Reported Decision : 48 NSWLR 381 New South Wales Court of Appeal CITATION : TCN CHANNEL 9 v ANTONIADIS [No 2] [1999] NSWCA 104 FILE NUMBER(S) : CA 40240/97 HEARING DATE(S) : 12 March 1999 26 March 1999 JUDGMENT DATE : 22 April 1999 PARTIES : TCN Channel 9 v Lorna Lassanda Antoniadis [No 2] JUDGMENT OF : Handley JA at 1; Beazley JA at 1; Stein JA at 1 LOWER COURT JURISDICTION : Court of Appeal LOWER COURT FILE NUMBER(S) : CLD 11047/90; 14914/91 LOWER COURT JUDICIAL OFFICER : Handley Beazley Stein JJA COUNSEL : A J Meagher SC (Appellant) A B Shand QC/M B Duncan (Respondent) SOLICITORS : Gilbert & Tobin (Appellant) Bush Burke & Company (Respondent) CATCHWORDS : RESTITUTION - repayment of judgment debts and costs - Supreme Court Rules Pt 51 AA r 18 - whether power to make restitutionary orders should be exercised when new trial pending ACTS CITED : Supreme Court Rules Pt 51AA r 18 Bankruptcy Act 1966 s 40(1)(g) TCN Channel 9 v Antoniadis (1998) 44 NSWLR 682 Production Spray Painting and Panel Beating Pty Ltd v Newnham [No 2] (1992) 27 NSWLR 659, 661 CASES CITED: Rodger v Comptoir d'Escompte de Paris (1871) LR 3 PC 465 Julius v Lord Bishop of Oxford (1880) 5 App Cas 214 Finance Facilities v FCT (1971) 127 CLR 106 Hood Barrs v Crossman [1897] AC 172 DECISION : Orders made THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40240/97 HANDLEY JA BEAZLEY JA STEIN JA 22 April 1999 TCN CHANNEL 9 PTY LTD v LORNA LASSANDA ANTONIADIS [NO 2] RESTITUTION - repayment of judgment debts and costs - Supreme Court Rules - Pt 51AA r 18 - whether power to make restitutionary orders should be exercised when new trial pending The claimant sought orders for the repayment of judgment debts and costs paid following the trial of defamation actions in the Common Law Division. The judgments were later reversed and a new trial was ordered. The opponent relied on SCR Pt 51AA r 18 submitting that the discretion should not be exercised because a new trial was pending, and also sought a stay of execution on any judgment entered in favour of the claimant. HELD: (1) The claimant was entitled to judgment for the damages and costs paid under the judgments which had been set aside. Production Spray Painting and Panel Beating Pty Ltd v Newnham [No 2] (1992) 27 NSWLR 659. (2) There was no discretion under SCR Pt 51 AA r 18 to refuse to order restitution. The rule should be construed as conferring a power to order restitution and not a discretion to refuse it. Julius v Lord Bishop of Oxford (1880) 5 App Cas 214 and Finance Facilities Pty Ltd v FCT (1971) 127 CLR 106 applied. (3) The Court is bound by its duty to redress any wrong done to a suitor in the Court and must make orders for restitution. Rodger v Comptoir d'Escompte de Paris (1871) LR 3 PC 465 applied. (4) The claimant's failure to seek orders for repayment at the hearing of the appeal made these further proceedings necessary. Consequently the claimant must pay the costs of the further proceedings. Production Spray Painting and Panel Beating Pty Ltd v Newnham [No 2] (1992) 27 NSWLR 659. (5) There should be no stay of execution. ORDERS (1) Judgment for the claimant for $664,156.63 with effect from 12 March 1999. (2) Claimant to pay opponent's costs of the motions of 15 December 1998 and 12 March 1999. THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40240/97 HANDLEY JA BEAZLEY JA STEIN JA 22 April 1999 TCN CHANNEL 9 PTY LTD v LORNA LASSANDA ANTONIADIS [NO 2] JUDGMENT 1 THE COURT: This is an application, by notice of motion, seeking orders for the repayment of judgment debts and costs paid pursuant to orders made by the Common Law Division in two defamation actions. On the third trial of the opponent's defamation actions, the jury found verdicts in her favour for $200,000 and $175,000. Levine J refused to stay execution of the judgments pending an appeal to this Court, and a further application for stay of execution made to a Judge of this Court was dismissed. On 20 May 1997 the claimant paid the judgment debts which, together with interest, totalled $425,802.73. On 20 April 1997 Levine J ordered the claimant to pay an amount of $150,000 to the opponent's solicitors on account of costs. This amount was eventually paid on 20 May 1998 but without a personal undertaking from the opponent's solicitors to repay the costs if the appeal was successful. 2 The claimant's appeal against the judgments succeeded, and on 1 October 1998 this Court ordered that the verdicts and judgments be set aside and that there be a new trial. (TCN Channel 9 v Antoniadis (1998) 44 NSWLR 682.) The Court was not informed that the judgment debts, together with $150,000 on account of costs, had already been paid by the claimant and it was not asked at the hearing of the appeal to order the opponent to repay these monies. Orders to this effect were not sought until the notice of motion was filed on 15 December. 3 This question, which is of some importance to the client, is so frequently overlooked by legal advisers acting for appellants that an embarrassing body of case law has accumulated which establishes that appropriate relief can be granted after the appeal has been determined. See Production Spray Painting and Panel Beating Pty Ltd v Newnham [No 2] (1992) 27 NSWLR 659, 661. 4 A successful appellant is entitled, in principle, to recover all monies paid under the judgment that has been set aside. The case law was reviewed by this Court in the decision last referred to and we held that a successful appellant is "entitled to be restored to all things which he may have lost by such erroneous judgment and proceedings" (ibid 661). 