Case: Sevenhill Holdings Pty Ltd v Musovic [1992] FCA 372
Outcome: cited
"Fairness" will be, in part assessed, by an applicant demonstrating that the benefit of a successful appeal will be taken away in every practical sense or rendered nugatory, if no stay of the primary order(s) is granted. Such a consideration has been described as a "substantial factor" influencing the discretion to order a stay ( Alexander v Cambridge Credit at 695D). Weighed in the balance is a preliminary non-speculative assessment of whether the appellant by the grounds of appeal has raised an arguable case. Such an assessment however is designed to be "protective" of the judgment creditor in the sense of being undertaken to test whether the appeal has "been lodged without any real prospect of success and simply in the hope of granting a respite against immediate execution upon the judgment" ( Alexander v Cambridge Credit at 695F). These principles have been applied in Powerflex v Data Access Corporation ; Starborne Holdings Pty Ltd v Radferry Pty Ltd &amp; Ors [1998] FCA 548 ; Henderson v Amadio Pty Ltd (No. 3 ) (1996) 65 FCR 66 and other cases in this Court. The assessment of the prospects of success of the appeal by reference to such a test reflects a low threshold of arguability. In Sevenhill Holdings Pty Ltd v Musovic [1992] FCA 372 , French J put the notion of an appeal reflecting an arguable prospect of success in these terms: In saying so, I accept that the very findings which underpin [it] are under challenge in an appeal which is not frivolous, that is to say, an appeal which has an arguable prospect of success. 41 In exercising the discretion to grant a stay or fashion the particular terms of intervention, the Court would ordinarily only impede the enforcement of its orders pending appeal so far as is necessary to ensure that orders which might ultimately be made by the Court on appeal can be given effect without leaving residual injustice in the hands of the party ultimately successful, as a residue of the first instance orders being performed, absent a stay. That is why the Court gives particular attention to whether an appeal might be rendered nugatory by the refusal of a stay and whether an appellant would be irremediably prejudiced if the stay were not granted yet its appeal ultimately upheld ( Cook's Construction Proprietary Limited v Stork Food Systems Australasia Pty Ltd [2008] QCA 322). The risk that an appeal may be nugatory must be balanced against the risk of prejudice to the party who succeeded at first instance if execution of the judgment is stayed ( Sevenhill Holdings Pty Ltd v Musovic per French J). On the question of a nugatory appeal, the Queensland Court of Appeal (Keane JA; McMurdo P and White AJA agreeing) in Cook's Construction v Stork Food Systems considered that even if the refusal of a stay were, in the circumstances of that case, to lead to the receivership or liquidation of the appellant, substantive rights could nevertheless be pursued by the receiver or the liquidator. 44 Although the respondents contend that four grounds of criticism of the appeal ([24]-[32]) demonstrate that the appeal can not succeed and no arguable ground of appeal has been articulated, the grounds of appeal do not fall into the class of case described in Alexander v Cambridge Credit Corporation or Sevenhill Holdings v Musovic , notwithstanding the difficulties the appellants confront. In other words, the appellants have raised contentions that are other than frivolous. It is true that many of the grounds of appeal challenge findings of fact as against the weight of evidence. Similarly, the grounds of appeal call into question the findings of the primary judge on questions of credit in circumstances where the primary judge had the benefit of assessing the evidence of Mr Tracy and Mr Strahley in the context of all the evidence. Nevertheless, the appellants are entitled to seek to persuade the Court on appeal, that the various challenged findings ought not to have been made or that errors of law were made in the treatment of particular topics such as reliance or any of the other matters framed by the notice of appeal. In so observing, of course, I make no comment about the merits or otherwise of any particular matter raised by any of the grounds of appeal. 45 However, the first appellant has no capacity to pay the judgment debt or costs. No protective mechanism has been put forward by Mr Tracy or the first appellant to ensure that any stay order is "fair to all parties". Mr Tracy has not offered any undertaking on behalf of the first appellant not to charge or encumber any of its assets pending appeal and no security is offered over any assets of Mr Tracy. There is no proposal to pay the judgment sum or any part of it into Court. The absence of any such proposal is no doubt due to the incapacity of the first appellant to be able to do so and a disinclination in Mr Tracy to suggest any other mechanism for a supervised investment account. 46 The appellants' principal discretionary consideration urged upon the Court is that a refusal of a stay with any consequential payment of monies (particularly the deposit monies) to the first respondent would occur in circumstances where the first appellant has no reasonable confidence of repayment if ultimately successful. The appellants however have not demonstrated that residual injustice will arise by complying with the orders at first instance should the appeal be successful. In that sense, the appellant has not demonstrated that the appeal will be rendered nugatory by a refusal of a stay. Inconvenience in satisfying the judgment debt or, alternatively, the prospect of changes in the administration of the first appellant either by reason of receivership or liquidation does not of itself render an appeal nugatory.