> Land and Environment Court of New South Wales CITATION : Woolworths Limited v The Warehouse Group (Australia) Pty Limited [No. 3] [2003] NSWLEC 106 APPLICANT: Woolworths Limited ACN 000 014 675 PARTIES : RESPONDENT: The Warehouse Group (Australia) Pty Limited ACN 000 038 702 FILE NUMBER(S) : 40243 of 2001 CORAM: Lloyd J KEY ISSUES: Practice and Procedure :- application for stay of court orders pending appeal - hardship in complying with court orders - risk that a successful appellant may not be restored to former position - effect on third parties - prejudice to successful applicant - undertakings to court made by respondent LEGISLATION CITED: CASES CITED: Minister for Local Government v South Sydney Council (No. 3) [2002] NSWCA 327 DATES OF HEARING: 17/04/2003 EX TEMPORE JUDGMENT DATE : 04/17/2003 APPLICANT: Mr J M Ireland QC and Ms J M Jagot (barrister) SOLICITORS: Mallesons Stephen Jaques LEGAL REPRESENTATIVES: RESPONDENT: Mr S D Rares SC and Mr M L Wright (barrister) SOLICITORS: Deacons JUDGMENT: - 1 - IN THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES 40243 of 2001 Lloyd J 17 April 2003 WOOLWORTHS LIMITED ACN 000 014 675 Applicant v THE WAREHOUSE GROUP (AUSTRALIA) PTY LIMITED 000 038 702 Respondent EXTEMPORE JUDGMENT [No. 3] HIS HONOUR: 1 This is a motion by the respondent for a stay of the Court's orders pending the determination of an appeal that has been brought to the Court of Appeal. In support of the motion I have read an affidavit and heard evidence from Mr M D Schneider on behalf of the respondent, who says that he is the regional manager of the respondent. He states the effect of the Court's orders upon the operation of the respondent. 2 Briefly stated, Mr Schneider refers to the fact that the respondent pays rent in the sum of $33,314.16 per month. The premises have been trading since February 2001. He says the respondent is unable to comply with the Court orders without substantial changes to the nature and extent of the trading from the premises, and that having regard to the changes necessary to reconfigure the store, it is unlikely that the store would remain commercially viable. 3 Mr Schneider refers, in his oral evidence, to the fact that the ordering of stock is controlled by computer from a central point and that it is difficult to change that program. He refers to the fact that in order to mitigate costs, the store would have to be vacated and subleased. There is no guarantee that the respondent could cover its costs by subleasing. It would take six weeks to remove stock from the store and vacate the premises. That will cost approximately $125,000 in wages and labour. During the period of ceasing to trade until the store is vacated, the respondent will incur costs including rent and other outgoings totalling $49,971. If the store is closed, approximately twenty three employees will be relieved of their duties and could not be re-employed elsewhere within the respondent's business. This will cost the respondent more than $150,000 in severance pay. It will cause those employees hardship and stress, and they will have to find alternative employment. 4 If the appeal is eventually upheld and the store did reopen, the following costs would not be recoverable: loss of sales, approximately $160,000 a week; loss of experienced staff, payment of rent during the closure and the cost of removing stock. Also if an appeal is successful, additional costs will be incurred which would not be recoverable: reconfiguration of fit-out costs, $250,000; restocking, $125,000; reopening costs, $12,000; and marketing campaigns, $30,000. He estimates that the total costs of closing down at approximately $325,000 and the total costs of recommencing trading $400,000. The number of staff whose employment would be terminated is twenty three. There will be losses in turnover or sales income of approximately $160,000 a week and the respondent will be continually liable for the monthly rent. He has calculated that if a stay of the orders is not granted and the appeal is successful, then the total loss to the respondent is approximately $5,000,000. 5 In considering the application for a stay pending an appeal, one of the questions is whether there is a real risk that it may not be possible for a successful applicant to be restored to his or her or its former position, see Minister for Local Government v South Sydney Council (No. 3) [2002] NSWCA 327 at [12]. In that case the Chief Justice also drew a parallel between the case of an application for a stay and the application for an interlocutory injunction. On an application for an interlocutory injunction the effect upon third parties, and, in particular, upon employees, must be taken into consideration. In the present case there is no direct prejudice to the successful applicant in the proceedings. 6 In these circumstances I am prepared to grant a stay, on the undertaking given by Mr Schneider on behalf of the respondent set out in paragraph 5 of his affidavit. On the basis of that undertaking I am prepared to grant a stay for a limited period, namely for a period of six months from today. The purpose of a limited grant of stay is to enable the Court to monitor the progress of the proceedings in the Court of Appeal. I grant liberty to restore on seven days notice. 7 As to the costs of the motion, those costs shall be in accordance with the costs orders to be made by the Court of Appeal in the disposition of the appeal in that Court. I hereby certify that the preceding 7 paragraphs are a true copy of the reasons for judgment herein of the Honourable Mr Justice Lloyd Associate ********** 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.