	:	Squire Patton Boggs

CACV 15 of 2021

Counsel:

Appellant	:	J K Taylor SC & R O'Brien
Respondent	:	G R Donaldson SC & J R C Sippe

Solicitors:

Appellant	:	Clayton Utz
Respondent	:	Squire Patton Boggs

Case(s) referred to in decision(s):

AGC Industries Pty Ltd v Karara Mining Ltd [2019] WASC 140
Aquatec-Maxcon Pty Ltd v Minson Nacap Pty Ltd [2004] VSCA 18; (2004) 8 VR 16
Daysea Pty Ltd v Watpac Australia Pty Ltd [2001] QCA 49; (2001) 17 BCL 434
Devaugh Pty Ltd v Lamac Developments Pty Ltd [1999] WASCA 280; (2000) 16 BCL 378
Eastland Technology Australia Pty Ltd v Whisson [2003] WASCA 307; (2003) 28 WAR 308
MSP Engineering Pty Ltd v Tianqi Lithium Kwinana Pty Ltd [No 2] [2021] WASC 39
Queensland University of Technology v Project Constructions (Aust) Pty Ltd (In liq) [2002] QCA 224; (2003) 1 Qd R 259
Tianqi Lithium Kwinana Pty Ltd v MSP Engineering Pty Ltd [No 2] [2020] WASCA 201
Tradesman Technologies Pty Ltd v Ameduri [2012] WASCA 168

REASONS OF THE COURT:

Introduction

On 1 April 2021, we heard applications by the appellants (collectively, Tianqi) for a stay of the orders of Master Sanderson made 8 March 2021 for payment of approximately $38.8 million to the respondent (MSP). Alternatively to an unconditional stay, Tianqi sought an order that it pay the judgment sum (or such portion as the court sees fit) into court within 14 days after the date of the orders, pending the hearing and determination of the appeal. Tianqi also sought an order for an urgent hearing of the appeal and associated directions.
We made the following orders on 1 April 2021:
1.Subject to orders 2 and 3 of these orders, the orders made by the Supreme Court in proceedings CIV 1318 of 2020 and 1319 of 2020 on 8 March 2021 are stayed pending the determination of appeals CACV 14 of 2021 and CACV 15 of 2021 (Appeals) or further order.
2.By 4 pm on Friday 9 April 2021, the appellant shall pay into court the judgment sum of $38,881,505.20.
3.Order 1 of these orders shall cease to have effect if payment into court is not made in accordance with order 2 of these orders.
4.The appellant's applications for an urgent appeal order are adjourned to 9.30 am on 21 April 2021.
We said we would provide written reasons. These are our reasons.

Background

In the primary proceedings, the master granted MSP's applications for summary judgment against Tianqi and entered judgment in favour of MSP. Written reasons for the decision were delivered on 18 February 2021: MSP Engineering Pty Ltd v Tianqi Lithium Kwinana Pty Ltd [No 2][1] (primary decision).
[1] MSP Engineering Pty Ltd v Tianqi Lithium Kwinana Pty Ltd [No 2] [2021] WASC 39.
The primary proceedings related to moneys allegedly owing by Tianqi to MSP pursuant to two (relatively identical) contracts, under which Tianqi engaged MSP to design and construct a lithium hydroxide processing plant in Kwinana. The two contracts are referred to as 'LHPP1' and 'LHPP2'.
The relief claimed by MSP was payment of amounts the subject of progress certificates certifying the amounts as due pursuant to cl 37.2 of the contracts. There were five progress certificates relevant to the LHPP1 contract and seven progress certificates relevant to the LHPP2 contract.[2] After certain payments were made, the balance owing to MSP by Tianqi in respect of progress certificates issued under LHPP1 contract is $26,969,407.88 plus GST, and the balance owing to MSP by Tianqi in respect of the progress certificates issued under LHPP2 contract is $5,643,951.49 plus GST.[3]

The Contract[4]

[2] Primary decision [5].

[3] Primary decision [6].

[4] For present purposes, it is sufficient to refer to the terms of the contract as outlined in Tianqi Lithium Kwinana Pty Ltd v MSP Engineering Pty Ltd[No 2] [2020] WASCA 201 (Tianqi [No 2]).

