Reported Decision: 74 ACSR 324 New South Wales Court of Appeal CITATION: O'Brien v Australian Securities and Investments Commissioner; Gillfillan v Australian Securities and Investments Commissioner; Koffel v Australian Securities and Investments Commission [2009] NSWCA 312 HEARING DATE(S): 21 September 2009 JUDGMENT DATE: 1 October 2009 JUDGMENT OF: Tobias JA at 1 EX TEMPORE JUDGMENT DATE: 21 September 2009 (a) The Notice of Motion of Geoffrey Frederick O'Brien filed on 14 September 2009 is dismissed with costs. DECISION: (b) The Notices of Motion of Michael John Gillfillan and Martin Koffel filed on 15 September 2009 are dismissed with costs. (c) The appeals of the applicants be expedited. CATCHWORDS: CORPORATIONS – Directors – Disqualification from managing a corporation – Whether to grant stay of disqualification orders pending appeal – Stay application not occasion for detailed consideration of merits of appeal – Whether significant repair to damaged reputation worked by granting stay – Whether failure to grant stay would cause significant and irreversible prejudice and damage if appeal succeeded – Stay refused Bail Act 1978 LEGISLATION CITED: Corporations Act 2001 (Cth) Corporations Law Uniform Civil Procedure Rules 2005 Adler v Australian Securities and Investments Commission [2002] NSWCA 303; (2002) 43 ACSR 35 Adler v Australian Securities and Investments Commission [2003] NSWCA 131; (2003) 46 ACSR 504 Alexander v Cambridge Credit Corporation (Receivers Appointed) (1985) 2 NSWLR 685 Australian Securities and Investments Commission v Adler [2002] NSWSC 483; (2002) 42 ACSR 80 Australian Securities and Investments Commission v Macdonald (No 11) [2009] NSWSC 287 CASES CITED: Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 Australian Securities and Investments Commission v White [2006] VSC 239; (2006) 58 ACSR 261 Dwyer v National Companies and Securities Commission (1988) 15 NSWLR 285 Kalifair Pty Ltd v Digi-Tech (Australia) Ltd [2002] NSWCA 383; (2002) 55 NSWLR 737 R v Hilton (1986) 7 NSWLR 745 Rich v Australian Securities and Investments Commission [2004] HCA 42; (2004) 220 CLR 129 Whitlam v Australian Securities and Investments Commission [2002] NSWCA 312; (2002) 43 ACSR 73 Geoffrey Frederick O'Brien PARTIES: Michael John Gillfillan Martin Koffel Australian Securities and Investments Commission FILE NUMBER(S): CA 40325/09, 40336/09, 40337/09 Mr Wood / Mr M Henry (for the applicant O'Brien) COUNSEL: Mr T Bathurst QC / Mr R Hardcastle (for the applicants Gillfillan and Koffell) Mr A J L Bannon QC / Mr Beech-Jones (for the respondent ASIC) SOLICITORS: Arnold Bloch Leibler, Sydney (for the applicant O'Brien) Atanaskovic Hartnell, Sydney (for the applicants Gillfillan and Koffel) LOWER COURT JURISDICTION: Supreme Court - Equity Division LOWER COURT FILE NUMBER(S): SC 1490/07 LOWER COURT JUDICIAL OFFICER: Gzell J LOWER COURT DATE OF DECISION: 27 August 2009 IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40325/09 CA 40336/09 CA 40337/09 TOBIAS JA Thursday 1 October 2009 GEOFFREY FREDERICK O'BRIEN v AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION MICHAEL JOHN GILLFILLAN v AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION MARTIN KOFFEL v AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION Judgment on applications for a stay 1 TOBIAS JA: On 27 August 2009, Gzell J, pursuant to s 206C(1) of the Corporations Act 2001 (Cth) (the Act), ordered, inter alia, that Geoffrey Frederick O'Brien (Mr O'Brien), Michael John Gillfillan (Mr Gillfillan) and Martin Koffel (Mr Koffel) (together the applicants) each be disqualified from managing a corporation for a period of five years. Pursuant to s 1317G(1) of the Act his Honour also ordered that each of the applicants pay to the Commonwealth of Australia a pecuniary penalty in the sum of $30,000: Australian Securities and Investments Commission v Macdonald (No 12) [2009] NSWSC 714 (the penalty judgment). On the same day his Honour granted a stay of those orders until 5pm on 24 September 2009. 2 By notice of motion filed 14 September 2009 Mr O'Brien sought an order staying the primary judge's order made on 27 August 2009 disqualifying him from managing a corporation for a period of five years pending the determination of his appeal against his Honour's orders. By notices of motion filed on 15 September 2009 each of Mr Gillfillan and Mr Koffel sought an identical order with respect to their disqualification as well as a stay in respect of his Honour's order that each pay the Commonwealth of Australia a pecuniary penalty of $30,000. 3 Mr O'Brien filed his Notice of Appeal on 7 September 2009 whereas Messrs Gillfillan and Koffel filed their Notices of Appeal on 15 September 2009. Each Notice of Appeal sets out a number of grounds upon which it is asserted that the primary judge erred with respect to both liability and penalty. 4 The hearing of the Notices of Motion took place on 21 September 2009. At the conclusion of argument I indicated that I was not prepared to grant a stay of the disqualification orders made with respect to Messrs Gillfillan and Koffel. Accordingly, the primary judge's orders with respect to those applicants took effect from 5pm on 24 September 2009. I reserved my decision with respect to Mr O'Brien's application but continued the stay granted by the primary judge with respect to the orders made against Mr O'Brien until my determination of his application. The nature of the proceedings at first instance 5 Each of Messrs Gillfillan and Koffel are non-executive directors of James Hardie Industries Limited (JHIL). Each resides in the United States and, apart from their membership of the Board of JHIL (the Board), it is not suggested that they have any business interests in Australia which would be affected by his Honour's disqualification order with respect to each of them. Nor was it suggested that that order would have any ramifications for them in the United States. Mr O'Brien is a Sydney-based alternate non-executive director of JHIL, a non-executive director of two public companies and a director of a number of private companies. 6 The events the subject of these proceedings relate to a meeting of the Board in Sydney on 15 February 2001 (the 15 February meeting). Mr O'Brien attended that meeting in person, whereas Messrs Gillfillan and Koffel attended by way of teleconference between Sydney and the United States. 7 On 14 February 2007 the Australian Securities and Investments Commission (ASIC) commenced proceedings against the applicants as well as a number of other individual defendants (together the defendants). This was almost six years after the date of the 15 February meeting. It was alleged that the defendants approved a draft announcement to the Australian Stock Exchange (ASX) with respect to the formation of an organisation to be known as the Medical Research and Compensation Foundation (the Foundation), of which Medical Research and Compensation Foundation Ltd was constituted as the trustee. The decision to set up the Foundation was made at the 15 February meeting. 8 ASIC alleged that the draft announcement to the ASX of the formation of the Foundation (the Draft ASX Announcement) was tabled, considered and approved by the JHIL Board at the 15 February meeting. It was contended that the Draft ASX Announcement stated that the Foundation would commence operation with assets of $284 million and that it contained a number of statements to the effect that the Foundation would have sufficient funds to meet all legitimate claims for asbestos-related diseases sustained from exposure to asbestos products manufactured and sold by former subsidiaries of JHIL between 1937 and 1987 (the Asbestos Claims); that it was fully funded and that it provided certainty for people with legitimate asbestos claims. ASIC alleged that those statements were false or misleading and in breach of provisions of the Corporations Law (Cth). 9 ASIC further alleged that in approving the Draft ASX Announcement at the 15 February meeting the defendants contravened s 180(1) of the Corporations Law as carried over into the Act in that on the material provided to them, the defendants could not have been satisfied that JHIL had a proper basis for making the assertions of sufficient funding of the Asbestos Claims in the Draft ASX Announcement. 