5 Mr Shand QC for the opponent resisted the making of orders for restitution on discretionary grounds, invoking SCR Pt 51AA r 18, and a principle he sought to derive from Rodger v Comptoir d'Escompte de Paris (1871) LR 3 PC 465. The judgment of this Court did not dispose of the litigation between the parties because a new trial was ordered and, as Mr Shand submitted, a jury on the new trial may well award the same or similar sums by way of damages. Rule 18 provides that on reversal of a judgment "… the Court of Appeal may make such orders for … restitution as the Court of Appeal thinks fit". Mr Shand submitted that the Court had a general discretion under the Rule, and because a new trial was pending, the discretion should be exercised in favour of the opponent and orders for restitution not made at this stage. 6 The principle which governs the construction of r 18 is that applied in Julius v Lord Bishop of Oxford (1880) 5 App Cas 214 to the expression "it shall be lawful" and in Finance Facilities Pty Ltd v FCT (1971) 127 CLR 106 to the word "may". In Julius v Lord Bishop of Oxford ibid at 222-3, Earl Cairns LC said: "The words 'it shall be lawful' are not equivocal. They are plain and unambiguous. They are words merely making that legal and possible which there would otherwise be no right or authority to do. They confer a faculty or power and they do not of themselves do more than confer a faculty or power. But there may be something in the nature of the thing empowered to be done, something in the object for which it is to be done, something in the conditions under which it is to be done, something in the title of the person or persons for whose benefit the power is to be exercised, which may couple the power with a duty, and make it the duty of the person in whom the power is reposed, to exercise that power when called upon to do so". 7 In Finance Facilities Pty Ltd v FCT ibid at 134-5 Windeyer J said: "The question then is, must the committed power be exercised if one of those conditions be fulfilled? This does not depend on the abstract meaning of the word 'may' but (on) whether the particular context of words and circumstance make it not only an empowering word but indicate circumstances in which the power is to be exercised - so that in those events the 'may' becomes a 'must'. Illustrative cases go back to 1663 … But I select one … out of a multitude: Macdougall v Paterson (1851) 11 CB 755, 766. There Jervis CJ said in the course of the argument 'the word "may" is merely used to confer the authority and the authority must be exercised if the circumstances are such to call for its exercise' and giving judgment he said (ibid at 773): 'We are of opinion that the word "may" is not used to give a discretion but to confer a power upon the court and judges; and that the exercise of such power depends, not upon the discretion of the court or judge, but upon the proof of the particular case out of which such power arises'." 8 The principle derived from these passages applies, in our judgment, to r 18 which should be construed as conferring a power to order restitution and not a discretion to refuse it. Of course orders for restitution may be moulded on discretionary grounds to provide for matters such as the date for repayment or delivery of possession, and perhaps for a stay of execution on appropriate security being given. 9 The relevance of the pending new trial to the exercise of the Court's power to order restitution was said by Mr Shand to flow from what Lord Cairns said in Rodger v Comptoir d'Escompte de Paris ibid at 475: "… one of the first and highest duties of all Courts is to take care that the act of the Court does no injury to any of the Suitors, and when the expression 'the act of the Court' is used, it does not merely mean the act of the Primary Court, or of any intermediate Court of appeal, but the act of the Court as a whole, from the lowest Court which entertains jurisdiction over the matter up to the highest Court which finally disposes of the case. It is the duty of the aggregate of those Tribunals … to take care that no act of the Court in the course of the whole of the proceedings does an injury to the suitors in the Court". 10 Mr Shand submitted that this principle had no application where an intermediate appellate court has only ordered a new trial and not finally disposed of the proceedings. 11 The present question was not raised by the facts in Rodger's case and in our judgment Lord Cairns' language, properly understood, does not support any qualification to the general principle. This claimant has been injured by acts of the Court, both the trial Court, and the single Judge of this Court who refused to order a stay of execution on the judgments under appeal in that it has been compelled to pay money at a time when it is now known that the money was not legally payable. The opponent, to use other language of Lord Cairns ibid 475, has "by mistake and by wrong obtained possession of the money under a judgment which has been reversed", and remains in possession of that money without any existing right to do so. In our judgment the Court is bound to make orders for restitution to redress this continuing wrong. 