The general conditions of the contract comprised, with amendments, AS4902‑2000, and included the following provisions.
The term 'WUC' is defined under the contract to mean 'the work which the Contractor is or may be required to carry out and complete under the Contract and includes the FEED Works, variations, remedial work, construction plant and temporary works'.
By cl 20, Tianqi is obliged (amongst other things) to ensure that at all times there is a Superintendent, and to use reasonable endeavours to ensure that the Superintendent fulfils all aspects of the independent certifying role and functions (a) honestly and fairly, (b) within the prescribed contractual time, and (c) by arriving at a reasonable measure or value of work, quantities or time.
Clause 37.1 and cl 37.2 provide:
37.Payment
37.1 Progress claims
The Contractor shall claim payment progressively in accordance with Item 33.
An early progress claim shall be deemed to have been made on the date for making that claim.
If the time for any progress claim falls due on a day which is Saturday, Sunday, statutory or public holiday the Contractor shall submit the claim either on the day before or next following that date which itself is not a Saturday, Sunday, statutory or public holiday.
Each progress claim shall be given in writing to the Superintendent and shall include details of the following, calculated in accordance with Annexure Part J:
(i)the value of WUC carried out to the end of the previous month and the amount forecast in accordance with Annexure Part P together with all amounts then otherwise due to the Contractor arising out of or in connection with the Contract;
(ii)the total amount previously certified pursuant to this subclause 37.1;
(iii)the amount being claimed by the Contractor;
(iv)separately identify work attracting GST and work which does not attract GST; and
(v)a written report on the progress made in carrying out the Works during the preceding period since the last progress report in a form approved by the Principal and containing as much detail as the Principal reasonably requires.
37.2Certificates
The Superintendent shall, within 10 business days after receiving such a progress claim, issue to the Principal and the Contractor, assessed in accordance with Annexure Part J:
(a)a progress certificate identifying the progress claim to which it relates and evidencing the Superintendent's opinion of the moneys due from the Principal to the Contractor pursuant to the progress claim and reasons for any difference ('progress certificate'); and
(b)a certificate identifying the progress claim to which it relates and evidencing the Superintendent's assessment of retention moneys and moneys due from the Contractor to the Principal pursuant to the Contract.
If the Contractor does not make a progress claim in accordance with subclause 37.1, the Superintendent may issue the progress certificate with details of the calculations and shall issue the certificate in paragraph (b) of this subclause 37.2.
If the Superintendent does not issue the progress certificate within 10 business days of receiving a progress claim in accordance with subclause 37.1, that progress claim shall be deemed to be the relevant progress certificate.
The Principal shall on the first day of the following month after the Superintendent receives the progress claim, pay to the Contractor the balance of the progress certificate after setting off such of the certificate in paragraph (b) of this subclause 37.2 as the Principal elects to set-off. If that setting off produces a negative balance, the Contractor shall pay that balance to the Principal within 7 days of receiving written notice thereof.
Neither a progress certificate nor a payment of moneys shall be evidence that the subject WUC has been carried out satisfactorily. Payment other than final payment shall be payment on account only.
At any time and from time to time, the Superintendent may by a further certificate correct any error which has been discovered in any previous certificate, other than a certificate of practical completion or final certificate.
Clause 37.4 provides, relevantly:
37.4Final payment claim and certificate
Within 28 days after the expiry of the last defects liability period, the Contractor shall give the Superintendent a written final payment claim endorsed 'Final Payment Claim' being a progress claim together with all other claims whatsoever in connection with the subject matter of the Contract including all claims which the Contractor considers exist under or arising out of any alleged breach of the Contract whether or not such claims have been made at any time previously.
Within ~~42 days~~ 10 business days of after the expiry of the last defects liability period the Contractor's final payment claim, or where the Contractor fails to provide such claim, the expiration of the period for lodging the final payment claim, the Superintendent shall issue to both the Contractor and the Principal a final certificate evidencing the moneys finally due and payable between the Contractor and the Principal on any account whatsoever in connection with the subject matter of the Contract.
Those moneys certified as due and payable shall be paid by the Principal or the Contractor, as the case may be, within 14 7 days after the debtor receives the final certificate. (original emphasis)
Clause 38.1 provides that at the time stipulated for submission of progress claims, MSP should give the Superintendent documentary evidence of the payment of moneys due and payable to workers, consultants and subcontractors, and that such documentary evidence, except where the contract provides otherwise, is to be to the Superintendent's satisfaction. Clause 38.2 reads:
38.2Withholding payment
~~Subject to the next paragraph, the Principal may withhold moneys certified due and payable in respect of the progress claim until the Contractor complies with subclause 38.1.~~
~~The Principal shall not withhold payment of such moneys in excess of the moneys evidenced pursuant to subclause 38.1 as due and payable to workers, Consultants and subcontractors.~~ (original emphasis)
Clause 39 deals with default or insolvency. By cl 39.1, if a party breaches (including repudiates) the contract, nothing in cl 39 prejudices the right of the other party to recover damages or exercise any other right or remedy. By cl 39.2, if MSP commits a substantial breach of the contract, Tianqi may give MSP written notice to show cause. Clause 39.4 provides:
39.4Principal's rights
If the Contractor fails to show reasonable cause by the stated date and time, the Principal may by written notice to the Contractor:
(a)take out of the Contractor's hands the whole or part of the work remaining to be completed and suspend payment unless or until it becomes due and payable pursuant to subclause 39.6; or
(b)terminate the Contract.
Clause 39.5 provides that Tianqi shall complete or procure completion of work taken out of MSP's hands.
Clause 39.6 provides:
39.6Adjustment on completion of work taken out
When work taken out of the Contractor's hands has been completed, the Superintendent shall assess the cost thereby incurred and shall certify as moneys due and payable accordingly the difference between that cost (showing the calculations therefor) and the amount which would otherwise have been paid to the Contractor if the work had been completed by the Contractor.
If the Contractor is indebted to the Principal, the Principal may retain construction plant or other things taken under subclause 39.5 until the debt is satisfied. If after reasonable notice, the Contractor fails to pay the debt, the Principal may sell the construction plant or other things and apply the proceeds to the satisfaction of the debt and the costs of sale. Any excess shall be paid to the Contractor.
By cl 39.7, if Tianqi commits a substantial breach, MSP may give Tianqi written notice to show cause. Substantial breaches include Tianqi's failure to make a payment due and payable pursuant to the contract. By cl 39.9, if Tianqi fails to show reasonable cause by the stated date and time, MSP may suspend the whole or any part of the works. MSP is to remove the suspension if Tianqi remedies the breach. MSP may, by written notice, terminate the contract if within 28 days of the date of suspension, Tianqi fails to remedy the breach or, if the breach is not capable of remedy, to make other arrangements to the reasonable satisfaction of MSP. Damages suffered by MSP by reason of a suspension shall be assessed by the Superintendent, who shall certify them as moneys due and payable to MSP.
Clause 39.10 deals with termination of the contract pursuant to cl 39.4(b) (by Tianqi) or cl 39.9 (by MSP). The first paragraph of cl 39.10 provides:
39.10Termination
If the Contract is terminated pursuant to subclause 39.4(b) or 39.9, the parties' remedies, rights and liabilities shall be the same as they would have been under the law governing the Contract had the defaulting party repudiated the Contract and the other party elected to treat the Contract as at an end and recover damages.
Clause 39.10 also refers to situations where there is wrongful termination by Tianqi or lawful termination by MSP:
If the Contract is wrongfully terminated by the Principal or rightfully terminated by the Contractor under clause 39.9, the Contractor shall then be entitled to a claim for:
(i)WUC which will include all direct costs, indirect costs, EPCM costs and Fixed Margin incurred up to and including the date for termination minus any payments that have already been made;
(ii)demobilisation costs, cancellation fees and other reasonable expenses and[/]or costs applicable in complying with or as a consequence of the termination; and
(iii)pro‑rata of the Performance Margin being 4.5% of all direct costs, indirect costs and EPCM costs incurred up to and including the date for termination.
Clause 39.10 then refers to a situation where Tianqi rightfully terminates the contract:
If the Principal rightfully terminates the contract pursuant to clause 39.4 prior to the date of Practical Completion, then the Principal shall not be required to pay the Performance Margin and the Contractor shall reimburse to the Principal amounts paid by the Principal for WUC that has not yet been performed but the Contractor shall be entitled to claim for:
(i)WUC which will include all directs costs, indirect costs, EPCM costs and Fixed Margin incurred up to and including the date for termination minus any payments that have already been made;
(ii)demobilisation costs, cancellation fees and other reasonable expenses and[/]or costs applicable in complying with or as a consequence of the termination.
Clause 39.10 then provides (in its concluding paragraph):
A party may deduct from moneys due to the other party, any money due or which may become due from that other party under the Contract or otherwise.
Clause 41.1 provides, relevantly in effect, that a party must, as soon as practicable after it could reasonably have been aware of any claim, give the other party and the Superintendent the prescribed notice or a notice of dispute under cl 42.1, but this requirement does not apply to any claim the communication of which is required by another provision of the contract, including a progress claim under cl 37.
Clause 42 of the contract deals with dispute resolution and provides:
42.Dispute resolution
42.1Notice of Dispute
If a difference or dispute (together called a 'dispute') between the parties arises in connection with the subject matter of the Contract, including a dispute concerning:
(a)a Superintendent's direction; or
(b)a claim:
(i)in tort;
(ii) under statute;
(iii)for restitution based on unjust enrichment or other quantum meruit; or
(iv)for rectification or frustration,
or like claim available under the law governing the Contract,
then either party shall, by hand or by registered post, give the other and the Superintendent a written notice of dispute adequately identifying and providing details of the dispute.
Notwithstanding the existence of a dispute, the parties shall, subject to clauses 39 and 40 and subclause 42.4, continue to perform the Contract.
42.2Conference
Within 14 days after receiving a notice of dispute, the parties shall confer at least once to resolve the dispute or to agree on methods of doing so. At every such conference each party shall be represented by a person having authority to agree to such resolution or methods. All aspects of every such conference except the fact of occurrence shall be privileged.
If the dispute has not been resolved within 28 days of service of the notice of dispute, that dispute shall be and is hereby referred to arbitration.
42.3Arbitration
If within a further 14 days the parties have not agreed upon an arbitrator, the arbitrator shall be nominated by the person in Item 37(a). The arbitration shall be conducted in accordance with the rules in Item 37(b).
42.4Summary relief
Nothing herein shall prejudice the right of a party to institute proceedings to enforce payment due under the Contract or to seek injunctive or urgent declaratory relief.
For the purposes of cl 42.3, under item 37(a) the nominating person is the president of the Institute of Arbitrators and Mediators of Australia.
The term 'claim' is inclusively defined by cl 1 of the contract to include any claim for payment of money under, or arising out of, or in any way connected with, the contract, including any claim in equity.
By cl 1(c), headings do not form part of and are not to be used in the interpretation of the contract.
Clause 46.6 provides that the rights, duties and remedies granted or imposed under the provisions of the contract operate to the extent not excluded by law.

