Court of Appeal Supreme Court New South Wales Medium Neutral Citation: M & W Zaki Pty Ltd v MindChamps Preschool Ltd [2022] NSWCA 140 Hearing dates: 01 August 2022 Decision date: 01 August 2022 Before: Leeming JA Decision: 1. Orders 1 and 2 of the decision of Slattery J of 1 July 2022 be stayed pending the determination of the appeal from those orders or until further order on condition that the first, second and third appellants undertake to pay the judgment sum plus interest pursuant to ss 100 and 101 of the Civil Procedure Act 2005 (NSW) in the amount of $643,500 into court. 2. Direct that the amount of $643,500 is to be paid into court by 4pm Friday 5 August 2022. 3. Grant liberty to apply on two working days' notice by email to my Associate in relation to any issue arising out of 1 and 2 above. 4. Direct the appellants to file and serve their written submissions in support of the appeal on or before Tuesday 16 August 2022. 5. Vacate the listing of the appeal before the Registrar on Wednesday 17 August 2022. 6. Stand the appeal over for directions before the Registrar on Monday 22 August 2022 noting that it is anticipated that by that time the respondents will have informed the appellants whether or not there is to be a cross-appeal, and if so, the length of the hearing of the appeal and cross-appeal which is required, in the expectation that on 22 August, the parties will receive a date for hearing of the appeal and any cross-appeal. 7. The costs of the notice of motion filed 28 July 2022 are costs in the appeal. Catchwords: PRACTICE – appeals – stay of execution – whether judgment sum should be paid into court – respondent a listed company based in Singapore – no local assets against which execution readily available – risk of expense and inconvenience if necessary to enforce NSW judgment in Singapore – no evidence of any prejudice – applicant proffering expedited appeal – stay granted Legislation Cited: Uniform Civil Procedure Rules 2005 (NSW), r 1.11(2) Cases Cited: Alexander v Cambridge Credit Corporation Ltd (1985) 2 NSWLR 685 Mindchamps Preschool Ltd v M & W Zaki Pty Ltd ATF the Zaki Group Trust & Ors [2022] NSWSC 881 Vaughan v Dawson [2008] NSWCA 169 Yeshiva Synagogue Inc v Karimbla Properties (No 10) Pty Ltd as Trustee of the Harry Triguboff Foundation [2017] NSWCA 331 Category: Procedural rulings Parties: M & W Zaki Pty Ltd (First Appellant/First Applicant) Child Care Income Protection Pty Ltd (Second Appellant/Second Applicant) Mark Zaki (Third Appellant/Third Applicant) MindChamps Preschool Ltd (Respondent) Representation: Counsel: R Newlinds SC (Appellants/Applicants) J Burnett (Respondent) Solicitors: Hitch Advisory (Appellants/Applicants) Dentons Australia Ltd (Respondent) File Number(s): 2022/00219808 Publication restriction: Nil Decision under appeal Court or tribunal: Supreme Court of New South Wales Jurisdiction: Equity Citation: [2022] NSWSC 881 Date of Decision: 1 July 2022 Before: Slattery J File Number(s): 2017/00063546 [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] EX TEMPORE Judgment 1. LEEMING JA: By notice of motion filed on 28 July 2022, the appellants M & W Zaki Pty Ltd as trustee for the Zaki Group Trust, Child Care Income Protection Pty Ltd as trustee for the KZ Trust, and Mr Mark Zaki seek a stay of orders 1 and 2 made on 1 July 2022 by this Court sitting in the Equity Division. On that day, a substantial reserved judgment of 309 paragraphs was delivered following an eight-day trial in July and August 2021: MindChamps Preschool Ltd v M & W Zaki Pty Ltd ATF the Zaki Group Trust & Ors [2022] NSWSC 881. 2. Orders 1 and 2 required the following: "1. Declare that upon the true construction of the Term Sheet made between the plaintiff as Buyer and the first, second and third defendants as Sellers on 1 September 2016 (the Term Sheet) and in the events which have occurred, the first, second and third defendants are obliged by clause 10 of the Term Sheet to return the deposit of $500,000 paid by the plaintiff; 2. Order the first, second and third defendants to pay the deposit of $500,000 to the plaintiff within 28 days." 1. 1 July 2022 was a Friday. Excluding that day, in accordance with UCPR r 1.11(2), the 28 days for the payment of the $500,000 required by order 2 expires today. I shall follow the course adopted by the parties and pass over what is to be understood as the effect of a stay of the declaration in order 1 (see Yeshiva Synagogue Inc v Karimbla Properties (No 10) Pty Ltd as Trustee of the Harry Triguboff Foundation [2017] NSWCA 331 at [12]) and focus on the substance of the dispute. 2. The appellants proffer, as the price of the stay they seek, $500,000 plus interest (which has not as yet been calculated in the Equity Division) in the amount of $143,500 being either paid into Court or into a joint account with as joint signatories two partners or other senior representatives of the law firms acting for the parties, together with a promise to use all reasonable endeavours to expedite the appeal. 3. It is common ground that the appeal is reasonably arguable. It is common ground that the hearing of the appeal, if there be no cross-appeal, will not exceed one day. 4. Mr Newlinds SC, who appeared for the appellants in this Court, and for the defendants below, proposes to accede to an accelerated timetable which could have the appeal listed for hearing in some eight weeks' time. 5. The application is opposed on bases fairly summarised in paras 12-14 of the helpful and concise submissions supplied to me by Mr Burnett. Those paragraphs are as follows: "First, the appellants have not demonstrated any reason to believe that the respondent would not honour any restitutionary judgment obtained against it if the appeal was successful. In other words, there is no reason to think that the respondent would be unable to repay the money without difficulty or delay if the appeal were to succeed: cf Woolworths Limited v Strong (No 2) (2011) 80 NSWLR 445; [2011] NSWCA 72 at [68]. Second, and related to the first point, the position of the respondent is such that the Court can be satisfied that there is no substantial risk that the respondent would be unable to satisfy any restitutionary judgment. The respondent is a publicly listed company in Singapore. Those assets include a substantial Australian operation, in the form of a 100% shareholding in MCELA. The operations of MCELA were described above. Third, in the unlikely event that the appellants were ever required to enforce a restitutionary judgment against the respondent in Singapore (notwithstanding the respondent's Australian asset), the process for registration and enforcement of a judgment of the Supreme Court of New South Wales is straightforward." 