10 The primary judge found that each of the applicants had breached s 180(1): Australian Securities and Investments Commission v Macdonald (No 11) [2009] NSWSC 287 at [52]-[478] (the liability judgment). In so doing he found that at the 15 February meeting, the Board passed a resolution that (a) approved the Draft ASX Announcement in the form of Annexure A to the Fourth Further Amended Statement of Claim (the FFASC) in relation to the establishment of the Foundation; and (b) the Draft ASX Announcement be executed by JHIL and sent to the ASX. 11 With respect to Mr O'Brien the primary judge declared (at [475]-[476]) that he: "…contravened section 180(1) of the … Corporations Act 2001 (Cth) in relation to ABN 60 Pty Ltd (formerly known as James Hardie Industries Limited) … by his conduct, as a director of that corporation, in voting on 15 February 2001 in favour of a resolution of the directors to approve a Draft ASX Announcement … and authorise its execution and sending to the Australian Stock Exchange … in circumstances where: (a) he knew that the Draft ASX Announcement conveyed or was capable of conveying that: (i) the material available to JHIL provided a reasonable basis for the assertion in the announcement that it was certain that the amount of funds made available to the Medical Research and Compensation Foundation … would be sufficient to meet all legitimate present and future asbestos claims brought against two of JHIL's former subsidiaries Amaca Pty Ltd and Amaba Pty Ltd; (ii) JHIL's Chief Executive Officer, Mr Macdonald, believed that it was certain that the amount of funds made available to the Foundation would be sufficient to meet all legitimate present and future asbestos claims brought against Amaca and Amaba; (iii) all of the directors or at least a majority of them believed that it was certain that the amount of funds made available to the Foundation would be sufficient to meet all legitimate present and future asbestos claims brought against Amaca and Amaba; [and] (iv) JHIL had received expert advice from [PricewaterhouseCoopers] and Access Economics that supported the statement that it was certain that the amount of funds made available to the Foundation would be sufficient to meet all legitimate present and future asbestos claims brought against Amaca and Amaba; (b) he ought to have known that the Draft ASX Announcement was misleading in those respects." 12 With respect to Messrs Gillfillan and Koffel, his Honour declared (at [477]-[478]) that each of them had: "… contravened s 180(1) of the … Corporations Act 2001 (Cth) … in relation to ABN 60 Pty Ltd (formerly known as James Hardie Industries Ltd) … in that, as a director of that company, at a meeting of the board of directors of that company on 15 February 2001 during which it resolved to approve a Draft ASX Announcement … and authorise its execution and sending to the Australian Stock Exchange … he failed to take any of the following steps: (a) request that he be provided with a copy of the Draft ASX Announcement; (b) familiarise himself with its terms; or (c) abstain from voting in favour of the resolution to approve the Draft ASX Announcement and authorise its execution and sending to the ASX." 13 Having found in the liability judgment that each of the applicants had contravened s 180(1), his Honour in the penalty judgment dealt firstly with the claims of the defendants (including the applicants) to be exonerated from their contravention pursuant to s 1317S(2) or s 1318(1) (which are relevantly identical) of the Act upon the basis that they had acted honestly and, in the circumstances, ought fairly to be excused for their contravention. 14 In rejecting these claims for exoneration, his Honour made the following findings with respect to, inter alia, Mr O'Brien: "38. The vice was that … Mr O'Brien … voted in favour of the resolution when [he] knew that the Draft ASX Announcement conveyed or was capable of conveying that the material available to JHIL provided a reasonable basis for the assertion in the announcement that it was certain that the amount of funds made available to the Medical Research and Compensation Foundation … would be sufficient to meet all legitimate present and future asbestos claims brought against two of JHIL's former subsidiaries, James Hardie & Coy Pty Limited …, which subsequently changed its name to Amaca Pty Ltd …, and Jsekarb Pty Ltd …, which subsequently changed its name to Amaba Pty Ltd … 39. They also knew that the Draft ASX Announcement conveyed or was capable of conveying that Mr Macdonald believed that it was certain that the amount of funds made available to the Foundation would be sufficient to meet all legitimate present and future asbestos claims brought against Coy and Jsekarb. 40. They knew that the Draft ASX Announcement conveyed or was capable of conveying that all of the directors, or at least a majority of them, believed that it was certain that the amount of funds made available to the Foundation would be sufficient to meet all legitimate present and future asbestos claims brought against Coy and Jsekarb. 41. They knew that the Draft ASX Announcement conveyed or was capable of conveying that JHIL had received expert advice from PricewaterhouseCoopers … that supported the statement that it was certain that the amount of funds made available to the Foundation would be sufficient to meet all legitimate present and future asbestos claims brought against Coy and Jsekarb. 42. Finally, they knew that the Draft ASX Announcement conveyed or was capable of conveying that JHIL had received expert advice from Access Economics Pty Ltd … that supported the statement that it was certain that the amount of funds made available to the Foundation would be sufficient to meet all legitimate present and future asbestos claims brought against Coy and Jsekarb. 43. Those directors ought to have known that the Draft ASX Announcement was misleading in those respects." 15 At [56] of the penalty judgment his Honour held that there was nothing in the evidence which enabled him to be positively satisfied that Mr O'Brien acted honestly in the relevant sense. 16 At [64] his Honour also found that the evidence did not persuade him that either of Messrs Gillfillan or Koffel had acted honestly when they failed to request a copy of the Draft ASX Announcement, failed to familiarise themselves with its terms or failed to abstain from voting in favour of the resolution to approve its publication. 17 The primary judge then discussed the principles applicable in civil penalty proceedings to the making of a disqualification order under s 206C of the Act. He referred to the observations of McHugh J in Rich v Australian Securities and Investments Commission [2004] HCA 42; (2004) 220 CLR 129 at 152 [48] relating to the factors to be taken into account by a court exercising its power to order the disqualification of a person from managing a corporation under s 206C. In this respect McHugh J referred to the decision of Santow J in Australian Securities and Investments Commission v Adler [2002] NSWSC 483; (2002) 42 ACSR 80 at 97-99 [56] where his Honour formulated 15 criteria, some of which McHugh J considered to be protective and others punitive. 18 At [271] the primary judge accepted what Hargrave J had stated in Australian Securities and Investments Commission v White [2006] VSC 239; (2006) 58 ACSR 261 at 265 [18] to be the four general categories of important matters which could be distilled from the analysis of McHugh J in Rich as being those to which the courts should have regard when determining whether to order disqualification and if so, for what period, namely, "(1) the nature and seriousness of the contravention; (2) protection of the public; (3) retribution and deterrence; (4) mitigating factors". 19 At [273] his Honour observed that since the decision in Rich, it was clear that the purpose of a disqualification order is not only protective but also punitive: it may be imposed by way of punishment and for general deterrence, although care must be taken in applying punitive measures. 20 As to the seriousness of the applicants' contravention, his Honour acknowledged (at [101] of the penalty judgment) that the circumstances in which s 180(1) may be breached varied from the trivial to the serious. However, in the present case he found that the breaches were serious. He said: "103. … This event, while isolated, was highly significant. The board had decided to form the Foundation, to settle Coy and Jsekarb upon it and to provide a level of funding to meet future asbestos claims. The non-executive directors knew from the board papers they had received at this and earlier meetings that JHIL had to convince the public that there were sufficient funds to meet all legitimate asbestos claims. They had rejected an earlier proposal that did not provide sufficient funding. They were aware of the significance of what was to be said in the Draft ASX Announcement about the level of funding. The information at their disposal did not support the emphatic terms of the Draft ASX Announcement. 104. This was a serious breach of duty and a flagrant one. The non-executive directors were endorsing JHIL's announcement to the market in emphatic terms that the Foundation had sufficient funds to pay all legitimate present and future asbestos claims, when they had no sufficient support for that statement and they knew, or ought to have known, that the announcement would influence the market. 