Youlden Enterprises Pty Ltd v Health Solutions (WA) Pty Ltd - [2003] WASC 127

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: YOULDEN ENTERPRISES PTY LTD & ANOR -v- HEALTH SOLUTIONS (WA) PTY LTD & ORS [2003] WASC 127

CORAM: MASTER NEWNES

HEARD: 16 JUNE 2003

DELIVERED : 16 JUNE 2003

FILE NO/S: COR 337 of 2002

BETWEEN: YOULDEN ENTERPRISES PTY LTD (ACN 063 388 947)
KING HOLDINGS PTY LTD (ACN 056 144 793)
Plaintiffs
AND
HEALTH SOLUTIONS (WA) PTY LTD (ACN 065 481 049)
First Defendant
HEALTH SOLUTIONS AUSTRALIA PTY LTD (ACN 063 345 077)
Second Defendant
JONATHAN ALFRED FOGARTY
Third Defendant

Catchwords:

Practice and procedure - Application for stay of proceedings pending appeal - Turns on own facts

Legislation:

Nil

Result:

Application allowed in part

Category: B

Representation:

Counsel:

Plaintiffs:     Mr M H Zilko SC
First Defendant             :     Mr J C Yeldon
Second Defendant         :     Mr J C Yeldon
Third Defendant           :     Mr M A MacLennan

Solicitors:

Plaintiffs:     Tottle Christensen
First Defendant             :     Clayton Utz
Second Defendant         :     Clayton Utz
Third Defendant           :     Bennett & Co

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

Bridge Pump Co Pty Ltd v Fazio [1998] WASC 305
Hamersley Iron Pty Ltd v Lovell (No 2) (1998) 20 WAR 79

Case(s) also cited:

Alexander v Cambridge Credit Court Ltd (1985) 2 NSWLR 685
Bridge Pump Co Pty Ltd v Fazio [1998] WASC 305
Croney v Mand [1999] 2 Qd R 342
Deputy Commissioner of Taxation v Fontana [1989] WAR 262
Fagenblat v Feingold, unreported; SCt of Vic, C & E Div No 2007 of 2002
Hume v Maher [1988] WASC 328
Jefferson Ltd v Bhetcha [19779] 1 WLR 898
Scott v ANZ Banking Group Ltd [1989] WAR 256
Wilson v Church (No 2) 1879 12 Ch D 454

MASTER NEWNES: This is an application for a stay of proceedings pending an appeal against my order of 2 May 2003 dismissing the third defendant's application for a stay of the proceedings until the resolution of a criminal charge currently pending against him. The current application is put on the basis that, unless an interim stay is granted, an appeal would be rendered nugatory. The application was heard on an urgent basis.
It is clear that the jurisdiction to grant a stay on an application of this sort is to be exercised only in special or exceptional circumstances: Hamersley Iron Pty Ltd v Lovell (No 2) (1998) 20 WAR 79 per Ipp J at 81 ‑ 82; Bridge Pump Co Pty Ltd v Fazio [1998] WASC 305.
Generally speaking, the Court will only stay proceedings where it is necessary to preserve the subject matter or integrity of the litigation or where refusal would create practical difficulties in the relief available to the appellate Court or where 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 stay is not granted.
If that hurdle is surmounted, it is necessary to consider other factors, such as the prospects of success of the appeal, so far as they can be assessed at this point, to determine whether the appeal is simply without any merit at all, the effect of the stay on other parties and the balance of convenience.
The third defendant says, as he said on the original application, that if he is required to file a defence and to give discovery of documents in these proceedings, there is a real risk that that will cause injustice to him in the criminal proceedings. He says the effect will be that he will be required to disclose in advance what is to be his defence, and the gist of his evidence, in the criminal proceedings to a key prosecution witness who has an interest, including a commercial interest, in seeing him convicted. He says that once those matters are disclosed that witness will be able to trim his evidence accordingly and the damage will be done; there will be no way of restoring him to his existing position, and the appeal will be nugatory.
The plaintiffs say, in effect, that the third defendant has raised nothing on this application that was not considered and rejected on the original application. No exceptional circumstances have been shown. The decision at first instance involved the exercise of a discretion and the third defendant has not pointed to the exercise of that discretion having miscarried in any way, but rather simply seeks to persuade the Full Court that the discretion should have been exercised differently.
The plaintiffs say that if a stay is granted the civil proceedings will be bogged down for a considerable period of time, bearing in mind that the criminal proceedings are apparently further delayed, and that will occur in circumstances in which the plaintiffs say the oppressive conduct of the defendants is continuing.
I am conscious that a stay should be granted only in exceptional circumstances and I certainly do not underestimate the difficulties facing a party seeking to challenge on appeal the exercise of a discretion. Nor am I unaware of the position which the plaintiffs face if a stay is granted and these proceedings come to a standstill.
However, in this case the third defendant says the effect, if a stay is not granted, will be that he will be seriously prejudiced in respect of criminal proceedings where the charge he faces is a serious one. I consider that that is a matter of particular significance in weighing up the competing considerations.
I accept Mr Zilko's submission that there is no suggestion at this stage that the third defendant will have to put any relevant information on oath. However, once material is disclosed it will be available to the parties in this litigation and the third defendant will be facing the prospect of cross‑examination on it. I am not at this stage in a position to determine that disclosing that material would not have an adverse effect, or potential adverse effect, on the criminal proceedings. I accept that if the material is disclosed and it has the effect that is advanced by the third defendant, then it would be impossible to restore him to his current position.
In the circumstances, somewhat hesitantly because I think the case is marginal, I am satisfied that a stay should be granted pending the appeal.
Having reached that conclusion, the question arises as to the position of the first and second defendants. It is contended that the stay should extend to the first and second defendants. It was put on different bases by counsel for the third defendant and counsel for the first and second defendants respectively.
The third defendant says that the disclosure of the defence of the first and second defendants will effectively disclose his defence and, likewise, disclosure of their documents will have the same effect as disclosure of the documents in his possession.
It is difficult to see why that is necessarily the case, or indeed why it is the case at all, and nothing has been put before me that persuades me that it would have that effect. The first and second defendants are companies separately represented and with their own boards of directors and their own separate interests. I do not consider that at this stage it has been shown that prejudice will result to the third defendant if the proceedings are not stayed against the first and second defendants.
The first and second defendants' counsel put the claim for a stay on the basis that the first and second defendants would be prejudiced, as I understood it, by not having available to them Mr Fogarty to provide them with instructions and to confer with. In any event, on whatever precise basis it is put, once again the first and second defendants have their own boards of directors, their own separate interests, and their own legal representation. I do not believe that anything has been advanced this morning which would justify a stay of the proceedings against them.
In those circumstances, I consider that a stay should be granted in respect of the third defendant pending the hearing of the appeal. That would be on the basis that the third defendant pursue the appeal with all proper expedition, and I would give liberty to apply so that if that were not the case, the matter could be reviewed.
I should add one thing in connection with an issue which arose at the hearing of this application. I understand from counsel for the first and second defendants that there is the prospect of an application to strike out the amended statement of claim of the plaintiffs. I do not intend that the stay in respect of the third defendant would extend to such an application if the third defendant were instructed to bring it. In other words, if the third defendant has any objection to the form of the statement of claim, then those objections should be pursued in the normal way. The stay would not extend to that, but simply to steps that the third defendant is required to undertake in respect of defence, discovery and other such interlocutory processes.