Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Classic Bet (NSW) Pty Ltd & anor v KRM (Vic) Pty Ltd & anor; Kay v KRM (Vic) Pty Ltd [2020] NSWCA 6 Hearing dates: 6 February 2020 Date of orders: 06 February 2020 Decision date: 06 February 2020 Before: Payne JA Decision: See paragraph [18] Catchwords: CIVIL PROCEDURE – Court of Appeal – application for stay pending appeal – no issue of principle – where limited evidence – conditional stay granted Cases Cited: Alexander v Cambridge Credit Corporation (1985) 2 NSWLR 685 Bar-Mordecai v Rotman [2000] NSWCA 123 Kalifair Pty Ltd v Digi-Tech Australia Ltd (2002) 55 NSWLR 737; [2002] NSWCA 383 Category: Procedural and other rulings Parties: Classic Bet (NSW) Pty Ltd and Best Bet (NSW) Pty Ltd (Applicants in 2020/12237) Ryan Kay (Applicant in 2020/6311, Second Respondent in 2020/12237) KRM (Vic) Pty Ltd (First Respondent in both 2020/6311, 2020/12237) Representation: Counsel: I R Pike SC; E A Walker (Applicants in 2020/12237) A J McInerney SC (Applicant in 2020/6311, Second Respondent in 2020/12237) A C Harding (First Respondent in both 2020/6311, 2020/12237) Solicitors: Yates Beaggi Lawyers (Applicants in 2020/12237) Price & Company Solicitors (Applicant in 2020/6311, Second Respondent in 2020/12237) K&L Gates (First Respondent in both 2020/6311, 2020/12237) File Number(s): 2020/12237; 2020/6311 Publication restriction: Nil. Decision under appeal Court or tribunal: Supreme Court of New South Wales Jurisdiction: Equity - Commercial List Citation: [2019] NSWSC 1773 Date of Decision: 29 November 2019 Before: Rein J File Number(s): 2018/314837 [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] Judgment 1. PAYNE JA: On 29 November 2019, Rein J delivered his reasons in this matter, KRM (Victoria) Pty Ltd v Classic Bet Pty Ltd [2019] NSWSC 1773. 2. On 18 December 2019, the primary judge entered judgment for the plaintiff, KRM (Victoria) Pty Ltd, and made the following orders disposing of the claim and the two cross claims which were before him: 1. Judgment for the Plaintiff against the First, Second and Third Defendants in the sum of $3,684,690.98 ("Judgment"). 2. The Defendants are to pay the Plaintiff's costs of the proceedings ("Costs Order"). 3. The Court declares that the First, Second and Third Defendants are each entitled to equitable compensation in respect of the Judgment and Costs Order. 4. The Amended First Cross-Claim filed on 1 March 2019 ("First Cross-Claim") is dismissed. 5. The Amended Second Cross-Claim filed 1 March 2019 ("Second Cross-Claim") is dismissed. 6. The First and Second Defendants to pay the Cross-Defendants' costs of the First Cross Claim and Second Cross-Claim. 7. The Plaintiffs to pay the Cross-Claimants' costs of the Third Cross-Claim. 8. The Third Cross-Claim is otherwise dismissed. 1. On 19 December 2019, the primary judge granted a stay of execution of the orders made on 18 December, relevantly, in the following terms: 1. Stay the execution of the orders made on 18 December 2019 up to and including 7 February 2020, upon the terms in orders 2 to 8 below. 2. The third defendant [Mr Ryan Kay], shall not, up until 7 February 2020 charge, dispose of, or otherwise deal with his assets, other than in the ordinary course of business or to pay his reasonable legal costs or to pay reasonable living expenses up to a maximum of $3,000.00 per week, or to pay the ATO notice of assessment to Ryan Kay of 17 September 2019 in the amount of $10,198.09. 3. The first defendant and the second defendant [Classic Bet and Best Bet] shall not, up until 7 February 2020, charge, dispose of, or deal with their assets, except in relation to operational expenses up to $5,000.00 per month. 1. His Honour then made further orders for the present applicants to to file and serve affidavit evidence about their assets, liabilities, and willingness to pay the judgment sum. 2. On 3 February 2020, although there was only one proceeding below, two separate notices of appeal were filed in this Court in the Registrar's list: 1. on behalf of the first and second defendants below, Best Bet and Classic Bet, and 2. on behalf of the third defendant below, Mr Ryan Kay. 1. At the same time, two notices of motion were filed in court. The first notice of motion, filed on behalf of Best Bet and Classic Bet, sought the following orders: "Upon the applicants' undertaking to the court: a) not to charge, dispose of, or deal with their assets except in relation to operational expenses up to $5,000 per month; and b) to pay the requisite filing fees; the court orders: 1. The applicants have leave to file in court this notice of motion and a notice of appeal dated 3 February 2020. 2. This notice of motion be made returnable instanter. 3. That enforcement of the orders of the Court made in Supreme Court of NSW Proceedings 2018/00314837 on 18 December 2019 against the applicants be stayed until determination of the appeal. 4. The costs of this notice of motion to be the applicants' costs in the cause in the appeal." 1. The second notice of motion, filed on behalf of Mr Ryan Kay, also sought various orders. It is unnecessary to say any more about that motion as it has been resolved and I will shortly make orders by consent. 2. The hearing of the stay application was stood over to this morning, 6 February 2020, on the application of the respondent which had only just been served with the papers. The stay sought by Classic Bet and Best Bet was opposed. 3. The following evidence was read on behalf of Classic Bet and Best Bet: 1. an affidavit of Daniel Simic sworn 2 February 2020; and 2. an affidavit of Nathan David Franklin affirmed 2 February 2020. 1. In addition, MFI 1, being an affidavit of Nathan David Franklin sworn 5 February 2010, which I was informed was only served last night, was sought to be read. Mr Harding, who appeared for KRM, objected. Having considered the matter, I reject the attempt to rely on an affidavit about an important matter served outside the very clear directions that I had given to solicitors for Classic Bet and Best Bet when the matter was before me in the referrals list on 3 February. 