Tianqi's purported termination of the contracts

By notices dated 7 August 2020, Tianqi purported to terminate the contracts pursuant to cl 39.4(b).[5] Throughout the primary proceedings, MSP maintained that it was not in default under the contracts and that Tianqi was not entitled to terminate the contract under cl 39.4(b) or otherwise.[6]
[5] Primary decision [7] - [8].
[6] Primary decision [8].

The primary decision

The parties' arguments before the master

Tianqi did not dispute the validity of the progress certificates or contend that it is not obliged to pay the certified amounts.[7] Tianqi advanced three arguments against the summary judgment application.
[7] Primary decision [10].

First, Tianqi relied on the last sentence of cl 39.10 of the contract which provides that a party 'may deduct from moneys due to the other party, any money due or which may become due from that other party under the Contract or otherwise'. Tianqi alleged that it had rights of set‑off against the amounts claimed by MSP under the terms of the contract. Tianqi claimed that because of MSP's breach of the contracts and its rightful termination of the contracts, it was entitled to substantial damages from MSP exceeding the amount owed under the progress certificates. Tianqi said it was entitled to set‑off these claims against the progress certificates and was not obliged to make payment under the progress certificates.[8]
[8] Primary decision [13].
The master noted that in response, MSP said that there was not 'any money due' (within the meaning of cl 39.10) to Tianqi by MSP and that while damages 'may become due' after arbitration, it was not sufficient to refuse an order for summary judgment.[9]
[9] Primary decision [13].
Secondly, Tianqi contended that as the contracts were terminated, it was no longer precluded from relying on equitable set‑off, and that an equitable set-off was available to it.[10] In support of the proposition that it was not precluded from relying on equitable set‑off, Tianqi referred to Aquatec‑Maxcon Pty Ltd v Minson Nacap Pty Ltd[11] and Queensland University of Technology v Project Constructions (Aust) Pty Ltd (In liq).[12]
[10] Primary decision [17].
[11] Aquatec-Maxcon Pty Ltd v Minson Nacap Pty Ltd [2004] VSCA 18; (2004) 8 VR 16.
[12] Queensland University of Technology v Project Constructions (Aust) Pty Ltd (In liq) [2002] QCA 224; (2003) 1 Qd R 259.
Finally, Tianqi said the contracts were liable to be set aside or avoided or declared unenforceable for misleading or deceptive conduct and therefore any contractual rights Tianqi had pursuant to the contracts could not be enforced but must await determination by arbitration.[13]

The master's findings

[13] Primary decision [10], [22].

The master determined the summary judgment application on the assumption that the contracts had been validly terminated by Tianqi and that in due course there may be an award of damages in Tianqi's favour greater than the amount to which MSP was entitled under the progress certificates.[14] He noted that these matters would be addressed by arbitration.[15]
[14] Primary decision [9], [14].
[15] Primary decision [9].
As to Tianqi's first argument, the master found, contrary to Tianqi's construction of cl 39.10, that the phrase 'may become due' required Tianqi to establish with certainty that the money will become due.[16] The master said that what was being referred to in the final sentence of cl 39.10 was 'sums certain'. He said that this construction was supported by the fact that the clause specified what amounts the principal will not be required to pay in rightful termination and the amounts the contractor will be entitled to claim. The master said that to adopt the interpretation contended for by Tianqi would run counter to the evident intent of the clause. Accordingly, the clause did not anticipate a deduction of an unspecified amount which may become payable after an arbitration.[17]
[16] Primary decision [14] - [15].
[17] Primary decision [15] - [16].
In respect of Tianqi's second argument, the master proceeded on the basis, without determining the matter, that as the contract has been properly terminated by Tianqi, it was no longer precluded from relying upon equitable set-off.[18] The master said that equitable set-off could arise where the equity of a case requires it, having regard to how closely the claims are related, particularly as to time and subject matter and to the conduct of the parties.[19]
[18] Primary decision [19].
[19] Primary decision [21].
The master found that the facts did not give rise to a fairly arguable claim for equitable set-off. In particular, progress certificates had been issued under the contract which was then on foot, and Tianqi had undertaken to pay those progress certificates. The master concluded that it was 'not offensive in equity' to require that Tianqi's undertaking be honoured.[20] The parties had always agreed and remained in agreement that if, in the end, MSP owed money to Tianqi, the progress payments would be disgorged.[21]
[20] Primary decision [21].
[21] Primary decision [21].
In respect of Tianqi's third argument, the master considered that although one of the remedies available for misleading and deceptive conduct is to have contracts declared void or set aside, the authorities suggested that the statutory power to avoid an agreement entered into by reason of pre-contractual misleading and deceptive conduct is governed by analogous equitable principles. This meant that in granting relief, the principles of laches would be considered as would the difficulty of effecting restitutio in integrum. The master also noted that Tianqi raised no allegation of fraud. Having regard to these considerations, the master was not satisfied that it was arguable that the contracts would be set aside.[22]
[22] Primary decision [23].
The master said that even if the contracts could be set aside, there would have to be a balancing exercise between amounts rightly claimed by MSP and amounts owing to Tianqi. At that stage, any amount paid in relation to the progress certificates could be set-off against any amount found to be owing by MSP to Tianqi. The master considered that nothing in that outcome would suggest any injustice in requiring Tianqi to meet the contractual obligations which it accepted were on foot when MSP's claims were made.[23]
[23] Primary decision [24].
The master concluded:[24]
In preparing these reasons I have been acutely conscious this is a summary judgment application. There have been any number of summary judgment applications which have failed because the matters at issue between the parties are complex and the proper course is to have a full trial of the matter. Here the parties agreed that when progress claims were made and certified, the amounts due and payable by [Tianqi] (principal) and [MSP] (contractor) would be paid and if they were not paid could be recovered summarily. That is an important aspect of construction contracts. So although this summary judgment application is a long way from the norm and is by no means straightforward, it seems to me important from a policy perspective, the issues should be carefully considered and resolved summarily if possible. None of that alters the essential principles applicable to summary judgment applications. I am satisfied, in this case, [MSP] is entitled to the judgment it seeks.
[24] Primary decision [25].

