FEDERAL COURT OF AUSTRALIA

Steggles Limited v Yarrabee Chicken Company Pty Ltd (No 2) [2011] FCA 1097

THE COURT ORDERS THAT:

1.    The interlocutory application filed on 13 September 2011 be dismissed with costs.

Note:    Settlement and entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. The text of entered orders can be located using Federal Law Search on the Court’s website.

REASONS FOR JUDGMENT

1    The appellant, Steggles Limited (Steggles), seeks a stay of certain orders, pending the outcome of the present appeal.

2    On 25 August 2011 I granted leave to Steggles to appeal from judgments given by the primary judge on 30 August 2010, and on 14 July 2011 (the second judgment). In my reasons for granting leave, I gave a brief account of the nature of the claims, relevant to the appeal, that had been brought against Steggles: Steggles Limited v Yarrabee Chicken Company Pty Ltd [2011] FCA 984 at [2]-[10].

3    It is not necessary for me to repeat that summary other than to note that the primary proceeding was a representative proceeding under Part IVA of the Federal Court of Australia Act 1976 (Cth) brought by the respondent, Yarrabee Chicken Company Pty Ltd (Yarrabee), as the representative of certain tunnel growers of broiler chickens in the Hunter Valley who successfully advanced certain claims against Steggles for breach of contract.

4    In the second judgment the primary judge made orders that Steggles pay damages for breach of contract in the sum of $1,123,990.47 (inclusive of interest and GST). The primary judge ordered that that sum be distributed amongst the growers in certain identified amounts.

5    On 22 August 2011 the primary judge made costs orders against Steggles, including an order that Steggles pay Yarrabee’s costs of the primary proceeding (subject to a limited exception) as agreed or taxed. The primary judge also ordered that those costs be paid forthwith: Yarrabee Chicken Company Pty Ltd v Steggles Limited (No 3) [2011] FCA 993 (the third judgment).

6    By its interlocutory application filed on 13 September 2011, Steggles seeks a stay of the orders made under the second judgment for the payment of damages and the orders made under the third judgment for the payment of costs. Yarrabee opposes the application.

Relevant principles

7    Rule 36.08 of the Federal Court Rules 2011 provides as follows:

(1)    An appeal does not:

(a)    operate as a stay of execution or a stay of any proceedings under the judgment subject to the appeal; or

   (b)     invalidate any proceedings already taken.

(2)    However, an appellant or interested person may apply to the Court for an order to stay the execution of the proceeding until the appeal is heard and determined.

(3)    An application may be made under subrule (2) even though the court from which the appeal is brought has previously refused an application of a similar kind.

8    The approach to be taken in such an application was discussed by Heerey J in Henderson v Amadio Pty Ltd (No 3) (1996) 65 FCR 66. In that case his Honour referred, with approval, to the observations of the New South Wales Court of Appeal in Alexander v Cambridge Credit Corporation Ltd (Receivers Appointed) (1985) 2 NSWLR 685 at 694 to the effect that it is not necessary for the grant of a stay that “special” or “exceptional” circumstances be made out; it is only necessary for the applicant for the stay to demonstrate a reason or an appropriate case to warrant a favourable exercise of the discretion.

9    After observing that a party seeking a stay needs to show some reason why a stay should be granted, his Honour said (at 69):

…where the judgment sought to be stayed is for payment of a money sum and costs, as is the case here, the appellant will often be concerned with the prospect that without a stay the proceeds of the judgment may be dissipated or seized by other creditors or for some other reason be impossible or very difficult to recover. In such a case the appellant has to show there would be no reasonable probability of getting back moneys paid under the judgment if the appeal succeeds: see Andrews v John Fairfax & Sons Ltd [1979] 2 NSWLR 184 at 189 citing Bridges v Australian Consolidated Press Ltd (unreported, NSW Court of Appeal, 16 June 1970). However this could hardly be considered a special, exceptional, rare or unusual situation. It is an everyday occurrence for appeals to be brought against judgments in favour of parties who have little in the way of assets, especially in personal injury litigation…

10    While his Honour’s observations were made in the context of an earlier version of the Rules of this Court, there is no reason to think that those observations are not apposite when considering the application of the present Rule 36.08.

Aspects of the evidence

11    It is necessary for me to record some matters arising from the affidavit evidence that was read on the hearing of the present application.

12    The first matter to which reference should be made is the nature and extent of the evidence touching upon the financial circumstances of the growers to whom damages and costs are payable under the second and third judgments.

13    There are 30 such growers. Nine of the growers are proprietary companies. All of the corporate growers are companies registered in New South Wales. With one possible exception, all have nominal paid-up share capital, although the amount of that paid-up capital varies in each case.

14    Steggles’ solicitors conducted an online property search with Land and Property Information – NSW on 16 September 2011 to ascertain whether any of the corporate growers owned real property in New South Wales. Save for two such growers, the results of that search revealed that the other corporate growers did not own real property in New South Wales. That being said, the search results were qualified by a disclaimer that the information provided was a “searching aid only”, and that the Registrar General “does not guarantee that the information provided discloses details of all land owned/leased by the parties searched against”.

15    There is no other evidence directed to the present financial circumstances or capacities of the corporate growers that has been brought to my attention.

16    There is no evidence at all in relation to the present financial circumstances or capacities of the other 21 growers.

