IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NG 1077 of 1998 BETWEEN: THE TANK PEOPLE PTY LTD (ACN 008 578 372) First Appellant STEPHEN EWEN McEWEN Second Appellant AND: TECH TREAT PTY LTD Respondent JUDGE: EMMETT J DATE OF ORDER: 16 DECEMBER 1998 WHERE MADE: SYDNEY THE COURT NOTES THE FOLLOWING UNDERTAKINGS GIVEN TO THE COURT: 1. By the Second Appellant that, pending the appeal, he will not dispose of or otherwise alienate any of his assets otherwise than for the purposes of normal living expenses or pursuant to the orders made by the Family Court of Australia on 11 June 1998. 2. By Gordon Mar that, should the appellants be successful in the appeal and, as a result of any costs orders in favour of the appellants made by the Full Court, a net amount is payable to the appellants when the amount due under those costs orders is set off against the amount due under the compromise agreement for which the appellants contend, and the present respondent fails to pay such net amount, Mr Mar would assume personal liability to make good any shortfall up to but not exceeding the amount paid by the appellants pursuant to the orders below. THE COURT ORDERS THAT: 3. If the appellants pay to the respondent the sum of $14,000 by 24 December 1998, orders (2), (3) and (4) made by Whitlam J on 21 September 1998 be stayed from the date of such payment until judgment is delivered on the appeal. 4. If thereafter the appellants fail to pay to the respondent the sum of $1,000 on the 18th day of each month until the final disposition of the appeal, the stay be dissolved. 5. The costs of the motion for a stay be the costs of the parties in the appeal. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NG 1077 of 1998 BETWEEN: THE TANK PEOPLE PTY LTD (ACN 008 578 372) First Appellant STEPHEN EWEN McEWEN Second Appellant AND: TECH TREAT PTY LTD Respondent JUDGE: EMMETT J DATE: 16 DECEMBER 1998 PLACE: SYDNEY EX TEMPORE REASONS FOR JUDGMENT 1 HIS HONOUR: In the proceedings heard by Whitlam J, the present respondent claimed relief for contraventions of sections 52 and 53 of the Trade Practices Act 1974 (Cth). In substance, it was accepted by Whitlam J that there had been contraventions. The contravention was by the first appellant. However, the second appellant, who is a director of the first appellant, was found to have participated in the contravention. The principal answer raised by the present appellants to the claims made before Whitlam J was that the claims had been compromised. 2 His Honour heard evidence as to the two versions of conversations said to have taken place between the second appellant and a principal of the present respondent. His Honour concluded that, given the certainty with which both adhered to their respective recollections, the most likely conclusion is that they were at cross purposes. The question concerned whether or not mention was made of scale legal costs in the course of the conversation. His Honour concluded that if the second appellant spoke of scale legal costs the principal of the present respondent did not hear him say so. His Honour concluded, therefore, that even though both individuals thought they had made a legally binding agreement to settle the proceedings, in fact, they had not. 3 The present appellants have now filed a notice of appeal from that determination. The principal issue to be raised on the appeal is whether his Honour erred in having regard to the subjective state of mind of the individuals concerned and whether his Honour should have made a finding of fact as to what was said. Whatever was said, according to that finding, would constitute the agreement between the parties. That contention is based on what is said to be the objective theory of contract under the common law. I consider that there is at least an arguable case on the hearing of the appeal such that there are at least reasonable prospects of success. Of course, I do not express any view as to the likely outcome of the appeal. I do no more than indicate that I am satisfied that there is at least some prospect of success. 4 I now have before me an application by the second appellant for a stay pending the hearing of the appeal of the judgment entered by Whitlam J. The evidence before me indicates that the second appellant may not be in a position to meet the judgment. I also have evidence that in June 1998 the second appellant and his wife entered into arrangements which were sanctioned by the Family Court of Australia concerning a property settlement resulting from the breakdown of their marriage. The effect of the property settlement might fairly be said to result in the second appellant's wife receiving virtually all of his property. On the other hand, the second appellant says that he has expectations of receiving a not insignificant bequest from his father who presently resides in New Zealand. The second appellant's father has asked him to return to New Zealand to run the father's business. While it was suggested that the property settlement was in some way calculated to defeat the present respondent's claim, I am not satisfied that the property settlement was entered into otherwise than in good faith. 