Appellant's case

Tianqi has filed an appellant's case in the lead appeal (CACV 15 of 2021) on 18 March 2021 containing three grounds of appeal.
Ground 1 alleges, in effect, that the master erred in law at [14] ‑ [16] of the primary decision:
1.by finding that the reference in the final sentence of cl 39.10 of the contracts to 'any money due or which may become due' was a reference only to sums certain; and
2.by failing to conclude that Tianqi has an arguable defence to MSP's claim, namely that following termination of the contracts (not disputed for the purpose of the summary judgment application) Tianqi was entitled to deduct or set-off sums which are due or may become due by arbitral award against amounts due under the progress certificates the subject of MSP's claim.
Ground 2 alleges that the master erred in law at [17] - [21] of the primary decision in finding that the facts and circumstances in the case did not give rise to a fairly arguable claim for equitable set-off.
Ground 3 alleges that the master erred in law at [22] - [24] in finding, in effect, that Tianqi did not have an arguable defence under s 237 and 243 of the Australian Consumer Law that the contracts are liable to be set aside or avoided or declared unenforceable, at least in part.

The stay application

As noted earlier, Tianqi sought a stay of Master Sanderson's orders of 8 March 2021, or alternatively payment into court, pending the determination of the appeals.

Tianqi's evidence and submissions

Tianqi filed affidavits dated 11 and 19 March 2021 by Mr R van Erp, General Counsel and Company Secretary of Tianqi, in support of Tianqi's application.
Mr van Erp's affidavit dated 11 March 2021:
1.annexed MSP's annual report for the year ended 30 June 2019, which indicated[25] that (1) MSP had made a net profit of $9.58 million for the year, (2) MSP had total net assets of $10.193 million, which included trade and other receivables of $66.5 million and 'contract assets' of $20 million, (3) MSP had net current assets of $8 million, (4) cash and cash equivalents stood at $31 million at the end of the 2019 financial year, albeit down from $90.64 million at the end of the 2018 financial year, and (5) MSP had declared dividends of $12 million in respect of the 2019 financial year and $6.57 million in respect of the 2018 financial year; and
2.stated that based on searches, including an annexed PPSR search, it appeared MSP owns no real property in Australia and that MSP's personal property is encumbered.[26]
[25] All amounts are approximate.
[26] Affidavit of R van Erp dated 11 March 2021, RFVE-4.
Mr van Erp also annexed:
1.A letter dated 19 August 2020 from Tianqi's solicitors referring to MSP's Annual Report and stating that it was likely that the net assets included the disputed amounts claimed from Tianqi, in which event, the solicitors alleged, MSP may be in a significant net liability position. The letter also raised concerns about MSP's viability on the bases that (1) it was not clear what ongoing works MSP was involved in, (2) MSP's Chief Executive Officer had left the company, and (3) a new entity employing former MSP staff had been set up and was operating from MSP's offices.[27]
2.A letter dated 20 August 2020 from MSP's solicitors in reply stating, in effect, that (1) the (disputed) debts claimed from Tianqi relate to the period August 2019 - February 2020, and do not form part of the net assets for the year ended 30 June 2019, (2) a new Chief Executive Officer had been appointed, and (3) former employees of MSP had set up another entity which had no corporate connection with MSP.[28]
3.A letter from Tianqi's solicitors to MSP's solicitors dated 26 August 2020 asserting that MSP had no significant assets and enclosing a copy of the searches undertaken as to MSP's assets.[29]
4.A letter from MSP's solicitors dated 31 August 2020, stating that MSP's level of property ownership is indicative of the business model for project delivery companies and that it in no way impacted upon MSP's ability to operate. The letter said that MSP's level of property ownership is no different to what it was when the parties contracted in 2016. The letter also said that the 'Contract assets' in the 2019 accounts were not limited to the LHPP Project.[30]
5.A letter dated 20 November 2020 from Tianqi's solicitors enquiring whether MSP remained a large proprietary company in the 2020 financial year and whether MSP intended to file a financial report with ASIC, and in the event it did not file a report, whether it would provide a financial report to Tianqi to satisfy it of MSP's solvency.[31]
6.A letter from MSP's solicitors dated 26 November 2020, stating, in effect, that (1) MSP is no longer a 'large proprietary company', for the purposes of s 45A(3) of the Corporations Act 2001 (Cth), and (2) MSP is accordingly not required to lodge a financial report with ASIC for the year ending 30 June 2020, and (3) MSP is solvent.[32]
7.Correspondence dated 4 December 2020 and 18 December 2020 in which Tianqi's solicitors repeated concerns over a decline in MSP's revenue and the source of any incoming revenue. The 18 December 2020 letter stated that MSP's former Chief Executive Officer, Mr Andrew Rowe, had advised Tianqi that MSP was in financial difficulties and operating under 'safe harbour' provisions.[33]
8.A letter dated 14 December 2020 from MSP's solicitors stating, in effect, that MSP did not meet the criteria for a 'large public company' as the criteria required the establishment of at least two of three matters, (1) consolidated revenue of at least $50 million, (2) consolidated gross assets of at least $25 million, and (3) at least 100 or more employees. The letter stated that MSP's revenue exceeded $200 million, but the other two criteria had not been met.[34]
[27] Affidavit of R van Erp dated 11 March 2021, RFVE‑2.
[28] Affidavit of R van Erp dated 11 March 2021, RFVE‑3.
[29] Affidavit of R van Erp dated 11 March 2021, RFVE‑4.
[30] Affidavit of R van Erp dated 11 March 2021, RFVE-5.
[31] Affidavit of R van Erp dated 11 March 2021, RFVE‑6.
[32] Affidavit of R van Erp dated 11 March 2021, RFVE-7.
[33] Affidavit of R van Erp dated 11 March 2021, RFVE-8 and RFVE-10. Section 588GA(1) of the Corporations Act, relevantly, excludes civil liability under s 588G(2) of the Corporations Act in relation to a director if, in general terms, the director becomes involved in restructuring efforts that are reasonably likely to lead to a better outcome for the company.
[34] Affidavit of R van Erp dated 11 March 2021, RFVE‑9.
The affidavit also annexed an article published in the West Australian Business News on 4 March 2021 titled 'Kaefer takes $1m debt to court' in relation to alleged legal action by Kaefer Integrated Services Pty Ltd (Kaefer) against MSP in respect of works undertaken on Tianqi's lithium plant.[35]
[35] Affidavit of R van Erp dated 11 March 2021, RFVE-11.
Mr van Erp also stated, in effect, that a company related to Tianqi, Talison Australia Pty Ltd, had engaged MSP at its Greenbushes mine, and that MSP had issued invoices to that company totalling approximately $102.631 million which, he said, would have been attributable to MSP's revenue for the 2020 financial year.[36] Mr van Erp also stated, in effect, that he believed that the paid and unpaid invoices issued by MSP to Tianqi in relation to LHPP1 and LHPP2 would have been attributed to MSP's revenue for the year ended 30 June 2020.[37]
[36] Affidavit of R van Erp dated 11 March 2021, pars 11 - 12, 15.
[37] Affidavit of R van Erp dated 11 March 2021, pars 13 - 15.
In Mr van Erp's affidavit dated 19 March 2021, he annexed certain correspondence between the parties' solicitors.[38] He also annexed a search conducted on 'InfoTrack', referred to as a 'litigation search conducted in the Supreme Court of Western Australia dated 15 March 2021'. The search indicated that the status of the proceedings instituted by Kaefer against MSP on 2 March 2021 appeared as 'lodged'.[39] Mr van Erp also stated that MSP is no longer engaged in any capacity by Tianqi or by Talison Lithium Australia Pty Ltd.[40]
[38] Affidavit of R van Erp dated 19 March 2021, RFVE‑1.
[39] Affidavit of R van Erp dated 19 March 2021, RFVE‑2.
[40] Affidavit of R van Erp dated 19 March 2021, par 6.
In submissions filed 11 March 2021, Tianqi submitted that special circumstances existed justifying the grant of a stay of execution of the 8 March 2021 orders including:
1.Tianqi has been unsuccessful in obtaining from MSP information relating to MSP's financial performance in the 2020 financial year and MSP has not lodged a financial report with ASIC in respect of the financial year ended 30 June 2020.
2.MSP's financial revenue appears to have declined significantly from the 2018 and 2019 financial years (when MSP was engaged in work for Tianqi under the contracts). There is no information about MSP's ongoing project work on its website and no information has been forthcoming from MSP. MSP's CEO has left and MSP's employee count has decreased.
3.In respect of MSP's financial position:
(a)MSP's assets have decreased from approximately $121 million in the 2019 financial year to less than $25 million in the 2020 financial year.[41]
(b)It has been reported in the media that Kaefer has launched legal action against MSP to recover an outstanding debt of $1.03 million plus interest and costs. It may be inferred that MSP would use a portion of the judgment sum to pay Kaefer.[42]
(c)PPSR and property ownership searches indicate that MSP owns no real property and that its personal property is largely encumbered by security interests.[43]
[41] Appellant's submissions filed 11 March 2021, par 23.
[42] Appellant's submissions filed 11 March 2021, par 22.
[43] Appellant's submissions filed 11 March 2021, par 26.
Tianqi submitted, in effect, that it has reasonable prospects of success in the appeal on the basis of the grounds in its appellant's case.[44]
[44] Appellant's submissions filed 11 March 2021, par 27.
Tianqi submitted that the balance of convenience favoured the grant of a stay because the appeal should be heard relatively promptly and the balance of convenience should be assessed against the short period over which the stay would be necessary.[45]
[45] Appellant's submissions filed 11 March 2021, pars 34 - 35.
Tianqi submitted that if a stay were not granted, the potential prejudice to Tianqi is substantial as the appeal may be rendered nugatory. Tianqi submitted that it is willing to pay the judgment sum into the court pending the determination of the appeal, which will substantially cure any prejudice to MSP arising from the stay.[46]
[46] Appellant's submissions filed 11 March 2021, pars 36 - 37.
In supplementary submissions filed 23 March 2021, Tianqi submitted that MSP's criticisms of the quality of the evidence which Tianqi had adduced to establish MSP's financial position overlooked the 'multiple requests' made to MSP for information regarding its financial position. Tianqi also submitted that the evidence of MSP's financial position is based upon hearsay evidence of conclusions drawn by Mr Dunbar having reviewed MSP's latest financial records, which have not been provided to the court. Tianqi submitted that the failure of MSP to disclose its financial reports is a significant matter.[47]
[47] Appellant's supplementary submissions filed 23 March 2021, pars 4, 6.
Tianqi submitted that MSP's evidence failed to address the issue of whether, if MSP were to receive the judgment sum, it might dissipate or expend those funds such that it would be unable to repay Tianqi if the appeal succeeded.[48]
[48] Appellant's supplementary submissions filed 23 March 2021, par 7.
Tianqi submitted that the evidence showed that (1) MSP has limited cash at bank relative to its liabilities, (2) MSP has wound down its business activities, and (3) MSP is currently involved in legal proceedings and multiple arbitrations. Further, in the financial years ending 30 June 2019 and 30 June 2018, MSP declared and paid dividends in the total amounts of $12,005,362 and $6,566,000 respectively. Tianqi submitted that these amounts formed a large proportion of the approximate total of $23 million in dividends paid out in the 2016 - 2019 financial years and that, despite repeated requests, Tianqi has not been able to ascertain whether MSP has paid dividends since 30 June 2019 or whether it intends to pay dividends in the future. Tianqi submitted that these factors indicate that the appeal would be rendered nugatory it the stay was not granted.[49]
[49] Appellant's supplementary submissions filed 23 March 2021, pars 8 - 9.
In oral submissions, Tianqi accepted the evidence of Mr Dunbar referred to in [64.7] below. Tianqi placed particular emphasis on the contention that any payment of the judgment sum to MSP would likely result in MSP paying the money to its shareholders by way of dividends, thereby rendering the appeal nugatory.[50]
[50] In this submission, it was not suggested by Tianqi that any payment of dividends would be other than in accordance with s 254T of the Corporations Act.

