Industrial Court of New South Wales CITATION: Merlino v Montresor [2008] NSWIRComm 135 APPELLANT Alfio Merlino PARTIES: RESPONDENT Lorenzo Montresor FILE NUMBER(S): IRC 1070 of 2006 CORAM: Staff J CATCHWORDS: Stay of proceedings - Appeal - Stay sought pending hearing of the appeal - Proceedings brought under s 106 of Industrial Relations Act 1996 - Orders made for monetary compensation - Principles - Onus met by appellant for stay - Stay granted upon terms LEGISLATION CITED: Industrial Relations Act 1996 CASES CITED: Michael John Burgess & Ors v Mount Thorley Operations Pty Limited (2002) 119 IR 52 Montressor v Astra Prestige Vehicle Service & Detailing Pty Ltd & anor [2008] NSWIRComm 109 HEARING DATES: 10 July 2008 EXTEMPORE JUDGMENT DATE: 10 July 2008 APPELLANT Mr R De Meyrick of counsel Solicitor: Mr S Butcher LEGAL REPRESENTATIVES: Law Partners RESPONDENT Solicitor: Mr D Carbone Carbone Lawyers JUDGMENT: - 1 - INDUSTRIAL COURT OF NEW SOUTH WALES CORAM: STAFF J Thursday 10 July 2008 Matter No IRC 1070 of 2008 ALFIO MERLINO v LORENZO MONTRESOR Application by Alfio Merlino for leave to appeal and appeal against a judgment of Justice Marks given on 13 June 2008 in matter No IRC 5995 of 2004 EX TEMPORE JUDGMENT [2007] NSWIRComm 135 1 On 4 July 2008, Alfio Merlino, the appellant, lodged an application for leave to appeal and, if granted, appeal against a decision of Justice Marks given on 13 June 2008: Montressor v Astra Prestige Vehicle Service & Detailing Pty Ltd & anor [2008] NSWIRComm 109. 2 The respondent, Mr Montresor had brought proceedings under s 106 of the Industrial Relations Act 1996 alleging that he made an arrangement with Astra Prestige Vehicle Service & Detailing Pty Ltd, the first respondent in the proceedings below, or with the appellant, by which he performed work servicing motor vehicles. 3 His Honour found that companies controlled by Mr Merlino had had the benefit of having vehicles serviced to the value of $30,000 and that the Astra Prestige Vehicle Service & Detailing Pty Ltd, having been deprived of that income, Mr Montresor was also denied the ability to pay himself moneys, as agreed under the arrangement for work that he had performed. His Honour found that as Mr Merlino was the controlling mind of two companies the failure to make payments totalling $30,000 created unfairness. 4 His Honour determined the arrangement between Mr Montresor and the appellant to be unfair, declared it void from its commencement and ordered the appellant to pay $32,000, together with interest, to the respondent. 5 There are 28 grounds of appeal. Essentially, they may be summarised as follows: (a) His Honour erred in finding that the Court had jurisdiction to make orders under s 106 and finding that the arrangement ws unfair; (b) His Honour erred in finding that companies controlled by the appellant failed to pay $30,000 to Mr Montresor and misstated the evidence in reaching this finding; (c) His Honour should have found that the alleged $30,000 in unpaid accounts were unpaid to Astra Prestige Vehicle Service & Detailing Pty Ltd and thus Mr Merlino was a 50 per cent owner of such moneys; (d) His Honour should have held that the Court was precluded from making orders against the appellant by reason that Astra Prestige Vehicle Service & Detailing Pty Ltd was deregistered and not an active party to the proceedings (and/or in the absence of other parties to the contract including Mr Montresor's company, Montresor Motors Pty Ltd, and/or the companies controlled by the appellant; (e) His Honour should have held that the unfairness could not be elevated to more than an alleged breach of contract, thus being outside jurisdiction on a proper application of Sydney Water Corporation Ltd v Industrial Relations Commission of New South Wales [2004] NSWCA 436; (f) whether the arrangement was one where work was performed in an industry at all relying upon Yin and Kim v Industrial Relations Commission of New South Wales (2007) 162 IR 62. Relevant Principles 6 For the purposes of the stay application, I propose to adopt the principles set out by Walton J, Vice-President in Michael John Burgess & Ors v Mount Thorley Operations Pty Limited (2002) 119 IR 52 as applicable in determining this application, particularly at: [19] The principles which govern the exercise of discretion in considering an application for a stay in appeal proceedings have been elucidated in two comparatively recent decisions: Re Transport Industry - Waste Collection and Recycling (State) Award (2000) 102 IR 192 and Campbells Cash & Carry v National Union of Workers, New South Wales Branch (2001) 104 IR 400. The appellant is required to establish or demonstrate a sufficient and proper basis for a stay. The decision as to whether to grant a stay is a discretionary one, to be made by the Court after considering, among other factors, the balance of convenience and the rights of the parties. In certain cases, it may be appropriate to consider (as a very preliminary assessment) whether an appellant has a reasonably arguable ground of appeal or whether there is a serious question to be tried. [20] I respectfully agree with the following principles which were succinctly stated in Re Transport Industry at par 19: "19 I consider that the following considerations derived from the discussion in the Cambridge Credit case are those relevant to apply in this matter: (1) The mere filing of an appeal will not of itself provide a reason or demonstrate an appropriate case nor will it discharge the onus which the applicant bears. (2) A court has an appropriate discretion whether or not to grant the stay and as to the terms that would be fair if a stay be granted. (3) The onus is upon the applicant for a stay to demonstrate a proper basis for a stay that will be fair to all the parties. (4) In the exercise of its discretion all considerations including the balance of convenience