5 When the matter was first before me last week, I indicated that I was disposed to grant a stay on terms, subject to being satisfied as to two matters. The first matter was that a property referred to in the property settlement was not a property in respect of which the second appellant had any interest. That matter was raised by counsel for the present respondent. However, a closer examination of the terms of settlement between the second appellant and his wife indicated that the property was in fact dealt with by the terms of settlement. That seems to have been accepted by the present respondent because that question was not raised again when the matter came before me today. 6 The other matter upon which I wanted to be satisfied was that the second appellant did not in fact have assets which would enable him to meet the judgment entered by Whitlam J. A further affidavit has now been filed and there has been no real challenge to the evidence of the second appellant that he is not in a position to meet the judgment, apart from the attack on the property settlement. 7 The compromise which the appellant alleged had been entered into involved the payment of a lump sum and monthly payments thereafter. It appears to have been common ground that the first payment was to be made when a written agreement was entered into. The appellants say that no such written agreement has yet been signed because of the repudiation by the present respondent. Nevertheless, had the compromise agreement been accepted by Whitlam J, directions would have been given for its specific performance and that would have required payment well before now of the amount which, under the terms of the alleged compromise, would have been payable by the appellants. 8 I am satisfied that there would be a severe prejudice to the second appellant if there were no stay because of the possibility of bankruptcy. On the other hand, I am also satisfied that there would be no prejudice to the present respondent arising from a stay on terms that the second appellant perform the compromise agreement said to have been entered into. 9 In the circumstances, I consider that it is appropriate to stay the judgment. The orders which I propose are that: (1) if the appellants pay to the respondent the sum of $14,000 by 24 December 1998, orders (2) (3) and (4) made by Whitlam J on 21 September 1998 be stayed from the date of such payment until judgment is delivered on the appeal; (2) if thereafter the appellants fail to pay to the respondent the sum of $1000 on the 18th day of each month until the final disposition of the appeal, the stay be dissolved. 10 The question arises as to the costs of the application for a stay. The second appellant, in effect, seeks an indulgence from the Court since, prima facie, a successful applicant is entitled to the fruits of its victory. On the other hand, as I have said, I am satisfied that the interests of justice require that a stay on the terms which I have proposed be ordered. There was correspondence between the parties concerning the terms upon which the stay would be ordered. It appears to me that neither party really indicated a firm stance which would justify the prior conduct being taken into account in the exercise of discretion concerning costs. 11 In a sense, the applicant for the stay has been at least partly successful. On the other hand, as I have said, the grant of a stay is an indulgence and there was no firm offer made by the second appellant to make the payments which I would require to be made as a term of the stay. Had both parties been properly prepared it would not have been necessary for the matter to be adjourned to today. In the circumstances, I consider the appropriate order is that the costs of the motion for a stay be the costs of the parties in the appeal. 12 I have noted that Mr Gordon Mar, the managing director of the present respondent, has proffered an undertaking, through his counsel, that should the appellants be successful in the appeal and, as a result of any costs orders in favour of the appellants made by the Full Court, a net amount is payable to the appellants when the amount due under those costs orders is set off against the amount due under the compromise agreement for which the appellants contend, and the present respondent fails to pay such net amount, Mr Mar would assume personal liability to make good any shortfall up to but not exceeding the amount paid by the appellants pursuant to the terms which I propose. 13 In those circumstances, it seems to me to be appropriate that the amounts in question should be paid, as terms of the stay, to the present respondent. The second appellant has also proffered an undertaking that, pending the appeal, he will not dispose of or otherwise alienate any of his assets otherwise than for the purposes of normal living expenses or pursuant to the orders made by the Family Court of Australia on 11 June 1998. I propose to accept both of those undertakings and, on that basis, I will make the orders which I have foreshadowed. I certify that the preceding four (4) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett. Associate: Dated: 16 December 1998 Counsel for the Applicant: MJ Lawler Solicitor for the Applicant: Dianne Burn & Yvonne Swift Counsel for the Respondent: GPF Rundle Solicitor for the Respondent: Brierley Hodge & Co Date of Hearing: 11 & 16 December 1998 Date of Judgment: 16 December 1998