2. Exhibit 1 comprised solicitor's letters from Mr Harding's instructing solicitors. CONSIDERATION 1. The leading authorities in this area are Alexander v Cambridge Credit Corporation (1985) 2 NSWLR 685 and Kalifair Pty Ltd v Digi-Tech Australia Ltd (2002) 55 NSWLR 737; [2002] NSWCA 383. Those authorities provide that the Court must weigh a number of factors when considering a stay application, including: 1. The onus is upon the applicant to demonstrate a proper basis for a stay which will be fair to all parties. 2. The Court has a discretion involving the weighing of considerations such as balance of convenience and the competing rights of parties. 3. Where there is a risk that if a stay is granted, the assets of the applicant will be disposed of, the court may refuse a stay. 4. Where there is a risk that the appeal will prove abortive if the appellant succeeds and a stay is not granted, courts will normally exercise their discretion in favour of granting a stay. 5. The Court will not generally speculate about the appellant's prospect of success, but may make some preliminary assessment about whether the appellant has an arguable case, in order to exclude an appeal lodged without any real prospect of success simply to gain time. 6. As a condition of a stay the Court may require payment of the whole or part of the judgment sum or the provision of security. 1. My necessarily preliminary assessment is that the appellants, in which I include Mr Ryan Kay, have each raised arguable grounds of appeal. 2. As Mr Harding points out, however, if attention is limited to Classic Bet and Best Bet's notice of appeal, even if wholly successful, the appellants will still be obliged to pay the respondent approximately $2.2 million. Mr Pike SC, who appears for Classic Bet and Best Bet today, accepted that if attention is limited to Classic Bet and Best Bet's notice of appeal an amount of approximately that size would be owing to KRM but submits that if Mr Ryan Kay's appeal is successful, in particular in relation to ground 4, much of the judgment debt would necessarily be set aside including against his clients. That proposition is arguable. Mr Pike accepts, however, as I understand it, that even if Mr Kay succeeded and his clients was otherwise successful in their appeal, his clients would still be obliged to pay KRM an amount of approximately $125,000. 3. I have taken into account the evidence led by the appellants that each company is effectively insolvent and are unable to meet any part of the judgment sum against them. Whilst there is a real risk that their appeal will prove abortive if a stay is not granted, I have come to the view that even assuming complete success for Mr Pike's clients (and Mr Kay), Classic Bet and Best Bet will nonetheless still be obliged to pay the respondent $125,000. 4. In attempting to ensure fairness between the parties I propose to grant a stay, but on terms that within 14 days Mr Pike's clients pay $125,000 to the successful respondent. If, as Mr Pike submits, his clients are not in a position to pay that amount, I accept that that will have the likely effect of stultifying his clients' appeal. I also propose to set this matter down for an early final hearing and will make orders to ensure that occurs. 5. I propose to case manage each of these matters, conscious that if within 14 days $125,000 is not paid, at least so far as Mr Pike's clients are concerned, there will no longer be a stay. 6. The following orders are made in each appeal: In case 2020/12237: 1. Stay the execution of the orders of the Court made on 18 December 2019 in proceedings 2018/314837 against the Applicants (Classic Bet (NSW) Pty Ltd and Best Bet (NSW) Pty Ltd) until the determination of the appeal, upon condition that within 14 days the Applicants pay $125,000 to the First Respondent (KRM (Vic) Pty Ltd). 2. The Applicants shall not, up until the determination of the appeal, charge, dispose of, or deal with their assets, except in relation to operational expenses not exceeding $5,000.00 per month. 3. Following 14 days from the date of these orders, the First, Second and Third Respondents in this case, and the Applicants in case number 2020/6311 (Messrs Kay) have leave to make an application for security for costs by notice by email to the Associate of Payne JA. 4. The appeal is listed for hearing on 7 and 8 April 2020 with an estimate of one day plus. 5. Appellants to file and serve submissions, together with the Red, Black and Blue books by 28 February 2020. 6. Respondents to file and serve submissions by 20 March 2020. 7. Appellants to file and serve any reply by 1 April 2020. 8. Orange book to be filed and served by 4pm on 3 April 2020. In case 2020/6311: The following orders are made by consent: 1. Stay the execution of Orders 1 and 2 made on 18 December 2019, insofar as they relate to Ryan Kay, up to and including the determination of the appeal, upon the terms set out in paragraphs 2 and 3 of these orders. 2. Within 14 days of the date of these orders, Ryan Kay will pay into Court the sum of $55,000 by way of security for costs in favour of KRM (Vic) Pty Ltd. 3. Ryan Kay shall not, up until the determination of the appeal, charge, dispose of or otherwise deal with his assets, other than: 1. in the ordinary course of business; or 2. to pay his reasonable legal costs; or 3. to pay his reasonable living expenses up to a maximum of $6,500 per week; or 4. to make payments to the ATO in accordance with the payment instalment schedule contained in Exhibit "RK7" to the affidavit of Ryan Kay sworn 31 January 2020; and 1. No order as to costs of the Notice of Motion filed by Ryan Kay on 3 February 2020 (with the intent and effect that each party shall pay their own costs of that Motion). The Court further orders: 1. Appellants to file and serve submissions, together with the Red, Black and Blue books by 28 February 2020. 2. Respondents to file and serve submissions by 20 March 2020. 3. Appellants to file and serve any reply by 1 April 2020. 4. Orange book to be filed and served by 4pm on 3 April 2020. ********** 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. Decision last updated: 07 February 2020