105. Here the negligently made misleading statement was serious as it was a deliberate attempt to influence the market to an acceptance of the separation of Coy and Jsekarb, with their attendant asbestos claims, from the James Hardie group." 21 Further, at [127], his Honour stated that he did not consider the breach of duty by Messrs Gillfillan and Koffel to be of a lower degree of flagrancy to the conduct of those, such as Mr O'Brien, who attended the 15 February meeting in person. 22 Relevant to the questions of deterrence and mitigation, each of the non-executive directors, including the applicants, had tendered testimonials by persons who his Honour considered (at [343]) to be of impressive stature and who had sworn to those defendants' good character and competence. His Honour continued "343. As indicated in Macdonald (No 11) [the liability judgment], each of the non-executive directors is highly qualified. They have had impressive careers as directors of public companies. Their testimonials speak glowingly of their ability. They establish the care, skill and competence they have displayed in roles at the executive or non-executive level. 344. The need for personal deterrence is low. The testimonial evidence is strongly in favour of their general honesty and probity. The testimonials also establish the fitness of each of the non-executive directors to manage a company. 345. But considerations of general deterrence and retribution remain and I do not regard these factors as differentiating the contravention by Mr Macdonald to such an extent that a discriminatory order should be made with respect to any of the non-executive directors. 346. Like the other individual defendants each has been affected adversely by the publicity associated with the Special Commission and with these proceedings. And the personal hurt to them and their families must be weighted in the balance. …" The relevant principles applicable to a stay of the primary judge's disqualification order 23 Mr O'Brien submitted that his application was made pursuant to rule 50.7 of the Uniform Civil Procedure Rules 2005 (the UCPR) whereas Messrs Gillfillan and Koffel relied upon rule 51.44. Both called in aid the inherent jurisdiction of the Court and the principles discussed by this Court in Alexander v Cambridge Credit Corporation (Receivers Appointed) (1985) 2 NSWLR 685 at 694. In my opinion the relevant rule is rule 51.44. 24 Mr O'Brien summarised the principles expounded in Cambridge Credit as being the following: (a) an applicant for a stay is not required to demonstrate special or exceptional circumstances; (b) it is sufficient for an applicant to demonstrate a reason or an appropriate case to warrant the exercise of the discretion in his or her favour; (c) the onus is on an applicant to demonstrate a proper basis for a stay that will be fair to all parties and the court will weigh considerations such as the balance of convenience and the competing rights of the parties; (d) where there is a risk that the appeal will prove abortive if the applicant succeeds and a stay is not granted, the court will normally exercise its discretion in favour of granting a stay. Accordingly, if it is apparent that unless a stay is granted an appeal is rendered nugatory, this will be a substantial factor in favour of the grant of a stay; (e) the Court will make some preliminary assessment about whether the applicant has an arguable case on appeal. 25 These principles were referred to by this Court (Handley, Sheller and Ipp JJA) in Kalifair Pty Ltd v Digi-Tech (Australia) Ltd [2002] NSWCA 383; (2002) 55 NSWLR 737 and summarised (at 741-742 [18]) in the following terms: "[the applicant] 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." 26 There are two decisions of Giles JA sitting as the referrals judge dealing directly with an application for a stay of a disqualification order imposed in civil penalty proceedings pending the hearing of an appeal. The first is Whitlam v Australian Securities and Investments Commission [2002] NSWCA 312; (2002) 43 ACSR 73. The second is Adler v Australian Securities and Investments Commission [2002] NSWCA 303; (2002) 43 ACSR 35 (Adler). It was submitted by ASIC in the present case that in Whitlam Giles JA referred to the following four matters: first, the prospects of success on appeal; second, the seriousness of the findings and the protection of the public; third, whether there would be any direct pecuniary hardship to the applicant as a consequence of the refusal of the stay; and fourth, the harm, if any, to the applicant's reputation if a stay is refused. 27 With respect to the fourth matter his Honour observed (at 80 [45]) that it could be accepted that having regard to the findings made by the trial judge, such support as there was for Mr Whitlam's reputation had been adversely affected by those findings and the consequent disqualification order. In other words, the harm to his reputation had already occurred. Thus his Honour indicated that it was difficult to see that a stay could operate as a kind of interim restoration of reputation and that it should not be granted for that purpose. If the applicant was to be vindicated and his reputation restored, it would be by success on his appeal. 28 However, his Honour did consider (at 80 [45]) that any significant repair to damaged reputation might be worked in the interim if it was to be held on the stay application that the findings of the trial judge were significantly in doubt. As will appear, I do not consider that the applicants have so demonstrated. In fact, Mr O'Brien's submissions did not attempt to go so far. He contented himself with submitting that there is an arguable case on appeal – a proposition which was not in contest. In this context, as Giles JA pointed out in Whitlam at [39], although on a stay application it is material to consider the prospects of success on appeal, such an application is not an occasion for a detailed consideration of the merits of the appeal. This is particularly so where, in a case such as the present, the challenge is to the primary judge's factual findings. Any challenge to those findings will face the well-accepted principles of appellate restraint where the trial judge makes credibility-based findings with the benefit of seeing and hearing the witnesses. 29 In the present case, it must be said, at least to some extent, that his Honour's findings were credibility-based. Thus at [189] of the liability judgment he referred to the evidence of five defence witnesses on the issue of whether the Draft ASX Announcement was before the 15 February meeting and who had denied or did not recollect that it was. His Honour noted that those witnesses "were not disinterested in asserting that the Draft ASX Announcement was not before the meeting". Further, at [191] he referred to the fact that each of the eight witnesses who attended the 15 February meeting said they had no recollection of the Draft ASX Announcement being tabled, its terms being discussed or it being approved. 30 In the previous paragraph his Honour at least hinted that those persons may have been dissembling, although one of the challenges to be made to his Honour's fact-finding in this context is that he made no specific finding that any of the eight witnesses did in fact dissemble. 31 Further, there was a hotly contested issue as to which document Mr Baxter, the senior vice-president of corporate affairs at JHIL, took to the 15 February meeting. Was it the 7.24am Draft Announcement or the 9.35am Draft Announcement? It would seem that Mr Baxter's recollection as to the identity of the document that he took was very much in issue. His Honour ultimately accepted (at [220]) that Mr Baxter took the 7.24am Draft Announcement to the meeting and provided copies to those present. Such a finding seems to involve an acceptance of Mr Baxter's credit. 32 Having found that Mr Baxter took the 7.24am Draft ASX Announcement to the 15 February meeting and provided copies thereof to those present at the meeting, the next issue was whether they approved its contents. As his Honour noted at [225] the defences were that the Draft ASX Announcement was not before the Board, was not considered and was not approved. Each of the relevant defendants gave evidence to that effect. However, at [222] his Honour considered that "for present purposes" it was sufficient to find that those of the individual defendants who swore that the Draft ASX Announcement was not before the 15 February meeting "were mistaken". It is at least arguable that this was a credit-based finding. 33 Again, at [228], his Honour found that it was sufficient for him to find that those individual directors who swore that there was no consideration or approval of the Draft ASX Announcement "were mistaken". Again, it is arguable that this is a credit-based finding. 