In relation to the balance of convenience, Tianqi submitted that (1) MSP has provided no evidence that it would be prejudiced by the grant of the stay while the appeal is determined, (2) even if MSP were solvent, there is a real risk that the appeal will be rendered nugatory by MSP being unable to repay the judgment sum as a result of MSP using the money to discharge its liabilities, fund its commercial operations, or pay dividends to shareholders, and (3) MSP's rights would be protected by Tianqi paying the money into court.[51]
[51] Appellant's supplementary submissions filed 23 March 2021, pars 27 - 30.
In relation to the question of payment into court, Tianqi relied on an affidavit by Mr R Surendran, Acting General Manager and General Manager of Finance for Tianqi, dated 29 March 2021. Mr Surendran said that his affidavit concerned the 'practical considerations related to any payment required to be made by [Tianqi] to [MSP] or into court'. He said that if Tianqi were required to make a payment in excess of $10 million, then Tianqi would need to make the payment in two tranches, as follows. The first tranche would comprise $10 million, and would be made from funds held by Tianqi in Australia. The second tranche would comprise the balance of any amount payable, and would be transferred to Australia from Tianqi's parent company, Tianqi Lithium Corporation (TLC), in China.
The first tranche comprising $10 million from Tianqi could be made within three business days, based on his experience of transferring similarly‑sized sums of money in Australia.
As to the balance, to be paid by TLC from China, he has been informed by TLC's China Region Financial Controller that (1) TLC would take steps to ensure that Tianqi could make any payment ordered by the court, (2) however, TLC would require approval from the China State Administration of Foreign Exchange to make the transfer, as any amount would likely exceed the amount that TLC was currently authorised to transfer out of China, (3) such applications generally take two to four weeks to be approved, and (4) TLC has engaged King & Wood Mallesons in China to assist with the approval process and ensure that it is completed as expeditiously as possible.

