FEDERAL COURT OF AUSTRALIA Jeans v Commonwealth Bank of Australia [2003] FCA 771 JOHN ANTHONY JEANS v COMMONWEALTH BANK OF AUSTRALIA LIMITED N 681 OF 2003 GYLES J SYDNEY 8 JULY 2003 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 681 OF 2003 BETWEEN: JOHN ANTHONY JEANS APPLICANT AND: COMMONWEALTH BANK OF AUSTRALIA LIMITED RESPONDENT JUDGE: GYLES J DATE OF ORDER: 8 JULY 2003 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The motion for a stay be dismissed. 2. Costs of the motion be costs in the appeal. 3. The parties have liberty to apply on three days' notice. 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 N 681 OF 2003 BETWEEN: JOHN ANTHONY JEANS APPLICANT AND: COMMONWEALTH BANK OF AUSTRALIA LIMITED RESPONDENT JUDGE: GYLES J DATE: 8 JULY 2003 PLACE: SYDNEY REASONS FOR JUDGMENT 1 This is an application for a stay pending appeal by John Anthony Jeans, the appellant, against whom judgment in favour of Commonwealth Bank of Australia Limited ("the Bank") has been entered in the sum of $4,672,379.71, together with interest accruing at $1,683.34 cents per day from 1 April 2003. The judgment appealed from is Deangrove Pty Ltd v Commonwealth Bank of Australia [2003] FCA 470. Success in the appeal will depend upon a challenge to a ruling during the course of the hearing in which the trial judge refused leave for the appellant to withdraw an admission made on the pleadings (Deangrove Pty Ltd v Commonwealth Bank of Australia [2003] FCA 268). Each side is agreed that the principles laid down in Alexander v Cambridge Credit Corporation Ltd (1985)2 NSWLR 685 adopted in Powerflex Services Pty Ltd v Data Access Corporation (1996) 67 FCR 65 are to be applied on this application. 2 It is submitted for the appellant that unless a stay is ordered the statutory right of appeal accorded him will be rendered nugatory as satisfaction of the judgment is impossible. He will be left without means to prosecute the appeal and would be at immediate risk of bankruptcy proceedings which would virtually certainly end any practical prospect of pursuing the appeal. It is also submitted that bankruptcy would affect the ability of an associated company to pursue other current proceedings against receivers appointed by the Bank. In my opinion, that consideration is to be ignored for present purposes. 3 The Bank's first point is that I should not be satisfied that there is no ability to meet the judgment debt. The evidence shows that the Jeans family trust ("the Trust") has assets which could well exceed the amount of a judgment and that companies associated with the appellant are potential beneficiaries of that Trust. In addition, there have been a number of arrangements between the appellant and the trustee which indicate a capacity to utilise the assets of the Trust for his purposes. There is substance to these submissions although I am not satisfied that the Trust has available liquid assets of the scale which will be necessary to pay this debt nor that that would be an appropriate course for the trustee to take. On the other hand I am satisfied that it would be a mistake to view the appellant as an indigent person. When discretionary relief is being considered, it is appropriate to have regard to the ability of the appellant to influence the disposition of assets under his general practical umbrella. 4 Next, the Bank is concerned that there is no certainty that the appeal would be pursued expeditiously if a stay is granted. Reference is made to the unsatisfactory conduct of the litigation on the part of the appellant which was described by the trial judge as lamentable. This is a legitimate concern. It is then submitted that the substance of the appeal is against an interlocutory ruling on a matter of practice and procedure which, whilst not unarguable, would have little chance of success. The appellant will certainly have a heavy burden as the trial judge referred to the relevant authorities and principles in the considered decision to which he came. The Bank points out that there is no offer to pay any amount and that no security is offered at all for payment of the judgment debt if the appeal is unsuccessful. Interest is accruing at a significant rate per day. There is obviously no difficulty in obtaining repayment of amounts paid towards satisfaction of a judgment and interest from the Bank in the event of the appeal being successful. 5 The offer on behalf of the trustee of the Trust to pay costs up to a limit of $50,000 is not regarded by the Bank as satisfactory. It is submitted that a further delay of some months inevitably involves a real prospect of prejudice to the Bank if a stay is ordered. There is no control in the meantime over transactions involving the appellant or any associated entities which may reflect upon his financial position. It is also submitted that the inability to serve a bankruptcy notice may prejudice creditors generally as it would delay the relevant act of bankruptcy: Rigg v Commonwealth Bank [2000] FCA 846 and Warner v Frost [1999] FCA 830. 6 These are all legitimate considerations. In order to meet the argument that the appeal may be rendered nugatory, and on the basis the appeal will be heard in the November Full Court sittings, the Bank has offered an undertaking in the following terms: 'The respondent undertakes to the Court that it will not, pending determination of the appeal, present a petition seeking a sequestration order against the appellant should ground exist otherwise entitling the respondent to do so.' 7 This would leave the Bank free to serve a bankruptcy notice but would not affect the immediate ability of the appellant to pursue the appeal. It is submitted for the appellant that bankruptcy proceedings should not intervene at all. One factor to be borne in mind is that if the Bank did serve a bankruptcy notice other creditors not bound by the undertaking could rely upon the act of bankruptcy. I was also reminded that the Bank has security for the costs of the proceedings up to judgment provided on behalf of Deangrove Pty Ltd which, in practice, covers costs caused by the appellant. 8 When I indicated to counsel for the appellant that a condition of any stay would include at least significant payments on account of post judgment interest to date and continuing, he indicated that his client would prefer to abandon the application for a stay, and accept the undertaking offered by the Bank. In the circumstances, I will accede to that solution. I indicate that if the appeal is diligently pursued it will be heard in the November 2003 sittings of the Full Court. I expect the parties to agree on standard directions for the preparation of the appeal, which they should bring in. If not, the matter should be returned under liberty to apply. 9 I note the promise in paragraph 14 of the affidavit of Noel James Barrett of 3 July 2003. I note the undertaking of the appellant to the Court by his counsel that he will diligently pursue the appeal. I note the undertaking to the Court of the Bank by its counsel that pending the determination of the appeal or further order it will not present a petition seeking a sequestration order against the appellant. 10 On that basis I order: (1) that the motion for a stay be dismissed; (2) that costs of the motion be costs in the appeal; (3) that the parties have liberty to apply on three days' notice. I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gyles. Associate: Dated: 24 July 2003 Counsel for the Applicant: JM Ireland QC Solicitor for the Applicant: Robert H Butler Counsel for the Respondent: AG Bell Solicitor for the Respondent: LE Taylor Date of Hearing: 8 July 2003 Date of Judgment: 8 July 2003