and the competing rights of the parties need to be considered and weighed. (5) Where there is a risk that the appeal will prove abortive or nugatory if the stay is not granted then the normal exercise of discretion will result in the grant of a stay. (6) Although, generally speaking, it is inappropriate in relation to an application for a stay to speculate as to the appellant's prospects of success, this does not prevent a court, in the context of considering the specific terms of the stay that will appropriately and fairly adjust the interests of the parties, from making a preliminary assessment as to whether the appellant has an arguable case." 7 Mr R De Meyrick, who appeared on behalf of the appellant, strongly opposed that the stay be granted on terms. Mr De Meyrick submitted that the appellant had what he described as "knockout points" and that if any moneys were released to the respondent there was a real danger that such moneys would be dissipated, particularly in respect of the costs of running the appeal. 8 Mr D Carbone, who appeared for the respondent, sought that the stay be granted on terms, proposing that an amount of $15,000 be released to the respondent. Mr Carbone submitted that the respondent owned his own home and would be in a position to repay any moneys in the event that the appeal was successful. He further submitted that in such circumstances the appellant would not be prejudiced. Consideration 9 It is regularly observed by Members of this Commission when considering an application for a stay, that it is for the applicant for the stay to demonstrate why a stay should be granted in the particular circumstances which arise for consideration. 10 I am satisfied the appellant has met the onus in this case. It is therefore appropriate to make an assessment of the appellant's prospects of success in this appeal. That consideration is relevant to the question of the balance of convenience and the terms of any stay. Such an assessment is necessarily preliminary, as the Commission has not fully heard the parties on the application for leave to appeal, or the merits of the appeal. 11 In my view, the appeal is arguable. The essential questions raised by the appeal are whether the unfairness could be elevated to more than a breach of contract and if his Honour erred in finding that companies controlled by the appellant failed to pay some $30,000 to Mr Montresor. Furthermore, there is an issue as to whether there was an arrangement where work was performed in an industry at all. 12 Clearly, I am not in a position, nor is it appropriate for me to determine such questions at this preliminary stage, particularly in the absence of appeal books and submissions. However, it seems to me that it cannot be said that the contentions are without merit. 13 As is often the case, the more difficult question is whether his Honour's orders, which involve the payment of moneys to the respondent should be stayed. This raises the question of the terms upon which a stay should be granted to effectively balance the interests of the parties in a fair and appropriate way. This needs to be balanced against the reasons demonstrated for a stay. In my view, the orders should be stayed on terms. 14 The terms of the stay will be that the appellant pay to the respondent a sum equivalent to 50 per cent of the amount ordered by Marks J. The balance of the amount awarded by Marks J should be paid into an interest bearing account with a solicitor from the appellant and a solicitor from the respondent being joint trustees in respect of the account. The payment of moneys would be on the basis that the money would only be paid out of the account in accordance with the orders of the Court. The account should be structured in a way where the money bears interest. 15 In light of the submission from Mr Carbone that the respondent will be in a position to repay any moneys, in considering the overall interests of the parties, this seems to me to be an appropriate and fair way of dealing with the application for a stay. 16 I therefore grant a stay of the orders made by his Honour on 13 June 2008. The appellant is to pay moneys to the respondent on the following basis: 1. Within 14 days of today's date, the appellant shall pay 50 per cent of the amount ordered by his Honour to the respondent. 2. The balance of the amount awarded to the respondent after complying with order 1, will be paid into an interest bearing account arranged by its solicitor. The moneys in such account are not to be paid out, except upon an order of this Court and in accordance with that order. 3. A solicitor shall act as trustee for the appellant in respect of the account. Similarly, a solicitor shall act as a trustee to the account on behalf of the respondent. The respondent shall nominate a solicitor to act as trustee to the account within seven days of the date of this order. In the event that no nomination is made by the respondent within that time, the appellant's solicitor shall be the sole trustee to the account. 4. The solicitor for the appellant shall advise the Industrial Registrar within 21 days of the date of this decision of the above moneys being paid to the respondent and the balance being paid into an interest bearing account referred to earlier and a copy of that correspondence shall be forwarded to the solicitor for the respondent. 5. The Court also grants liberty to apply generally in relation to the appeal if there is any matter that needs to be dealt with. 6. The Commission orders that the orders made by Justice Marks in matter No IRC 5995 of 2004 be stayed until further order of the Commission upon the terms that the appellant shall pay 50 per cent of the amount awarded by his Honour to the respondent and the balance into an interest bearing account by no later than 4.00 pm on 24 July 2008. 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.