MSP's evidence and submissions

MSP filed an affidavit of Mr J Dunbar, General Manager of MSP, dated 15 March 2021, in opposition to Tianqi's application.
In his affidavit dated 15 March 2021, Mr Dunbar deposed, in effect that:
1.The amounts comprising the whole of the debt to MSP the subject of the orders of 8 March 2021 have been owing to MSP since March 2020.
2.In 2019, Tianqi and MSP agreed to a deferred payment plan of the debts owed to MSP, but Tianqi failed to comply with the deferred payment plan in January and February 2020, because it was unable to pay its creditors.
3.Approximately 90% of the certified progress payments comprising the judgment debt arising pursuant to the 8 March 2021 orders relates to work done by MSP's subcontractors and vendors that provided goods and services for the Kwinana processing plant. MSP is liable to pay the subcontractors and vendors regardless of whether or not Tianqi pays MSP. MSP has used its working capital reserves to partially pay the subcontractors and vendors and has entered into various arrangements in respect of the amounts owing to them, including for partial payment with a delay or deferral of the balances owing. There are also three disputed and unsubstantiated claims made against MSP by subcontractors for work done in respect of the Kwinana processing plant. These claims were rejected by MSP and have not been pursued by the subcontractors.
4.On 2 March 2021, Kaefer commenced proceedings against MSP seeking payment of approximately $1 million in relation to works at the Kwinana processing plant and MSP has agreed to resolve these proceedings using its working capital.
5.As at 15 March 2021, an amount of $5.45 million (including the amount claimed by Kaefer but not including GST) remains owing.
6.MSP has been required to devote considerable time and attention to the recovery of the debt which has constrained its ability to tender and pursue new work opportunities. It has also been forced to wind down its existing business activities and liquidate assets to maximise its cash position to pay its debts to subcontractors and vendors.
7.MSP's current financial position based on the latest financial records is that:
(a)there are no significant assets other than $7.44 million in cash and $690,000 in receivables, ie, net current assets totalling approximately $8.1 million; and
(b)there are no significant liabilities other than $5.45 million owing to subcontractors and vendors, $200,000 owing in employee entitlements, and the claims between MSP and Tianqi.
8.Despite winding down its business activities, MSP remains solvent, is no longer in 'safe harbour' under provisions of the Corporations Act and continues to meet all of its tax, employee and compliance obligations.
Mr Dunbar also referred in his affidavit to the financial position of Tianqi. He annexed a copy of the consolidated financial statements for the year ended 31 December 2019 of Tianqi Lithium Holdings Pty Ltd (TL Holdings), the immediate parent company of Tianqi.[52] The financial statements indicated:
1.The principal activities of TL Holdings was the construction of a lithium hydroxide plant in Kwinana.[53]
2.The loss after tax for the year ended 31 December 2019 was $16.241 million, following the loss for the year ended 2018 of $10.537 million.[54]
3.Between January - June 2020, TL Holdings received $26.8 million from its holding company and associated entities for the purpose of funding working and capital expenditure. It also received $7.321 million from another associated company.[55]
4.Although its total assets exceeded its total liabilities, TL Holdings had current assets of $39.257 million and current liabilities of $180.914 million.[56]
5.TL Holdings' non‑current assets comprised, principally, property, plant and equipment of $1.043 billion, which is secured in favour of its ultimate parent entity.[57]
6.The auditor's report included the statement that the accounts of TL Holdings disclosed a 'material uncertainty … that may cast significant doubt on the Company's ability to continue as a going concern and, therefore, whether it will realise its assets and discharge its liabilities in the normal course of business, and at the amount stated in the financial report'.[58]
[52] Affidavit of J Dunbar dated 15 March 2021, JJD4.
[53] Affidavit of J Dunbar dated 15 March 2021, page 21.
[54] Affidavit of J Dunbar dated 15 March 2021, page 21.
[55] Affidavit of J Dunbar dated 15 March 2021, page 21.
[56] Affidavit of J Dunbar dated 15 March 2021, page 24.
[57] Affidavit of J Dunbar dated 15 March 2021, pages 24, 42.
[58] Affidavit of J Dunbar dated 15 March 2021, page 51.
Mr Dunbar also annexed a copy of announcements to the Shenzhen Stock Exchange by Tianqi's ultimate holding company (TLC) dated 28 April 2020 and 30 September 2020 and their English translations.[59] The translations of the announcements to the Shenzhen Stock Exchange dated 28 April 2020 and 30 September 2020 indicated, in substance, that:
1.TLC faced serious liquidity risks, including as a result of borrowings of US$3.5 billion for the acquisition of a stake in a Chilean company, low rates of production from its projects, and external factors such as lower prices for its products and the international disruption of economic activity attendant upon the COVID‑19 pandemic. The price of lithium was said to have experienced a 'cliff fall'.[60]
2.If Tianqi were unsuccessful in its disputes with MSP, and could not raise the funds to meet its liabilities to MSP, Tianqi may go into voluntary administration and subsequently liquidation.[61]
3.TLC faced risks in payment to its suppliers due to tight liquidity and there were risks that it may materially breach its distribution and supply agreements of lithium concentrate, which may trigger a supply risk of the ore material.[62]
4.TLC faced the risk of cross‑defaults under its financing agreements.[63]
5.If the crisis of liquidity could not be resolved appropriately, due to overdue debts, TLC may be faced with further issues such as 'litigation, arbitration and the freezing of bank accounts and assets … which will affect [TLC's] production and business operation, increase costs, further tighten capital and adversely impact [TLC's] performance …'.[64]
6.TLC's net profits of 2019 and the first half of 2020 were negative, and in the context of a difficult and uncertain operating environment, there may be a continuing loss of TLC's business in 2020.[65]
7.Under the rules of the Shenzhen Stock Exchange, if an audited net profit of a company remains negative for two recent consecutive financial years, the Shenzhen Stock Exchange has the power to implement a delisting alert on the trading of the company's stocks.[66]
[59] Affidavit of J Dunbar dated 15 March 2021, JJD5, JJD6.
[60] Affidavit of J Dunbar dated 15 March 2021, pages 59, 62.
[61] Affidavit of J Dunbar dated 15 March 2021, page 60.
[62] Affidavit of J Dunbar dated 15 March 2021, page 61.
[63] Affidavit of J Dunbar dated 15 March 2021, pages 61 - 62, 74 - 75.
[64] Affidavit of J Dunbar dated 15 March 2021, page 75.
[65] Affidavit of J Dunbar dated 15 March 2021, page 75.
[66] Affidavit of J Dunbar dated 15 March 2021, page 75.
