RADLEY INVESTMENTS COMPANY PTY LTD v AMQUE CLOTHING PTY LTD SUPREME COURT OF NEW SOUTH WALES — COURT OF APPEAL KIRBY P 5 July 1993 [1993] NSWCA 223 PRACTICE & PROCEDURE — stay — risk of financial difficulties of companies — held: Judgment to be paid into fund maintained by solicitors to await outcome of appeal — hearing expedited. Kirby P. Before the Court is an application for the stay of execution of a judgment of Garling DCJ given in the District Court. The motion follows an appeal to this Court from the judgment. The judgment was given on 14 May 1993. The application for stay of execution has followed the normal lines. As is so often the case, the matter is delicately balanced. I keep in mind the principles which govern the determination of applications for stay of execution, as expressed by the Court in authorities such as Alexander & Ors v Cambridge Credit Corporation Ltd (Receivers Appointed) (1985) 2 NSWLR 685 (CA). The judgment creditor is entitled to have the benefit of the judgment unless a stay is demonstrated, in case of dispute, by the judgment debtor. On the other hand, the judgment debtor has a right to appeal to this Court. That right has been exercised. An adjunct to that right, the judgment debtor is entitled to approach the Court to seek the protection of a stay. The Court has had placed before it evidence on the partof both the claimant parties, (the unsuccessful plaintiffs below), and the opponent parties, (the successful defendants). As I approach the matter on the basis of that evidence, each of the respective camps face certain difficulties in respect of their liquidity, at least viewed at this stage. So far as the opponents are concerned, Mr and Mrs Salzburger who are the principals of the company Amque Clothing Pty Ltd have according to the evidence of Mr Salzburger, substantial personal assets. However, it is also true that the judgment is formally entered in favour of the company. Their interest in that company which occasioned the proceedings against them personally was that of guarantors. However, by reason of the success of the company in the proceedings, it was unnecessary to call upon Mr and Mrs Salzburger as guarantors. I must therefore look at the matter from the point of view of Amque Clothing Pty Ltd. From that point of view, it appears from the evidence that the company now has few assets. The assets have been transferred to Mr and Mrs Salzburger. In the event that the judgment moneys were paid, there would be, or might be, real difficulties in the claimants" recovering the sum paid in the event that their appeal succeeds. 2 UNREPORTED JUDGMENTS On the other hand, evidence has been adduced today, which shows that there are certain difficulties for the claimants in having quickly to find the funds for the payment of the judgment debt. The evidence also disclosesthat the claimants have serious difficulties of liquidity. This is by no means unusual in these times. However it presents the spectre against which I must protect the Amque Clothing Pty Ltd and Mr and Mrs Salzburger, who have an interest in that company, that the claimant company and Mr Dalley, the second claimant, might experience difficulties in paying the judgment debt at the end of the whole course of litigation. It is for this reason that I consider that it is appropriate to bring the funds, which are the subject of the appeal, under the control of the Court. I suggested this earlier in the day. Full agreement could not be reached upon the suggestion for reasons which I understand. Having heard the further evidence and the argument, I acknowledge that there are difficulties from the point of view of both parties in the course which I propose. There are also certain dangers. However, the course which I have in mind is the one which, in my view, best meets the circumstances of this particular case. It protects both parties as far as I can presently do. It reduces the risks to both parties. It leaves it to the Court to determine the outcome of the appeal and thus to make orders which will control the disposition of the fund in the Court's possession or control. Two conditions were suggested for the purpose of the management of the proposed fund. The first was that it should be paid into an account at a branch of the Westpac Banking Corporation. This is a bank with which Mr Dalley has a business association. I understand the reason why hewould seek such condition. However, it was correctly pointed out by counsel for Amque Clothing Pty Ltd that the obligation of the Court is to act neutrally between the parties and to ensure the fund can secure the best possible rate of interest commensurate with the current rates in relation to the safety of the fund. It is possible the solicitors to whom I will commit the fund will agree that the money should be deposited with the Westpac Banking Corporation, such a course may secure the best available interest. However, I believe that it should be left to the solicitors to negotiate that matter. So long as the fund is properly and safely invested it can be left to their good sense to see whether or not it will be with the Westpac Banking Corporation or some other financial corporation which provides a suitable rate of interest upon the fund. The second suggestion was that Mr Dalley and his company, Radley Investment Company Pty Ltd, should have eight weeks within which to find the amount of the judgment debt. That debt is of the order of $27,000. I appreciate the financial position of the company, I also realise Mr Dalley's own personal position as explained in evidence. Their liquidity problems will present difficulties in raising capital, especially at the present moment. On the other hand, that will be the obligation of the claimants in the event that the appeal fails. It would be the obligation of the claimants, if I were now to refuse the stay which they have sought. Accordingly, I do not consider that the exceptional period of eight weeks, which would be twice that normally allowed, should be provided. I also keep in mind the fact that a period of approximately seven weeks has already elapsed since the judgment was entered. The combination of the two periods would be, in my view, unfair to the opponents. UAADLEY INVESTMENTS COMPANY PTY LTD v AMQUE CLOTHING PTY LTD (Kirby PB The result of this consideration of the application for a stay is that the following orders should be made: (1) Stay the execution of the judgment of his Honour Judge Garling, dated 14 May 1993 upon condition that 5 (a) Within six weeks of this date the claimants, Radley Investment Company Pty Ltd and/or John Travis Dalley pay into an account to be administered jointly by the solicitors for the claimants and the solicitors for the opponents, the sum of $27,288.30: (b) In the event that sum be not paid into such account within six 10 weeks of this day, the proceedings be returned to this Court for further or other orders; and (c) Both parties have liberty (after three days notice to the other) to apply to restore the matter to the list for further or other orders; (2) That the hearing of the appeal be expedited category C to the intent that 15 the appeal be heard within a period of approximately four weeks, on adate to be fixed by the Registrar, after notification to the parties; (3) That the costs of the motion for a stay be costs in the appeal to abide the outcome of the appeal; and (4) That the fund previously referred to in (1)(a) be maintained by the 20 solicitors to abide the outcome of the appeal and/or any further or other directions of the Court or of a Judge of Appeal. Orders accordingly. 25 Counsel for the claimants: G Segal Solicitors for the claimants: R L Kremnizer and Co Counsel for the opponents: A C Collins 30 _— Solicitors for the opponents: Phillips Fox