17    All of the growers have had and, as I understand it, continue to have, substantial commercial relationships with Steggles for the growing of broiler chickens. Steggles did not advance any evidence as part of its application that those relationships were, or had been, attended by the unsatisfactory financial performance of any grower, or an inability on the part of any grower to comply with his, her or its financial obligations.

18    The evidence shows that each of the growers received average gross batch payments from Steggles (for each of the years 2009 and 2010) for amounts that I would describe as significant and, in each case, substantially more than the damages to which the grower is entitled under the second judgment.

19    The second matter to which reference should be made is that the legal costs incurred by Yarrabee to date, on a solicitor and client basis, are approximately $1,200,000. The growers are liable to indemnify Yarrabee for those costs.

20    Yarrabee’s solicitor, Mr Anicich, estimates that, of that amount, the sum of $180,000 relates to that part of the growers’ successful claims that are the subject of the present appeal.

21    Steggles’ application that there be a stay of the costs to be paid under the third judgment relates to the full amount of those costs, not just a component part that can be identified as being referable to the claims the subject of the appeal.

Steggles’ submissions

22    Steggles submits that its application for a stay should be granted for the following reasons.

23    First, it has some concern about “getting its money back” from the growers, in the event that its appeal is successful. Steggles did not put its case any higher than the bare expression of that concern.

24    Secondly, part of its concern arises from the fact that, if the appeal is successful, it does not consider that it will have a right of set off against future sums payable by it to the growers, as a means of recovering damages that have been paid. It submits that, if, as a self-help remedy, it attempted to set off such sums, it would be in breach of its contracts with the growers.

25    Thirdly, although Steggles acknowledges that, if its appeal is successful, it could seek orders against the growers for restitutionary relief in respect of damages paid, it might nevertheless be put to the trouble and expense, including possibly irrecoverable expense, of commencing multiple, and in some cases relatively small, recovery claims against the growers.

26    Fourthly, if its appeal is unsuccessful, the assessment of the costs that have been ordered to be paid under the third judgment will be a relatively simple and straightforward matter. However, if its appeal is successful, the assessment of costs will not be as straightforward because of the likelihood that the parties would claim competing entitlements to costs representing, ultimately, the measure of their relative success. I note that, in its notice of appeal, Steggles seeks an order that Yarrabee pay Steggles’ costs at first instance in respect of what it has identified as “the clause 7.4 claim”.

27    Fifthly, the appeal has been placed in next month’s appeals callover list. Steggles expects that its appeal will be heard and determined some time in the early part of next year. It submits, therefore, that the growers will not be unduly prejudiced by the delay that would be occasioned by the granting of a stay, in the event that its appeal is unsuccessful.

Consideration

28    In my view Steggles has not established an appropriate basis for the stay that it seeks.

29    First, it has not shown that there would be no reasonable probability of getting back moneys paid under the second and third judgments, if its appeal succeeds. I would expect that, if there is any known and present appreciable risk in that regard, it is likely that it would have manifested itself in Steggles’ past and present commercial dealings with the growers. The fact that no evidence of any such risk is forthcoming from Steggles suggests that its concern is one based only on an unknown and unknowable future. That does not stand, however, as a sufficient reason to stay the entitlement of a successful party to the benefit of a money judgment awarded in its favour after a hearing of the merits of its claim.

30    Secondly, Steggles’ concern is based on the premise that one or more of the persons with whom it has, and has had, a mutually beneficial commercial relationship will act in a way that would jeopardise that relationship by requiring Steggles to institute recovery proceedings in order to seek the repayment of moneys that, ultimately, a Full Court might determine should not have been paid. Whilst in the case of any one grower that possibility cannot be excluded, there is no evidence to suggest that it is likely that any grower would so act or that the growers, as a body, would so act. The main plank of Steggles’ application is that, without a stay, and if successful on its appeal, it faces the risk of commencing multiple, and possibly uneconomic, proceedings for recovery against the growers. Whilst that consideration is a matter to be weighed in the balance, on the material before me, Steggles’ concern seems to be more theoretical than real.

31    Thirdly, the possibility that a successful appeal might result in an altered costs order does not stand as a reason for granting a stay of the costs orders that have already been made. The fact is that, after full argument, and due consideration reflected in published reasons, the primary judge has determined the question of costs. There is no sound reason why, on the present stay application, the orders for costs should stand apart and be treated differently from the judgment that has been obtained for the payment of damages.

32    If, on appeal, Steggles obtains a different order for costs, with the consequence that there then needs to be some re-apportionment of costs, or some additional assessment of costs, or some resulting repayment of costs, then so be it. I do not see how that will render futile the assessment that needs to be made at the present time, particularly when the greater part of the monetary amount of the costs that have been awarded has nothing to do with the subject of the present appeal or its outcome.

33    If, on some basis, the assessment of costs proceeds in advance of the hearing and determination of the appeal, the parties, with prudent foresight, can identify those items claimed by Yarrabee that would be disallowed if Steggles, on appeal, obtains the costs order that it seeks (namely, costs in respect of “the clause 7.4 claim”). There is nothing before me to suggest that the identification of those costs would be burdensome or add significantly to the task of assessment, such as to warrant a different course to be taken.

34    Finally, I do not think that much can be made of the fact that the appeal has been listed in the next appeals callover list. The hearing of the appeal has not been expedited. No doubt it will be listed for hearing, and heard and determined, with all due expedition. This does not mean, however, that a stay should be granted in the meantime.

Disposition

35    Steggles’ interlocutory application filed on 13 September 2011 should be dismissed with costs.

Associate:

Dated:    23 September 2011