34 The foregoing observations apply in particular to Mr O'Brien who was present at the meeting but who did not give evidence. Apparently he was content to rely on those witnesses who did give evidence as to the issues referred to. So far as Messrs Gillfillan and Koffel were concerned, it was accepted that the Draft ASX Announcement was not provided to them, as they were obviously not personally present at the meeting. Further, at [231] his Honour found that the Draft ASX Announcement was not read out at the meeting and (at [232]) that he was not prepared to find that they had participated in its approval by the other directors. On the other hand, he was not prepared to find that by their silence they should be taken to have abstained from the release of the document. He also found (at [233]) that neither of those directors raised any objection to the fact that they did not have a copy of the document. 35 So far the factual findings relied upon by the primary judge with respect to Messrs Gillfillan and Koffel would not appear to be credibility-based. At [337] his Honour found that each of those directors were in breach of s 180(1) in failing to request that they be provided with a copy of the Draft ASX Announcement, in failing to familiarise themselves with its terms or in failing to abstain from voting in favour of the relevant resolutions. At [338] he referred to Mr Gillfillan's evidence that he did not agree, when it was put to him, that he had approved the Draft ASX Announcement and Mr Koffel's evidence that he denied that he had approved the Draft ASX Announcement. 36 However, the primary judge considered (at [338]) that notwithstanding that they did not have a copy of the document before them, they nevertheless regarded it as appropriate to have considered the content of the document had they recalled it being before the 15 February meeting (which they did not). 37 At [339] his Honour said: "Once the finding is made, contrary to their testimony, that the Draft ASX Announcement was considered at the meeting, their failure to call for a copy to familiarise themselves with its terms or to abstain from voting constituted a breach of duty." (Emphasis added) It is at least arguable that his Honour's reference to the relevant finding being " contrary to their testimony " is one which is credibility-based. 38 I do not suggest that the applicants lack an arguable case on appeal in respect of other elements of his Honour's decision that do not involve credibility-based findings of fact. Thus in the case of Messrs Gillfillan and Koffel it is submitted that at [340] of his liability judgment his Honour applied the wrong legal test applicable to an allegation of negligence constituting a breach of s 180(1). 39 Although Mr O'Brien in his written submissions and Messrs Gillfillan and Koffel, particularly in their oral submissions, undertook a reasonably detailed rehearsal of the arguments they propose to argue on the appeal, each of those arguments was purportedly met in some detail with ASIC's written submissions. But as Giles JA observed in Whitlam at [39], stay applications are not an occasion for detailed consideration of the merits of the appeal especially where the facts are relatively complex, as they appear to me to be in the present case. 40 To attempt to decide between the relative strengths of the applicants' submissions with respect to alleged errors of the primary judge in his liability judgment on the one hand and those of ASIC in response on the other would involve a detailed consideration of the respective contentions which is inappropriate on an interlocutory application for a stay. 41 In my view it is clear from the parties' submissions to which I have referred that the challenges by the applicants to the primary judge's findings, when considered in the light of the parties' extensive written and oral submissions on the relative merits of the appeal, do not demonstrate more than that the applicants have a reasonably arguable case on appeal. As I have noted above, many of the issues to be argued on appeal turn essentially on disputed findings of fact by the primary judge with the limitations of appellate intervention which such challenges involve. It would appear that his Honour gave comprehensive reasons for his ultimate conclusion that the Draft ASX Announcement was considered and approved by the Board at its 15 February meeting but whether they contain the errors alleged by the applicants must await full argument on the hearing of the appeal. 42 Although it may be accepted that the applicants have reasonable prospects of success, I am not prepared to find that those prospects are so strong with respect to Messrs Gillfillan and Koffel as to justify the granting of a stay on that ground alone. In particular, to adopt the words of Giles JA in Whitlam (at [45]): "This is not a case in which such doubt has been shown as to the findings of the primary judge that, by so stating and granting a stay, any significant repair to damaged reputation might be worked." 43 Before turning to the evidence in support of these applications and my assessment thereof, I should refer to two further matters of principle. The first concerns ASIC's submission that the principles governing an application for a stay discussed in Cambridge Credit are not entirely apposite to civil penalty proceedings. It was submitted that it was significant that there was no reference to Cambridge Credit by Giles JA in either Whitlam or in Adler. This may be so, but I would not accept the consequential submission of ASIC that an applicant for a stay of a disqualification order made in civil penalty proceedings is required to demonstrate special or exceptional circumstances. There is nothing in the decisions in Adler or Whitlam that would support such a proposition, and I reject it. 44 Further, I would reject ASIC's submissions that the principles to be applied in the present case are akin to those which are applied to an application for a grant of bail pending the hearing of a criminal appeal. Reliance was placed upon the observations of McHugh J in Rich at 149 [43] where his Honour observed that in exercising their discretion to fix civil penalties in cases such as the present, the courts do not concern themselves solely with the issue of whether a defendant now is or in the future will be a fit and proper person to manage corporations. Rather they are required to take into account factors such as the size of any losses suffered by the corporation, its creditors and consumers, the legislative objectives of personal and general deterrence, contrition on the part of the defendant, the gravity of the misconduct, the defendant's previous good character, prejudice to the defendant's business interests, personal hardship and the willingness of the defendant to render assistance to statutory authorities and administrators. In other words, the courts take into consideration the same factors that are taken into account in sentencing in the criminal jurisdiction – retribution, deterrence, reformation, contrition and protection of the public. If this be so, so ASIC's argument runs, the question of a stay pending an appeal once a civil penalty had been fixed involves the same principles as an application for bail by an offender who has been sentenced but wishes to appeal against his conviction and/or sentence. 45 In this context reference was made to the observations of Hunt J in R v Hilton (1986) 7 NSWLR 745 at 752 where his Honour said: "The common law's insistence upon the existence of special or exceptional circumstances before bail will be granted pending the hearing of an appeal has always been maintained, and by the highest authority." 46 That principle no longer applies and any question of bail pending an appeal is exclusively the subject of the terms of the Bail Act 1978. But it does not follow that because criminal sentencing considerations are to be taken into account when determining the fixing of a civil penalty in a case such as the present, that the present application is to be treated as akin or analogous to a bail application pending an appeal by an offender who has been sentenced to a term of imprisonment after a criminal trial. 