New South Wales Supreme Court CITATION : Visnic v Sywak & Ors [2007] NSWSC 823 HEARING DATE(S) : 3 July 2007 JUDGMENT DATE : 3 July 2007 JURISDICTION : Equity Division JUDGMENT OF : Brereton J EX TEMPORE JUDGMENT DATE : 3 July 2007 DECISION : Extend time to file notice of appeal CATCHWORDS : PROCEDURE – Stay of execution – pending appeal – in winding up proceedings – applicable test LEGISLATION CITED : (CTH) Corporations Act 2001, s 482 (NSW) Supreme Court Rules 1970, Pt 44 r 5 Abalos v Australian Postal Commission (1990) 171 CLR 167 Alexander v Cambridge Credit Corporation Ltd [1985] 2 NSWLR 685 CASES CITED : Kalifair Pty Ltd v Digi-Tech (Australia) Ltd (2002) 55 NSWLR 737 Masri Apartments Pty Limited (In Liquidation) & Anor v Perpetual Nominees Limited [2004] NSWCA 255 Re A & BC Chewing Gum Ltd; Chewing Gum Inc v Coakley [1975] 1 All ER 1017 Milan Visnic (plaintiff) Peter Orest Sywak (first defendant) PARTIES : Adellos Pty Limited (second defendant) Parlamartu Pty Limited (third defendant) Castlove Pty Limited (fourth defendant) Donovi Pty Limited (fifth defendant) FILE NUMBER(S) : SC 1278/03 COUNSEL : Mr D Price (plaintiff) Mr J M White (defendants) SOLICITORS : Thomson Playford (plaintiff) Cosoff Cudmore Knox (defendants) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION BRERETON J Tuesday, 3 July 2007 1278/03 Milan Visnic v Peter Sywak & 4 Ors JUDGMENT (ex tempore) 1 HIS HONOUR: On 15 June 2007 I pronounced orders which included declarations as to the plaintiff's entitlement to shareholdings in the second, third, fourth and fifth defendants, orders for the transfer to the plaintiff by the first defendant of certain of the shares held by the first defendant in Adellos and Parlamartu, an order for the rectification of the registers of each of the corporate defendants, and an order that the corporate defendants be wound up on the just and equitable ground, and that Michael Gregory Jones, who until that point was the provisional liquidator of the corporate defendants, be appointed their liquidator. I made those orders in the context of delivering oral reasons, which I explained was a summary of my reasons, over a period of 40 minutes on the afternoon of 15 June, indicating that I would deliver my full reasons in due course. When those orders were pronounced on 15 June, no application was then made for a stay in respect of any of them. Today I have published my full reasons and counsel for the defendants has applied for a stay in respect of the orders made on 15 June. 2 In the course of argument it has become apparent that the principal concern of the defendants is the winding up order and, in turn, that underlying that concern is the fear that real property held by two of the corporate defendants may be sold by the liquidator if there is not a stay. The application this morning is made without Notice of Motion, without affidavit, without evidence and without any draft notice of appeal. 3 I feel I must record, because of the force with which the argument that the defendants should have time to consider the reasons published this morning has been pressed, that if that were so, then to go through the exercise of providing a summary of my reasons on 15 June was a complete waste of time. I might as well have not done it at all if the defendants were going to sit on their hands and wait until the full published reasons were provided before considering what grounds of appeal they might have. 4 It is unclear as to what extent certain of the orders made on 15 June have been implemented. Counsel for the plaintiff alleges; but counsel for the defendants denies that the order for the transfer of shares in Adellos has been implemented; neither produces any evidence which enables those assertions to be resolved. Counsel for the plaintiff asserts, and counsel for the defendant does not know whether, the order for rectification of the registers of the corporate defendants has been implemented. There is, of course, no utility in making an order staying the implementation of an order that has already been implemented. 5 It has been submitted for the plaintiff that there is no power to stay a winding up and that the winding up order puts the company into liquidation and is then beyond recall. This submission is wrong. In Masri Apartments Pty Limited (In Liquidation) & Anor v Perpetual Nominees Limited [2004] NSWCA 255 Ipp JA considered the power to stay a winding up order pending appeal and the relationship between (CTH) Corporations Act 2001, s 482, and former (NSW) Supreme Court Rules 1970, Pt 44 r 5, which provides that the Court may, on terms, stay execution of a judgment or order. His Honour concluded that an application for a stay of a winding up order pending appeal was governed by the Supreme Court Rules and not by Corporations Act, s 482, and, accordingly, that there was power to stay such an order under the Rules, and the applicable test was not that which applied to s 482, but that articulated in such cases as Alexander v Cambridge Credit Corporation Ltd [1985] 2 NSWLR 685 and Kalifair Pty Ltd v Digi-Tech (Australia) Ltd (2002) 55 NSWLR 737, in which it was said (at 741): The appellant must show that the appeal raises serious issues for the determination of the appellate court, and that there is a real risk that he will suffer prejudice or damage, if a stay is not granted, which will not be redressed by a successful appeal. This requirement will be satisfied if the appeal will be rendered abortive or nugatory unless a stay is granted. If these pre-conditions are established the Court will then consider the balance of convenience. 