Mr Dunbar also said that TLC had made an announcement to the Shenzhen Stock Exchange on 11 March 2021.[67] He did not annex a copy of the announcement or its English translation. He said, however, that he understood from a 'machine translation' that the announcement included a statement to the effect that Tianqi does not intend to make payment in accordance with the orders of Master Sanderson dated 8 March 2021. He annexed a copy of a letter sent by MSP's solicitors to Tianqi's solicitors in that regard dated 12 March 2021.[68]
[67] Affidavit of J Dunbar dated 15 March 2021, par 40.
[68] Affidavit of J Dunbar dated 15 March 2021, JJD3, page 16.
Mr Dunbar also annexed media articles dated 21 and 29 September 2020, containing reports of TLC's debt and concerns that it might not meet its debt obligations.[69]
[69] Affidavit of J Dunbar dated 15 March 2021, JJD7, pages 77 - 80.
On 31 March 2021, MSP filed an affidavit of R O'Brien dated 30 March 2021 annexing further correspondence between the parties which included a copy of an order of the Supreme Court dated 17 March 2021 indicating that, by the consent of the parties, the proceedings instituted by Kaefer against MSP had been dismissed.[70]
[70] Affidavit of R O'Brien dated 30 March 2021, RCO1.
In its submissions, MSP contended that there are no special circumstances warranting departure from the position that MSP, as the successful litigant, is entitled to judgment. MSP contended that it has provided evidence of its financial position which demonstrates that it is solvent and therefore, the evidence put forward by Tianqi does not discharge its onus to show special circumstances.[71]
[71] Respondent's submissions filed 16 March 2021, par 17.
MSP contended that the three grounds relied on by Tianqi in the appellant's case have no reasonable prospects of success.
In respect of ground 1, MSP submitted that the last part of cl 39.10 is plainly intended to apply only to the payment regime of which it forms part, which is a regime that provides for payments by each party to the other upon termination (including demobilisation costs). MSP contended that the words do not have wider import. MSP contended that in AGC Industries Pty Ltd v Karara Mining Ltd,[72] a provision substantially identical to cl 39.10 was considered and Allanson J was satisfied that it was not intended to include the right to deduct amounts arising out of a disputed claim. MSP also contended that cl 39.10 must be considered having regard to the commercial purpose and the contractual scheme which provides for ultimate rights to be determined through final certification or the dispute resolution process.[73]
[72] AGC Industries Pty Ltd v Karara Mining Ltd [2019] WASC 140.
[73] Respondent's submissions filed 16 March 2021, par 27.
In respect of ground 2, MSP submitted that the contractual scheme agreed to by the parties makes MSP's claims a simple matter of the enforcement of the agreement to pay on account.[74] Further, equity does not permit MSP to raise a set-off now as (1) the relevant progress payments were certified as long ago as August 2019, (2) Tianqi allowed work to continue under the contract and expressly ratified and confirmed the LHPP1 contract with knowledge of cost and time overruns, (3) Tianqi made payments in respect of part of the amounts due pursuant to the certified progress payments under the contracts, (4) Tianqi agreed to a payment plan to pay the remaining amounts, (5) Tianqi accepted that it owed the certified amounts as late as February 2020, (6) the notices of dispute issued by Tianqi after the primary proceedings were commenced did not clearly raise the claims of set-off, (7) Tianqi only purported to terminate the contracts after MSP commenced the primary proceedings and after its stay application before the master was dismissed, (8) Tianqi has the benefit of MSP's work and LHPP1 has reached practical completion, and (9) Tianqi has only recently made the 'false' assertions that expenditure and realistic forecast costs for the contracted work were held back from it by MSP.[75]
[74] Referring to Daysea Pty Ltd v Watpac Australia Pty Ltd [2001] QCA 49; (2001) 17 BCL 434; Devaugh Pty Ltd v Lamac Developments Pty Ltd [1999] WASCA 280; (2000) 16 BCL 378.
[75] Respondent's submissions filed 16 March 2021, pars 30, 32, 35 - 44.
In respect of ground 3, MSP submitted that the master was correct to accept that it was not reasonably arguable that the contracts are liable to be declared void or set aside in the circumstances. MSP asserted that this finding was not to the effect that Tianqi's misleading or deceptive claims were not reasonably arguable on the facts, but was a finding that Tianqi's claim for relief of avoidance was not arguable. MSP submitted that this finding was correct because (1) Tianqi relied on the terms of the contract to bring separate arbitration proceedings while also claiming that the contracts should be declared void or set aside, and (2) the master applied 'orthodox principle' in finding that the exercise of statutory power to avoid an agreement entered into by reason of pre‑contractual misleading and deceptive conduct is governed by analogous equitable principles. MSP also submitted that rescission of the contracts would not be ordered because of (1) Tianqi's conduct after entering into the contract, (2) the unexplained delay in making the misleading or deceptive conduct claims, (3) there was an 'obvious contrivance' in the claimed remedy of avoidance, (4) there was no suggestion of fraud on the part of MSP, and (5) Tianqi's claims do not require the extraordinary remedy of rescission.[76]
[76] Respondent's submissions filed 16 March 2021, pars 46 - 53, 56 - 57.
MSP contended that the balance of convenience did not favour the grant of a stay. MSP contended that the proceedings have a history of delay due to actions taken by Tianqi. Further, the failure of Tianqi to pay has caused hardship to MSP and its subcontractors and vendors. By comparison, Tianqi raises no issue of hardship if it were required to pay the judgment even though it relies on its parent company for support. MSP contended that it is relevant that Tianqi's ultimate holding company, TLC, has stated that it does not intend to pay the judgment debt or provide Tianqi with funds to do so.[77]
[77] Respondent's submissions filed 16 March 2021, pars 67 - 70.
MSP contended, in effect, that if the court was minded to order that Tianqi be required to pay into court some or all of the judgment sum pending the determination of the appeal, it should be ordered to pay the full judgment debt on the same day that the orders are made and the orders should provide that if Tianqi fails to pay the money into court in accordance with those orders, the stay be lifted. MSP contended that Tianqi advanced no basis on which only a portion of the judgment debt should be paid into court.[78]
[78] Respondent's submissions filed 16 March 2021, pars 73 - 75.
In oral submissions, MSP emphasised that Tianqi had known since 18 February 2021, when the primary decision was delivered, that it would be required to pay the judgment debt and, yet, had evidently done nothing to ensure that the money was available in Australia to effectuate its proposal that the money be paid into court as a condition of the grant of a stay.