47 The gravamen of the judgments in Rich, including that of McHugh J, was to establish that civil penalty proceedings are punitive as well as protective. The fact that they are punitive leads to the conclusion that, amongst other factors, sentencing principles are to be taken into account as relevant criteria governing the exercise of the court's powers of disqualification under the Act. However, that is not to equate civil penalty proceedings with criminal proceedings. Such a submission was rejected by this Court in Adler v Australian Securities and Investments Commission [2003] NSWCA 131; (2003) 46 ACSR 504 at 647 [678] where Giles JA, with the agreement of Mason P and Beazley JA, made it clear that civil penalty proceedings are not criminal proceedings. I would therefore reject any analogy of the present application for a stay to an application for bail pending an appeal in criminal proceedings. The nature of the case for a stay made on behalf of Messrs Gillfillan and Koffel 48 Mr Bathurst QC on behalf of Messrs Gillfillan and Koffel made it clear that he was not asserting that a stay of the disqualification orders made against his clients was necessitated by any particular prejudice that they might sustain if the stay was not granted but they were successful on their appeal. Rather, he submitted that the question of prejudice must be measured against the prospects of success on the appeal which, he stated, were "very strong" in the case of his clients. He further relied upon the primary judge's finding at [344] which I have recorded at [22] above, to the effect that the testimonial evidence was strongly in favour of the general honesty and probity of the applicants and established the fitness of each of them to manage a company. 49 In these circumstances it was submitted that as it was unrealistic to consider that any appeal could be conducted and disposed of within a year, it would be unjust for a disqualification order to be imposed upon Messrs Gillfillan and Koffel for such a period given the very strong prospects of success of any appeal which Mr Bathurst then sought to demonstrate by reference to alleged errors in his Honour's reasoning with respect to his clients. I shall return to those matters below. The case for a stay made on behalf of Mr O'Brien 50 Mr Wood QC for Mr O'Brien acknowledged and accepted the limitation that on a stay application the court does not engage in any detailed analysis of the prospects of success of an appeal, but rather addresses the question of whether there is an arguable case on appeal. He then sought to demonstrate that his Honour had made a number of fact-finding errors which demonstrated that Mr O'Brien clearly had an arguable case that his Honour had erred in two essential respects. First, that the Draft ASX Announcement as defined in the FFASC had been tabled at the 15 February meeting of the directors of JHIL; and, second, that ASIC had proved, as it had alleged in that statement of claim, that the directors of JHIL had voted in favour of a resolution to approve the Draft ASX Announcement and that that announcement be executed and sent to the ASX. As with Messrs Gillfillan and Koffel, I shall return to the issue of Mr O'Brien's prospects of success on his appeal later in these reasons. It is sufficient at this point to record that ASIC accepted that each of the applicants had an arguable case. 51 Unlike Messrs Gillfillan and Koffel, Mr O'Brien asserted that a failure to grant the stay sought by him until the determination of his appeal would cause him significant prejudice and damage which would be irreversible even if his appeal succeeded. In this respect, Mr O'Brien relied on three affidavits being that of his solicitor, Mr Jonathan Milner sworn 15 September 2009 as well as those of Mr Robert Kerry Critchley sworn 14 September 2009 and Mr Stephen Skala sworn 15 September 2009. 52 Mr Milner's affidavit was made on information and belief, his source being Mr O'Brien. The latter did not swear an affidavit himself. Apart from relying upon the affidavits tendered in the penalty proceedings and which comprised the testimonials referred to by the primary judge at [343] of the penalty judgment which I have recorded at [22] above, reliance was also placed upon the findings of his Honour not only at [343] and [344] but also at [85] and [86] where he accepted that the contravening conduct of the non-executive directors could not be characterised as a pattern of conduct over a period of time or involving personal gain, fraud or dishonesty. Rather, the contraventions were isolated incidents in lengthy careers of service on the boards and in positions of high management of an array of companies performed by each of them with competence, diligence and honesty. 53 According to Mr Milner, an ASIC Personal Name Extract Search of Mr O'Brien indicated that he is a director of some of 22 corporations of which two, Hexima Limited (Hexima) and Thomas & Coffey Limited (T&C) are publicly listed companies. Of the balance, Mr Milner dealt in detail only with two, namely, Leslie Manor Pty Ltd (Leslie Manor) and Hydration Pharmaceuticals Pty Ltd (Hydration). 54 With respect to Leslie Manor, Mr O'Brien is the sole director of that company and has been since 1999. It is the trustee of a unit trust governed by a unit trust deed dated 29 April 1999 (the Trust). However, there is nothing in Mr Milner's affidavit to indicate how many units have been issued in the Trust or to identify the beneficial owners of such units. In the absence of that evidence I would not infer that Mr O'Brien, or, for that matter, members of his family were the beneficial owners. 55 In its capacity as trustee of the Trust, Leslie Manor is the owner of two dairy farms and a supporting farm (on which heifers are reared and fodder grown) in Victoria (the Farm) and the registered owner and/or lessee of some 18 parcels of land comprising approximately 1500 hectares on which the business of the Farm is conducted. 56 Mr Milner's evidence with respect to Leslie Manor may be summarised as follows: (a) Leslie Manor does not itself operate the Farm's two dairy farms in Victoria which are now the subject of long-term lease agreements whereby the lessees pay rent to Leslie Manor calculated in accordance with the quantity of milk they produce. (b) Some of the land owned by Leslie Manor is mortgaged to the National Australia Bank to secure loans of approximately $5 million and there are a number of charges over assets of Leslie Manor to secure leases of plant items and equipment used on the Farm. (c) There are approximately 1,340 milking cows on the Farm which produces more than 10 million litres of milk annually. For the year ending 30 June 2009 the annual operating expenses of the Farm were approximately $5 million. It is, however, to be noted that there is no reference to annual revenue, gross or net. (d) According to information provided by Mr O'Brien, the Farm's operations are complex and there are considerable business risks associated with those operations, particularly as the milk price is changeable and consequently the Farm's ongoing profitability is said to be often unpredictable. Furthermore, over the past five years Mr O'Brien has spent an average of two days per week working as a director of Leslie Manor in relation to the business of the Farm, it being asserted that the management of the Farm's operations is time consuming and requires his attention every week. Although the two dairy farms are now the subject of a long-term lease agreement whereby, I infer, the Farm's dairy operations are conducted by the lessees, nevertheless Leslie Manor has entered into agreements " with a range of entities and individuals " relating to the business and operations of the Farm including employment and consultancy contracts with four individuals (unidentified) as well as the long-term lease agreement to which I have referred. (e) Mr O'Brien's role as a director of Leslie Manor involves amongst other things the following: "i. supervising and liaising with employees, contractors and lessees in relation to soil fertility, pasture growth, Farm productivity and strategy; ii. managing Leslie Manor's relationships with its banks and financiers; iii. managing the production and sale of fodder grown on the Farm; iv. supervising the management of approximately 600 head of non-milking cows which are owned by Leslie Manor (including the sale of those cows from time to time); v. supervising and managing capital improvements to the Farm; vi. managing the Farm's insurance arrangements; vii. dealing with the local council, including in relation to council rates. viii. contracting certain consultants." 57 One of the difficulties with the above assertions as to Mr O'Brien's role as the sole director of Leslie Manor concerns the extent to which any of the eight matters listed are still relevant given that the operation of the two dairy farms is now the subject of a long term lease so that one assumes that the day-to-day operation of the dairy activities of the Farm is now the responsibility of the lessees. However, I am prepared to accept that, as lessor, Mr O'Brien as the sole director of Leslie Manor, is required from time to time to liaise with the lessees in relation to such matters as farm productivity and strategy given that the rental payable by the lessees to Leslie Manor is, apparently, directly related to the quantity of milk they produce. 58 However, I would not be prepared to accept, without further evidence, that items (ii), (v), (vi), (vii) and (viii) require Mr O'Brien's regular attention. Thus, for instance, there is no evidence that Leslie Manor proposes to make capital improvements to the Farm between now and the time that Mr O'Brien's appeal is determined, a matter to which I shall return. Furthermore, the evidence with respect to items (iii) and (iv) is lacking in detail in relation to the extent of supervision or management which is required for each of the matters referred to in those items. 