12 The opponent, anticipating the making of such orders, filed a notice of motion on 12 March seeking a stay of execution on any judgment for the recovery of the monies paid until the result of the fourth trial is known. Mr Burke, in his affidavit of 12 March, said that the opponent will not be able to repay the money and any bankruptcy notice served by the claimant would be met with an application under s 40(1)(g) of the Bankruptcy Act 1966 to set it aside based on her pending actions for defamation against the claimant. Any such application would be determined by the Federal Court, and this Court should make the orders it thinks appropriate without attempting to anticipate or influence the decision of the Federal Court on any such application. We note that the opponent has not given evidence in these applications about her assets or income, nor explained what happened to the monies paid to her. 13 The opponent was entitled to receive and retain the amounts paid to her while the judgments in the Common Law Division remained in force. Those judgments having been reversed she no longer has any right to the money and has been remitted to the position of a person having a claim to unliquidated damages for defamation. As such she would not be entitled to enforce any interim payment pending trial on account of her claims, nor would she be entitled to security for any possible verdict. Had a stay of execution been granted she would have lost, on reversal, all right to receive payment from the claimant at that stage. 14 This Court could grant a temporary stay pending the hearing of an application for special leave, but there is no such application in this case. A temporary stay could also be granted to allow the opponent time to raise the funds by sale or mortgage of her assets, but the application has not been made on that basis. A stay is simply sought so that the opponent can retain the funds while she attempts to acquire a new right to them at the fourth trial. There is no support for such an approach in the decisions, and in our judgment the Court must give effect to the claimant's right to be repaid its money. 15 We can only express regret that a stay of execution was not granted in this case pending the hearing of the appeal. It was never suggested that the opponent ran any risk of losing the benefit of her judgments by being prevented from enforcing them pending the appeal. She was protected from the purely financial consequences of any delay by the accrual of interest on the judgments in the meantime. This Court regularly stays execution on judgments pending an appeal where there is a risk that the plaintiff will be unable to repay the money without difficulty or delay if the appeal were to succeed. 16 Adherence to this principle would have prevented the present embarrassing situation where the Court has enforced interim payment to the plaintiff but repayment cannot or will not be made without further litigation in the Federal Court with a risk that the opponent will be made bankrupt without the claimant recovering its money. 17 An appeal from the decision of the single Judge of this Court refusing a stay of execution would have succeeded and the claimant, by failing to commence and prosecute such an appeal, is partly the author of its own misfortune. The cost of such an appeal would have been modest indeed in the context of this litigation and the hearing of the appeal would probably have taken less than an hour. More court time and greater expense have been devoted to this contested motion, as was entirely foreseeable, and the imbalance will become even greater if there is litigation in the Federal Court. 18 Thus far we have been dealing with the judgment monies paid to the opponent. In addition $150,000 was paid to the opponent's solicitors on account of costs. There is an established procedure in circumstances such as this where interim payment of costs is enforced pending an appeal. In this case, as is common, the costs were ordered to be paid to the opponent's solicitors. However the costs were paid to the solicitors as agents for the opponent and in the event of reversal only the opponent, as the principal, is liable to repay them. The established procedure in England in such a case is illustrated by Hood Barrs v Crossman [1897] AC 172. At 175 Lord Herschell said: "… nothing is more common than for the Court, when refusing to stay execution and allowing costs to be received, to require the solicitor who is to receive them to give a personal undertaking to repay them if the Court of Appeal should reverse the order for their payment … the fact that such undertakings are constantly required and constantly given is, to my mind, almost conclusive against the notion that the Court has power when no such undertaking has been required and given to order the solicitor to repay the costs … in the present case Mr Hood Bars applied to the Court of Appeal for a stay of execution pending the appeal to this House, but he did not apply to the Court, if they were not prepared to stay execution, that they should require an undertaking from the solicitors to repay the costs. I cannot myself doubt that if that application had been made it would have been granted". 19 Again the claimant is, to some extent, the author of its own misfortune. The costs paid to the opponent's solicitors are therefore in the same position as the judgment monies paid to the opponent personally, and she must be ordered to repay both without any stay of execution. It follows in our opinion that the claimant's motion should be granted, and the opponent's motion for a stay of execution dismissed. 20 The claimants failure to seek orders for repayment at the hearing of the appeal has made these further proceedings necessary. The normal rule in such a case is that the claimant must pay the costs of the further proceedings. See Production Spray Painting and Panel Beating Pty Ltd v Newnham [No 2] (1992) 27 NSWLR 659, 663. Mr Meagher SC submitted that the usual rule should not be followed in this case because the opponent's cross-motion failed. In our opinion this is not a sufficient reason for departing from the general rule. 21 The following orders should be made: (1) Judgment for the claimant for $664,156.63 with effect from 12 March 1999. (2) Claimant to pay opponent's costs of the motions of 15 December 1998 and 12 March 1999. 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.