Principles

The principles in relation to a stay pending the determination of the appeal were not in dispute. In general terms:[79]
(a)The successful litigant is ordinarily entitled to enforce a judgment pending the determination of any appeal.
(b)It is for the applicant for a stay to move the court to a favourable exercise of its discretion. Under s 15(3) of the Civil Judgments Enforcement Act 2004 (WA) this court may only make a suspension order if there are 'special circumstances' that justify doing so and in an application for a stay under the Supreme Court (Court of Appeal) Rules 2005 (WA) this is also a usual requirement.
(c)The central issue will be whether the grant of a stay is perceived to be necessary to preserve the subject matter or the integrity of the litigation or whether a refusal of a stay could create practical difficulties in respect of the relief which may be granted on appeal. This may shortly be described as requiring the court to consider whether the right of appeal will be rendered nugatory if a stay is not granted.
(d)If it can be demonstrated that the right of appeal will be rendered nugatory if a stay is not granted, the stay will generally still be refused unless it can be established that the appeal has ultimately reasonable prospects of success.
(e)Finally, a stay may still be refused where it appears that the balance of convenience does not lie in favour of the applicant where, for example, the grant of a stay will occasion hardship to the respondent which may not be alleviated by the terms upon which the stay may be granted.
[79] Eastland Technology Australia Pty Ltd v Whisson [2003] WASCA 307; (2003) 28 WAR 308 [9]; Tradesman Technologies Pty Ltd v Ameduri [2012] WASCA 168 [22].

Disposition

On the evidence accepted by Tianqi, MSP's current assets exceeded its current liabilities by over $2 million. However, MSP has a history of paying substantial dividends to its shareholders. MSP also appears to have wound down its operations and liquidated most of its assets. Neither party contended that payment of all or a substantial part of the judgment sum as a dividend would necessarily contravene the provisions of the Corporations Act. MSP has not offered any undertaking as to how it would deal with the judgment sum if paid to it. The history of dividend payments, combined with the absence of ongoing business creating any current pressing need to retain money in the company, gives rise to an inference that MSP might lawfully pay the whole or a significant part of the judgment sum to its shareholders in the form of a dividend. Recovery of such a dividend from shareholders (the identity and financial position of whom was not the subject of any evidence before us) may be difficult or impossible. In our view, there was a real risk that the judgment sum, if paid to MSP pending the determination of the appeal, would be paid away in dividends unless a stay were granted. This would create at least practical difficulties for the recovery of the judgment sum if the appeal were allowed and repayment ordered to Tianqi. Accordingly, we accepted that the appeal would be rendered nugatory if a stay were not granted.

We also accepted that, for present purposes, the appeal has reasonable prospects of success.
As to the balance of convenience, the evidence indicated that Tianqi and the group of which it is a part is in serious financial difficulty. In our view, there was a substantial risk that if a stay were granted, Tianqi's position would deteriorate further and its ability to pay the judgment debt would be correspondingly reduced. It was necessary to balance the risk that MSP might disperse dividends if the judgment sum were paid to it against the risk that Tianqi's financial position might deteriorate making recovery of the judgment sum impossible if a stay were granted. The balance of convenience was such as to demand, in our view, that a stay should only be granted if provision was made to secure payment of the judgment sum in the event that the appeal was dismissed. It was appropriate in these circumstances to condition the stay in the manner proposed by Tianqi, namely that the judgment sum be paid into court.
Although Mr Surendran's affidavit indicated that the funds for the major part of the judgment debt would need to come from China, and may take a further two to four weeks to be released, it seemed to us that the interests of justice required a payment into court by Friday, 9 April 2021. With Easter approaching, this gave Tianqi five business days in Australia to make the payment. While formal orders were not made until 8 March 2021, the master's reasons for awarding summary judgment were published on 18 February 2021 (six weeks before the hearing of the stay application). Tianqi had had ample time to arrange its affairs for the funds to be available, or readily available, by the time this application for a stay came on for hearing on 1 April 2021. The grant of a stay without a condition requiring the prompt payment of the judgment sum into court would have been unjust in the circumstances.
We listed the matter for directions on 21 April 2021 to review the position with respect to the application for an urgent appeal order, in the context that, by that time, it would be known whether or not payment into court had been made as directed.
It was for the above reasons that we made the orders referred to at [2] above.
We note that, since those orders were made, Tianqi was able to arrange for payment of the judgment sum into court to be made in accordance with this court's orders.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
DM
Associate to the Honourable Justice Murphy
19 APRIL 2021