59 Mr Milner's evidence is that fodder is grown on the supporting farm and, no doubt, from time to time is harvested and sold. But again there is nothing in the evidence to suggest that this requires some weekly intervention on the part of Mr O'Brien. The same comment applies to item (vi). There is no suggestion in Mr Milner's affidavit that Mr O'Brien is the manager of the Farm or for that matter, the manager of the activities carried out upon the supporting properties. Although Mr Milner states that over the past five years Mr O'Brien has spent an average of two days per week working as a director of Leslie Manor in relation to the business of the Farm, it is not suggested that he is required to spend these two days on the Farm in Victoria as distinct from dealing with such matters that might arise in Sydney. In other words, the evidence does not allow me to find that Mr O'Brien has a hands-on role in the Farm's operations. 60 In fact, I would infer as a matter of commonsense and in the absence of evidence to the contrary, that Leslie Manor employs an experienced farm manager to carry out the day-to-day activities relating to managing the production and sale of fodder grown on the Farm and supervising the management of the non-milking cows including their sale from time to time. At least I am not prepared to infer that there is no such manager in the absence of evidence to that effect. 61 Mr Milner further deposes that he has been informed by Mr O'Brien that no member of his family, or any friend or business associate, is prepared to accept an appointment as director of Leslie Manor. Nor is Mr O'Brien currently aware of anyone who is capable of managing Leslie Manor's affairs who is prepared to accept an appointment as a director of that company. However, I note that Mr O'Brien is not paid a director's fee and thus carries out his activities as a director at no cost to the Trust. The evidence does not allow me to find, based on reasonably extensive enquiries, that there is no one with the necessary business acumen in the agricultural field capable of or willing to fill in for Mr O'Brien until his appeal is determined. 62 Mr Milner also deposes that Mr O'Brien has informed him that owing to the nature of the Farm's operations, it is unlikely that anyone will accept an appointment as a director of Leslie Manor and assume Mr O'Brien's responsibilities in respect of the Farm's operations "on terms which Leslie Manor could reasonably meet". If the latter is intended to convey that it is unlikely that anyone is prepared to assume Mr O'Brien's responsibilities at little or no fee, then I am not impressed. If the operation of the Farm, notwithstanding that the dairy activities are now leased, is as complex as is asserted, it must understandably follow that a person experienced in operating a farm would not be prepared to undertake Mr O'Brien's responsibilities without proper recompense. 63 But given that Mr O'Brien can manage the affairs of Leslie Manor by working only two days per week, the cost of engaging a new director would not appear to be great and, in any event, this would be at the expense of the Trust, not Mr O'Brien. The significance of that cost is unknown as there is no evidence as to the revenue or profits of the Trust. The only information provided by Mr Milner is that the operating expenses of the Farm for the last financial year were approximately $5 million. For reasons unexplained, there is no reference to the turnover of the Farm which might give some indication as to the extent of its current profitability. The only information that is provided is that Mr O'Brien has informed Mr Milner that there are business risks associated with the Farm's operations and that the milk price is changeable so that the Farm's ongoing profitability is "often unpredictable". These assertions are so vague and lacking in particularity as to be of little or no assistance. 64 As was submitted on behalf of ASIC, there is a deal of coyness with respect to the assertions contained in Mr Milner's affidavit which I understand to mean that the affidavit is long on generalities and short on detail. If that is what was intended to be conveyed by the submission, I agree with it. Thus Mr Milner's assertion at paragraph 24 of his affidavit that it is unlikely that anyone would be prepared to assume Mr O'Brien's responsibilities in respect of the Farm's operations "on terms which Leslie Manor could reasonably meet", really tells me nothing without some evidentiary material to support it. 65 In my view the evidence to which Mr Milner deposes on information provided by Mr O'Brien is so vague and general and so lacking in critical detail that I am unable to be satisfied that the continued disqualification of Mr O'Brien as a director of Leslie Manor pending the determination of his appeal would cause the Farm, and, therefore, the Trust to be irretrievably damaged in some unspecified manner. Certainly, the evidence of Mr Milner does not support any assertion that Mr O'Brien would sustain any personal loss or damage. This no doubt explains the absence of any submission to the contrary. 66 Mr Milner also deposes that he had been informed by Mr O'Brien that if the latter was precluded from managing Leslie Manor, the company would need to be replaced as trustee of the Trust, which would in turn require a number of agreements to which Leslie Manor is a party to be varied and/or renegotiated as well as the legal title to various parcels of land to be transferred to the new trustee. Mr Milner also deposes that he has been informed by Mr O'Brien that none of the parties to the agreements that would need to be varied and/or renegotiated have indicated whether they would consent thereto. On the other hand, there is no evidence that they have been requested to so consent and have refused. 67 In any event I have difficulty in accepting this evidence at face value given that Leslie Manor is, as far as the evidence indicates, a bare trustee. There is no suggestion that Mr O'Brien has given any personal guarantees, but even if he has, there appears to be no reason why, even if a new trustee needed to be appointed, those guarantees could not remain in place if they be considered essential by the parties to whom they have been provided. Nor is it self-evident that, apart from substituting one trustee for another, there would need to be some substantive variation and/or renegotiation of the agreements in question. There is no evidence as to why there would be any such need, nor is there evidence as to the particular agreements or the particular terms of those agreements which the appointment of a new trustee of the Trust would, as a matter of necessity, require to be varied or renegotiated. 68 Furthermore, it is proposed that the hearing of the appeals from the orders of the primary judge will be heard early next year. There is no reason to believe that a judgment will not be forthcoming within, at the most, two to three months of the conclusion of that hearing. The success or otherwise of Mr O'Brien's appeal should, therefore, be known within eight or nine months. On the basis of Mr Milner's evidence I am not satisfied that temporary arrangements could not be put in place for that period. 69 Apart from the two public companies, the only other corporation dealt with specifically by Mr Milner in his affidavit is Hydration. According to the information obtained from Mr O'Brien, he is the sole director of that company which manufactures and sells oral rehydration projects under the brand name "Hydralyte". In the 2008/09 financial year, Hydration generated over $4.5 million in sales revenue. Mr O'Brien is not paid a director's fee. Mr Milner deposes that Mr O'Brien is currently unaware of any individual capable of managing Hydration's affairs who is prepared to accept an appointment as a director of that company without remuneration. Nevertheless, if he is precluded from managing Hydration, Mr O'Brien believes that the individual likely to replace him as a director would be a businessman who would expect to be remunerated at an appropriate commercial rate of payment. No rate of payment to that individual has yet been agreed. 70 There is no evidence as to the profitability of Hydration or the extent to which it is able to afford to employ a director in lieu of Mr O'Brien for the next nine months to manage the company's affairs. Furthermore, there is no evidence as to precisely what management tasks Mr O'Brien carries out for Hydration. On that the evidence is silent. The only asserted claim of prejudice as a consequence of being unable to act as a director of Hydration is that, in the event that Mr O'Brien's appeal succeeds, any director's fee paid in the meantime to a replacement director would be lost. But this would be the company's loss, not that of Mr O'Brien. I do not regard that possibility as significant in the absence of specific evidence to the contrary. 