1. This is an application where neither side points to any substantial prejudice. For its part, the respondent is, prima facie, entitled to the fruits of the judgment it has secured. On the other hand, the evidence establishes that the judgment sum is very small in comparison with the assets controlled, or owned, by the respondents (whose Australian business alone employs some 619 staff and owns 18 preschool centres, and has a paid-up share capital of some $79 million). There is no evidence of any need for the money to which the respondent is entitled. 2. On the other hand, there is no evidence before me of any Australian assets against which execution of the judgment that would follow in the event that the appeal is successful may readily be levied. It is also relevant to bear in mind that the $500,000 which is the subject of this application, and indeed the appeal, was paid many years ago, in 2016, by way of deposit for the proposed acquisition for $68.5 million of some nine childcare centres operated by the appellants. That is to say, the respondent, while it is entitled to the fruits of the judgment, has already been denied enjoyment of those fruits for some six years. 3. For their part, there is no real suggestion on the part of the applicants that ultimately there would be substantial difficulty in recovering the amount which is the subject of the judgment plus interest in the event that its appeal is successful. Instead, it is put at the level of inconvenience, because in the event that repayment does not occur voluntarily, it seems to be common ground that it would be necessary to register the judgment in Singapore, with attendant time and expense involved. 4. The likelihood of these parties, which have fought an eight day trial and which are still involved in active litigation against one another in this Court, not accommodating consensually the outcome of the litigation in this Court (or indeed an application for special leave to appeal in the High Court), is not to be underestimated. For better or worse, the sort of dispute that has given rise to the referral from the Registrar's list this morning is not unlikely to recur in the event that there is a further need to obtain restitution of the amounts paid. 5. There is no dispute as to the applicable principles. Although I have referred to the prima facie entitlement of a successful litigant to the fruits of its judgment, and it remains necessary for the applicant to demonstrate that this is an appropriate case for the granting of a stay, the "prima facie entitlement" of a successful litigant has been explained by, for example, Campbell JA in Vaughan v Dawson [2008] NSWCA 169 at [16] as meaning that the onus remains on the applicant to make out a case that is suitable for the Court to award a stay, and it is for the applicant to demonstrate a proper basis for a stay that will be fair as between the respective interests of the parties: see Alexander v Cambridge Credit Corporation Ltd (1985) 2 NSWLR 685 at 694. 6. The considerations in the present case are relatively finely balanced. However, in my view, swayed as I am by the absence of any evidence from the respondent of actual prejudice for being further denied their $500,000 plus interest for what in the scheme of this litigation is a relatively insignificant period of time – by that I mean a matter of some months as opposed to the approximately six years that have heretofore elapsed – plus the capacity for there to be inconvenience, expense and further disputation in the event that it is necessary to register a judgment of this Court in Singapore, I have concluded that the applicants have demonstrated that there is a proper basis for granting a stay of execution. 7. That stay will be granted on terms that minimise the prejudice to the respondent and will be achieved by, first of all, ensuring that the entirety of the judgment sum plus interest is securely and readily available either through money being paid into Court, or in a joint bank account, and secondly through my accelerating the timetable as proffered by the applicants for the speedy determination of the appeal. 8. I'm just going to pause here to find out whether instructions have come through as to a preference between paid into Court or joint bank account, and whatever the preference is, that's what I'm going to do. 9. BURNETT: Yes, your Honour, the preference is for payment into Court. 10. HIS HONOUR: Very well. 11. Although there has been discussion, initially prompted by me, for the funds to be paid into a joint bank account operated by the solicitors, it being made clear that there was a contingent beneficial entitlement of the litigants to those sums, so that there was ownership of the money pending the determination of the appeal, although the litigants would not have its use, the respondent's preference is for the sum plus interest to be paid into Court. Since it is the respondent that is being kept out of the fruits of its judgment, I am minded to accommodate that preference. 12. [Discussion concerning timetabling and costs] 13. I make the following orders: 1. Orders 1 and 2 of the decision of Slattery J of 1 July 2022 be stayed pending the determination of the appeal from those orders or until further order on condition that the first, second and third appellants undertake to pay the judgment sum plus interest pursuant to ss 100 and 101 of the Civil Procedure Act 2005 (NSW) in the amount of $643,500 into court. 2. Direct that the amount of $643,500 is to be paid into court by 4pm Friday 5 August 2022. 3. Grant liberty to apply on two working days' notice by email to my Associate in relation to any issue arising out of 1 and 2 above. 4. Direct the appellants to file and serve their written submissions in support of the appeal on or before Tuesday 16 August 2022. 5. Vacate the listing of the appeal before the Registrar on Wednesday 17 August 2022. 6. Stand the appeal over for directions before the Registrar on Monday 22 August 2022 noting that it is anticipated that by that time the respondents will have informed the appellants whether or not there is to be a cross-appeal, and if so, the length of the hearing of the appeal and cross-appeal which is required, in the expectation that on 22 August, the parties will receive a date for hearing of the appeal and any cross-appeal. 7. The costs of the notice of motion filed 28 July 2022 are costs in the appeal. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 05 August 2022