6 In England the position appears to be that as a matter of practice a stay of a winding up order is never granted on the ground that an appeal is pending, [see Re A & BC Chewing Gum Ltd; Chewing Gum Inc v Coakley [1975] 1 All ER 1017, 1029]. However, in Australia a more liberal approach prevails and a stay of winding up order may be granted where the factors referred to in Kalifair v Digi-Tech are satisfied, [see Masri Apartments v Perpetual Nominees, [24]]. 7 In my view, the defendants have not begun to show that the proposed appeal would raise serious issues for the determination of the appellate court. They have not, at this stage, begun to articulate a ground of appeal. They say that they have not had an opportunity to do so because my full reasons were published only this morning, but if it were contemplated that an application for a stay were to be made, ample disclosure of my reasoning took place on 15 June. Nonetheless, I would not hold them out from an opportunity further to consider the question of articulating a ground of appeal if I thought that significant prejudice could be occasioned by not granting a stay at this stage. 8 As Mr White points out, although my decision turned on preferring Mr Visnic's version over that of Mr Sywak, and although in parts of the reasoning with reference to Mr Sywak's evidence, I was influenced by the inconsistencies and changes of position in his evidence as he was in the witness box – particularly his evidence on the 1 May transaction – demeanour did not of itself play a significant role, and my conclusion was based on the internal inconsistencies of Mr Sywak's evidence and the relationship which the cases of each party bore to what seemed to me to be the more objective evidence. An appeal from my decision would therefore not face the obstacle of Abalos v Australian Postal Commission (1990) 171 CLR 167, at least in its full rigour. 9 Nonetheless, all that has been said of this case at this stage is that it is possible that the Court of Appeal might reach a different view of the facts on its own analysis of the evidence. 10 So far as the question of prejudice is concerned, the companies have been in provisional liquidation since the conclusion of the evidence in about July of last year. If a stay were granted, they will remain in provisional liquidation. If a stay not be granted, it is possible that the liquidator would proceed with the realisation of assets – ­including the two significant assets, namely the real property at Oran Park and at Wetherill Park. No one suggested that any particular urgency attends the sale of that real property, although, given a very opportunity to address the issue, evidence might emerge, for example, that there were current development proposals at Oran Park which might make it an attractive time to sell. However, that, to some extent, is met by the defendants' offer of the usual undertaking as to damages as a condition of any stay. 11 The parties have not had a full opportunity to argue the issues relevant to a stay application. It seems to me that, despite the circumstance that they might well have availed themselves of that opportunity today I should not shut them out from it. At this stage, however, as the liquidator indicates that he will submit to the injunctions proposed in respect of the sale of the Oran Park and Wetherill Park properties, I do not see that any significant other prejudice will be occasioned by failing to grant a stay at this stage. 12 Upon the first defendant by his counsel giving to the Court the usual undertaking as to damages, I order that until 31 July 2007 or further order Michael Jones in his capacity as liquidator of Adellos Pty Ltd, not sell or take any step to market or sell the property described in Folio Identifier 293/708154A, being the property situate at and known as 1005 Cobbitty Road, Oran Park, in the State of New South Wales, except upon having given seven days written notice of his intention so to do to the solicitors for the first defendant. 13 Upon the first defendant by his counsel giving to the Court the usual undertaking as to damages, I order that until 31 July 2007 or further order Michael Jones, in his capacity as liquidator of Castlove Pty Ltd, not sell or take any step to market or sell the property described in the Folio Identifier 10/747233, being property situate at and known as lot 100 Elizabeth Street, Wetherill Park, in the State of New South Wales, except upon having given seven days written notice of his intention so to do to the solicitors for the first defendant. 14 I make the following further orders: 1. Adjourn the proceedings to Tuesday 31 July 2007 at 9.30am before me. 2. Order that time within which notice to appeal from the orders made on 15 June 2007 herein may be filed be extended up to and including 31 July 2007. 3. Direct that in the event the defendants seek any continuation of the orders made today, or any further stay in respect of the orders made on 15 June, they file and serve Notice of Motion by 20 July 2007, such motion to be returnable on 31 July 2007 at 9.30am before me. 4. Direct that the Exhibits be returned. ********** 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.