71 As I have indicated, Mr O'Brien is a non-executive director of Hexima and T&C. He is Chairman of the former. In respect of the financial year ending 30 June 2008 Mr O'Brien was paid a director's fee of $70,000 by T&C. He was paid a similar fee for the financial year ending 30 June 2009. According to T&C's 2008 Annual Report he is a substantial shareholder holding approximately 4.3% of the issued capital. 72 In respect of the financial year ending 30 June 2009 Hexima paid Mr O'Brien a director's fee of $170,000. According to Hexima's 2009 Annual Report Mr O'Brien is also a substantial shareholder holding approximately 8.5% of the issued capital (excluding options). 73 If he ceases to be a director of those companies he will lose his remuneration which, according to Mr Milner, forms a substantial part of Mr O'Brien's annual income. Furthermore, Mr Milner believes that if the disqualification order is not stayed, and even if Mr O'Brien's appeal is successful, the latter is concerned that his prospects of being asked to rejoin the boards of Hexima and T&C are low and, more generally, that his prospects of obtaining a role in the future as a public company director would be damaged. 74 With respect to the last-mentioned concern, any damage to Mr O'Brien's reputation as a public company director has already been caused by the primary judge's published findings. If those findings are reversed on appeal then no doubt his reputation will be reinstated. I do not accept that any stay of the disqualification order will make any difference to Mr O'Brien's reputation as a public company director if he is successful on his appeal. If he is to be vindicated and his reputation restored, it will be as a result of the success of his appeal: see [27] above. 75 Finally as to the other companies of which Mr O'Brien is a director, Mr Milner deposes that he was informed that those are private companies directly or indirectly owned by Mr O'Brien in which he has a substantial direct or indirect shareholding. Mr O'Brien believes that if a stay of his appeal is not granted then he will need to retain someone to continue to manage those companies. He anticipates that any such person would need to be remunerated at market rates. Without having any idea as to the activities of those companies and the extent to which any of them requires a person outside of Mr O'Brien's family to actively manage them so as to justify being paid an appropriate rate of remuneration, I do not find the evidence in respect of those companies to be compelling in terms of the issue of prejudice. 76 I turn now to the affidavits of Messrs Critchley and Skala. Mr Critchley is a non-executive director and Chairman of T&C. In an affidavit sworn for the purposes of the penalty proceedings before the primary judge, Mr Critchley stated, amongst other things, that it was not in T&C's interest for Mr O'Brien to resign as a non-executive director; that he has made and continues to make an important and valuable contribution to T&C and to have the unanimous support of T&C's board. In his affidavit sworn 14 September 2009 Mr Critchley deposes that notwithstanding having read the relevant parts of the primary judge's decision with respect to the disqualification of Mr O'Brien from managing a corporation, he nevertheless remains of the opinion that it is not in T&C's interests for Mr O'Brien to resign. He remains of the opinion that Mr O'Brien has made, and will continue to make, an important and valuable contribution to the company. 77 Mr Critchley confirms that the other directors of T&C are of a similar view and considers, as a matter of preference, that it is in T&C's best interests for Mr O'Brien to remain a non-executive director of that company. 78 Finally, Mr Critchley deposes that if Mr O'Brien is prohibited from continuing to act as a non-executive director pending his appeal, the current board of T&C could not guarantee that Mr O'Brien would be asked to rejoin the board in the event that his appeal is successful and that it would be uncertain whether, in that event, he would be asked to rejoin the board. 79 Mr Skala is a non-executive director of Hexima. He also swore an affidavit in the penalty proceedings to the same effect as that of Mr Critchley, but applying to Hexima. Notwithstanding having read the primary judge's penalty judgment disqualifying Mr O'Brien from managing a corporation, he and his fellow directors remain of the view that Mr O'Brien's contribution to Hexima is highly valued and that the loss of his expertise as a non-executive director would be detrimental to that company. He also deposes that in the event of a stay of the primary judge's disqualification order being refused, Hexima would have to appoint a new chairman to replace Mr O'Brien and would in all likelihood "in due course" appoint a non-executive director to replace him as a member of the company's board. Following such an appointment the board would be appropriately reconstituted making it unlikely that Mr O'Brien would be asked to rejoin the board if his appeal against the disqualification order was successful. 80 There are three comments I wish to make about the evidence of Messrs Critchley and Skala. The first is that only Mr Skala deposes that the loss of Mr O'Brien's expertise as a non-executive director of Hexima would be detrimental to that company. However, he gives no details to support that general assertion. Second, although I can accept that Mr O'Brien makes a positive contribution as a non-executive director to each of Hexima and T&C and as Chairman of the former, there is nothing in the evidence of either Mr Skala or Mr Critchley that would justify the conclusion that, if a stay is not granted, the absence of Mr O'Brien from the board of each of those companies would significantly or materially affect their commercial activities, their profitability or the value of their shares. Third, there is no evidence as to the number of directors required in respect of each of those companies so that it is not self-evident that it will be necessary, in the event that a stay is refused, for Mr O'Brien's position on the board of each company to be filled pending the hearing and determination of his appeal. By law, there must be a minimum of three directors of a public company: see s 201A(2) of the Act. Each of Hexima and T&C have six directors of whom five are non-executive. Mr O'Brien's loss to those boards will reduce their numbers to five, well above the minimum required by law. 81 I accept that it will be necessary for Hexima to replace Mr O'Brien as Chairman, but there is nothing in the evidence of either Mr Skala or Mr Critchley that indicates that, pending the determination of Mr O'Brien's appeal, it will be essential or even necessary to immediately replace him as a non-executive director; or if he is replaced, that it necessarily follows that if his appeal succeeds, he will not be invited to rejoin those boards given their expressed views as to his positive contribution to the work of those boards. That no guarantee can be given that he will be asked to rejoin is too vague to support a finding of actual prejudice. 82 Finally, I note Mr Milner's evidence that the director's fees received by Mr O'Brien from Hexima and T&C form a substantial part of his annual income. This may be so, but there is no evidence as to Mr O'Brien's financial position and it is not suggested that the loss of those director's fees will render him destitute or otherwise unable financially to pursue his appeal. Again, the terms in which Mr Milner has expressed himself on this matter are too vague and lack the necessary detail to justify making a finding of significant financial prejudice as a consequence of the loss of approximately $180,000 in gross income from director's fees over the next nine months. If Mr O'Brien is to make a case of significant personal financial prejudice, then he will need to be far more detailed in his evidence than he has been to date. The applications for a stay should be refused 83 As I have already observed (at [5] above), Messrs Gillfillan and Koffel do not contend that the refusal of a stay will cause them any direct pecuniary hardship. Rather, they rely on two matters. The first is the strength of their case on the appeal. However, as noted at [40] and [41] above, although I am prepared to accept that those applicants have reasonable prospects of succeeding on their appeal, I am not in a position, and it would be inappropriate, to find that their prospects of success are so strong that justice could only be served by granting a stay. 84 The second basis upon which Messrs Gillfillan and Koffel rely in support of their application for a stay is the findings of the primary judge at [344] of his penalty judgment based on the testimonial evidence adduced by those applicants. 