FEDERAL COURT OF AUSTRALIA

Welcome Real-Time SA v Catuity Inc (No 2) [2002] FCA 258

PRACTICE AND PROCEDURE – stay of costs order pending appeal

Federal Court Rules  O 42 r 17(1)

WELCOME REAL-TIME SA v CATUITY INC (No 2)

V 526 of 2000

HEEREY J

27 FEBRUARY 2002

MELBOURNE

THE COURT ORDERS THAT:

1.         The order for costs made on 24 July 2001 be stayed for 14 days.

2.         Liberty to apply is reserved.

3.         Before being released to the public, the transcript of today’s proceeding be made available to the applicant’s solicitors in order to protect any confidential information.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

1                     The respondent seeks a stay under O 52 r 17(1) of an order for costs which I made on 24 July 2001.  I should mention at the outset that a question then arose as to whether the costs should be ordered to be paid forthwith pursuant to O 62 r 3(3), it being accepted that, strictly speaking, the proceedings were interlocutory.  In my reasons given at the time I held that an order for payment forthwith should be made because the hearing concerned substantive rights and was not the sort of interlocutory proceeding contemplated by O 62 r 3(3). 

2                     Since that order was made there have been discussions between the parties concerning payment of costs.  On 4 January 2002 the applicant’s costs were provisionally taxed at $648,894.  The respondents had earlier made some proposals for arrangements whereby payment of costs would be postponed pending the hearing of their application for leave to appeal but those were rejected by the applicant.  The respondents' application for leave to appeal was heard by a Full Court of this court on 25 and 26 February 2002 and judgment has been reserved.

3                     The respondents say that there should be a stay on the payment of the costs because if their appeal succeeds they would be entitled to recover those costs back and there are grounds for thinking that there is some uncertainty as to whether they would be successful in such recovery. 

4                     At the outset, senior counsel for the applicant argued that a stay was not apt because in the light of the debate that took place at the time of my judgment the question of a stay was in substance decided by my ruling on the O 62 r 3(3) issue and what the respondents were really seeking to do was to vary or set aside that order pursuant to O 35 r 7(1).

5                     I do not accept this argument.  It seems to me that the order made on 27 July last year was an order of the Court like any other order and is susceptible to the exercise of the jurisdiction to grant a stay under O 42 r 17(1) if the Court considers the circumstances are appropriate. 

6                     I am influenced in considering this matter by the consideration that the final position between the parties will be resolved as soon as the Full Court has given judgment.  Of course, that cannot be predicted with certainty, but we are not talking here about a substantial period of time in which the applicant would be held out of its entitlement to have its costs of the trial paid should it be successful in the appeal.

7                     There is also the consideration that the proposal of the respondents is that the sum be paid within 14 days into an interest-bearing account, the interest on which is to accrue to the applicant in any event.  So there is no question of the applicant either not recovering the money in the event of its being successful in the appeal or of being deprived of compensation for being held out of its money in the meantime. 

8                     The circumstances relied on by the respondents as warranting a stay really amount to two factors: first, financial uncertainty as to the applicant being able to repay the costs should the respondents succeed in the appeal and, secondly, uncertainty as to the enforcement of any  order in France where the applicant is located. 

9                     The evidence as to the applicant's financial position shows on its face it is a firm of some substance.  Its net assets as at 31 December 2000 were the equivalent of approximately $A [confidential] and cash was approximately $A [confidential].  Unaudited accounts as at 30 June 2001 show an improvement in that position, assets increasing to approximately $A [confidential] and  cash to $A [confidential].  On the other hand, as senior counsel for the respondents points out, there are some unusual aspects in the applicant's balance sheets.  I will not mention the figures, since the exhibit is confidential, but the aspects counsel referred to were the substantial part of current assets constituted by investments in affiliated parties and, on the liability side, the figure of borrowings from shareholders.  In fairness to the applicant, I do not wish to be taken as casting any doubts on its solvency on the material available, but suffice to say that there is some force I think in the submissions that senior counsel makes as to the uncertainty of the position.

10                  The second ground relates to the enforcement of any judgment in France.  I was informed that there is no relevant treaty between Australia and France and an Australian judgment would be dealt with like any other foreign judgment.  The applicant tendered an e-mail dated 25 February 2002 from a French lawyer, which speaks of the French procedure as follows:

“Under the French law (article 2123 of the Civil Code and article 509 of the Nouveau Code de Procédure Civile), before enforcing a foreign judgment you need that a French Court,  (Tribunal de Grande Instance), declares the enforcement of the judgment: this procedure is named ‘L'instance en exequatur’.  An Australian company, which wants to enforce an Australian judgment in France against a French company, needs to obtain a decision of exequatur from a Tribunal de Grande Instance.

 The judge must check that the foreign judgment does not have irregularities, that the foreign judgment states the reasons on which it is based (the judge does not review the issues of fact), that the conditions for obtaining the judgment do not clash the principles of the public order (essentially the breach of the rights of defence).  If the conditions are satisfied, the exequatur will be granted.”

11                  The opinion of the French lawyer does not extend any further into the detail of the present case.  Of course the Australian judgment which would be relevant is not in existence, because it is a hypothetical judgment in the event of the Full Court allowing the appeal.  Nevertheless, there is an element of uncertainty in the procedure of which the French lawyer speaks, involving some value judgments and it is clear that registration of an Australian judgment and subsequent enforcement in France is something more than a routine clerical exercise.  Moreover, there is nothing said as to questions of delay and practicalities of execution.

12                  Although I think the considerations are finely balanced, I think in the light of the practical security that is provided to the applicant and the probable extent of the duration of the stay sought, it is reasonable that I should grant the stay sought.

Associate:

Dated:              14 March 2002