85 However, notwithstanding that evidence, his Honour determined the contraventions of the Act committed by those applicants to be a serious and flagrant breach of duty. The seriousness of their conduct and that of Mr O'Brien was demonstrated by the refusal of his Honour to exculpate the applicants under s 1317S(2) and/or s 1318(1) of the Act. Further, as I have noted at [21] above, his Honour did not consider the breach of duty by Messrs Gillfillan and Koffel to be of a lower degree of flagrancy to that of the other defendants, including Mr O'Brien, who were personally present at the 15 February meeting. 86 In the foregoing circumstances I would refuse Messrs Gillfillan and Koffel's application for a stay of the primary judge's disqualification order. 87 With respect to Mr O'Brien's application, the primary basis upon which it was submitted that a stay should be granted in his case, was that there would be a real risk to him of actual prejudice and damage if a stay was refused. As I have discussed above, heavy reliance was placed upon the testimonial evidence referred to by the primary judge at [344] of the penalty judgment as well as upon the affidavits of Messrs Milner, Skala and Critchley filed in the present application. 88 It was submitted that at [344] of the penalty judgment his Honour had found that the need for personal deterrence was low and that in view of his Honour's findings with respect to the general honesty and probity of Mr O'Brien and his fitness as a non-executive director to manage a company, there was no necessity for a stay to be refused upon the basis that the disqualification order should operate immediately for the protection of the public. 89 However, the foregoing submissions overlook the fact that although his Honour did in fact find that the need for personal deterrence was low, he did not consider it to be non-existent. Furthermore, at [345] he noted that there remained considerations of general deterrence and retribution. His finding with respect to the necessity for general deterrence involves an element of public protection. 90 However, the major plank of Mr O'Brien's submissions that a stay should be granted is based upon the evidence filed in the present application, it being submitted that if a stay is refused Mr O'Brien will sustain personal financial loss (being the director's fees he would otherwise earn as a non-executive director of Hexima and T&C). I have already commented upon that evidence and it is unnecessary to repeat it. The same observation applies to the information and belief evidence of Mr Milner with respect to Leslie Manor and Hydration. 91 In Adler at 39 [20] to [22] and in Whitlam at 80 [43] to [44], Giles JA commented upon the scant evidence before him in support of the contention that Mr Adler on the one hand, and Mr Whitlam on the other, would be under an unacceptable burden if the disqualification orders in those cases were not stayed. However, it was submitted by the present applicants that the critical lack of detail and of evidence as to prejudice on the stay applications in those cases was to be contrasted with the provision of such detail in the present case. 92 However, in light of my comments when dealing with the affidavit evidence of Messrs Milner, Critchley and Skala, I remain of the view that that evidence is so general and lacking in detail as to render it impossible for me to make a positive finding with any confidence that whatever prejudice Mr O'Brien may sustain as a consequence of the refusal of a stay would impose upon him such an unacceptable burden that a stay must be granted as a matter of justice. 93 Given the remarks of Giles JA in Adler (at 39 [24]) and Whitlam (at 80 [44]), in his written submissions Mr O'Brien recognised the availability of an application by him pursuant to s 206G of the act for leave to manage Hexima, T&C, Leslie Manor and Hydration. However he submitted that no such application was required in the present case given that, unlike the observation of Giles JA in Whitlam and Adler that the evidence was scant, that was not a proper description of the evidence filed on behalf of Mr O'Brien in the present case. 94 The theory behind the remarks of Giles JA is that on any such application the evidence would be more complete and more detailed than it is at present. In such a case, as his Honour noted, the interests of the public as well as the disqualified applicant can then be more suitably considered than in an application for a stay. For the reasons I have set out at [92] above, I would reject Mr O'Brien's submissions. 95 In Dwyer v National Companies and Securities Commission (1988) 15 NSWLR 285, McLelland J stated the relevant principles with respect to the exercise of the power to stay a disqualification order under the Companies (NSW) Code in the following terms (at 287) (omitting citations): "Since it rests on necessity for the purpose of preventing injustice, the extent of the power is commensurate with the requirements of the necessity which calls it into existence. In the present case the necessity is said to arise from the serious harm and loss which would enure to the plaintiff and others if the plaintiff is unable to remain a director of, and exercise managerial functions in, certain corporations, the operations of which are said to be reliant on his participation and are likely to be severely disrupted by the prohibition in question. It is said that in the event of the appeal being successful then the disruption and the consequent loss and damage to the corporations, and persons interested in them, being irretrievable and non-compensable, will give rise to serious injustice. That injustice of this kind could well arise in cases of this nature, is unquestionable. But it seems to me that there are sufficient means of avoiding it within the terms of s 562A(3) itself, and the necessity upon which the inherent jurisdiction depends does not arise. The prohibition in the section is subject to the qualification 'without leave of the Court' and there is thus available a statutory procedure which can be utilised in a proper case to avoid injustice of the kind referred to. I agree in this respect with the approach adopted by Pidgeon J of the Supreme Court of Western Australia … . Such an approach also has the advantage of avoiding any notion that the decision from which the appeal is brought is to be treated as merely contingent upon confirmation by the court, which, in agreement with Marks J of the Supreme Court of Victoria, … I would consider to be erroneous." Section 562A(3) of the Code was the then equivalent of the present s 206G. 96 In that case his Honour declined to exercise his inherent jurisdiction to grant a stay but exercised his jurisdiction under the relevant provision of the Code to order that the plaintiff in that case have leave to be a director of, and to be concerned in and take part in the management of, certain identified companies. It the present case it has not been suggested that I should exercise any power under s 206G, it being submitted on behalf of Mr O'Brien that in the circumstances of the present case s 206G should not occupy any significant role in the determination of the present stay application given that the prejudice to Mr O'Brien caused by the loss of his public company and private company directorships "does not lack [the] evidentiary detail" which was lacking in Adler and Whitlam. For the reasons to which I have already referred, I reject that submission. Conclusion 97 In my opinion, each of the applications for a stay of the disqualification order made by the primary judge with respect to each applicant should be refused. It is unnecessary to make any order in relation to the pecuniary penalties, as his Honour's orders do not require those penalties to be paid within any particular timeframe. 98 In the notice of motion filed on behalf of Messrs Gillfillan and Koffel an order was sought that their appeals be expedited. I would accede to that application both with respect to those applicants as well as Mr O'Brien and any other defendant who has filed an appeal in accordance with the rules. 99 As I have already indicated, I have been informed that it is proposed that the appeals will be heard early next year. The parties should prepare accordingly and the appeal will be case managed by Macfarlan JA. 100 The formal orders I make are as follows: (a) The Notice of Motion of Geoffrey Frederick O'Brien filed on 14 September 2009 is dismissed with costs. (b) The Notices of Motion of Michael John Gillfillan and Martin Koffel filed on 15 September 2009 are dismissed with costs. (c) The appeals of the applicants be expedited. ********** 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.