Federal Court of Australia

WSP Structures Pty Ltd v Liberty Mutual Insurance Company t/as Liberty Specialty Markets (Stay Application) [2023] FCA 1617

ORDERS

THE COURT ORDERS THAT:

1.    Unless and until a written undertaking by WSP Australia Pty Ltd under the seal of the company to repay any amounts that have been paid to or at the direction of the applicant pursuant to the orders made on 9 November 2023 has been filed and served, orders 6 to 13 made on 9 November 2023 be stayed until the hearing and determination of the appeal as to those orders or until further order.

2.    There be liberty for any party to apply on 3 days notice.

3.    Costs of the interlocutory application dated 28 November 2023 be costs in the appeal.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

COLVIN J:

1    WSP Structures Pty Ltd is a wholly owned subsidiary of WSP Australia Pty Ltd. As part of the settlement of claims made against it, WSP Structures agreed to pay an amount to Icon Co (NSW) Pty Ltd. The amount was paid to Icon by WSP Australia. WSP Structures sought indemnity from Chubb Insurance Australia Limited (Chubb) and Tokio Marine & Nichido Fire Insurance Co Ltd (Tokio Marine) for the liability it incurred to make the payment (which liability had been met by WSP Australia). The claim by WSP Structures to indemnity was upheld: WSP Structures Pty Ltd v Liberty Mutual Insurance Company t/as Liberty Special Markets [2023] FCA 1157. It was upheld on the basis, amongst other things, of a submission by WSP Structures that it would account to WSP Australia for any amount received by way of indemnity: at [143]. Based upon the determined liability to indemnify WSP Structures, Chubb and Tokio Marine were ordered to pay amounts to WSP Australia (Ordered Amounts).

2    As had been indicated in its submissions during the substantive hearing, WSP Structures has now formally requested Chubb and Tokio Marine to make payment of the Ordered Amounts to WSP Australia. Chubb and Tokio Marine have not made payment. Instead, they have sought a stay of the orders requiring payment pending the determination of an appeal against the determination that they are liable to indemnify WSP Structures.

3    WSP Australia has proffered an undertaking to Chubb and Tokio Marine that, if the appeal succeeds, it will repay the amounts paid to it and WSP Structures has sought payment of the Ordered Amounts on the basis of the undertaking.

4    On the hearing of the interlocutory application for a stay, I determined that a stay should be ordered but only until WSP Australia had filed and served a formal written undertaking under the seal of the company to repay the amounts and interest if the appeal by Chubb and Tokio Marine was successful. These are my reasons for those orders.

Relevant principles

5    The principles to be applied in considering whether to grant a stay pending an appeal were summarised by Katzmann J in In-N-Out Burgers, Inc v Hashtag Burgers Pty Ltd (No 2) [2020] FCA 772 at [25] where her Honour said:

The Court has a broad discretion and special circumstances are not required. But the judgment is not to be treated as provisional. The successful party is entitled to its benefit and the presumption that it is correct. Consequently, the applicant for a stay carries the burden of demonstrating that a stay is appropriate. A stay should not be granted unless the appeal is at least arguable, although speculation as to its prospects of success is usually inappropriate. Without more, however, an arguable case is not sufficient justification for a stay. In the exercise of the discretion, the court will weigh up such factors as the balance of convenience and the competing rights of the parties, including, in particular, any prejudice to the parties that would be caused by granting or refusing a stay. A substantial factor in favour of a stay is the risk that, without a stay, the appeal would be rendered nugatory.

6    The general principles were distilled in Eastland Technology Australia Pty Ltd v Whisson [2003] WASCA 307; (2003) 28 WAR 308 at [9] (Murray and Parker JJ) where they were expressed in the following terms:

•    The successful litigant at first instance will ordinarily be entitled to enforce the judgment pending the determination of any appeal.

•    It is for the applicant for a stay to move the court to a favourable exercise of its discretion.

•    It will not do so unless special circumstances are shown justifying the departure from the ordinary rule.

•    The central issue will be whether the grant of a stay is perceived to be necessary to preserve the subject matter or the integrity of the litigation, or where refusal of a stay could create practical difficulties in respect of the relief which may be granted on appeal. It is often put shortly that it will first and foremost be necessary to establish that without the grant of a stay, the right of appeal, whether upon the grant of leave or special leave or not, will be rendered nugatory.

•    If that can be demonstrated, the stay will generally still be refused unless it can be established that the appeal process, whether upon the grant of leave or special leave or not, has ultimately reasonable prospects of success so as to result in the grant of relief to the appellant.

•    If that hurdle can be overcome, the stay may still be refused where it appears that the balance of convenience does not lie in favour of the applicant; where, for example, the grant of a stay will occasion hardship to the respondent which may not be alleviated by the terms upon which the stay may be granted.

7    As can be seen from the above distillation, according to the usual principles applied where a party seeks a stay pending the outcome of an appeal, the balance of convenience is a matter to be considered after a number of other hurdles have been overcome by the applicant for a stay.

Application of principles in the present case

8    WSP Structures is to be viewed as being ordinarily entitled to enforce the determination that it is entitled to indemnity even though an appeal has been filed. The fact that it seeks to direct the Ordered Amounts to WSP Australia does not detract from that position.

9    Chubb and Tokio Marine demonstrated that there is sufficient merit in their grounds of appeal to support a stay. They also demonstrated that WSP Structures is a company with minimal financial resources and that WSP Structures has directed that the payments pursuant to the orders be made to WSP Australia, its parent.

10    In support of the stay application, Chubb and Tokio Marine accepted that it bore the burden of persuading the Court that the order should be made and submitted that the balance of convenience favoured the grant of a stay for the following reasons:

(1)    there is no inconvenience to WSP Structures because it will not be out of pocket in circumstances where WSP Australia is the party who made the relevant payment required by the terms of settlement;

(2)    the only party who may be inconvenienced is WSP Australia and it will be protected by the fact that interest at the rates provided for in the Insurance Contracts Act 1984 (Cth) will apply if the appeal is unsuccessful and Ordered Amounts are then paid; and

(3)    there is a risk to Chubb and Tokio Marine associated with enforcement of an undertaking that it does not wish to assume.

11    As to these matters, I was not persuaded that it was appropriate to approach the matter on the basis that it required an assessment as to where the balance of convenience may lie, unless special circumstances had been demonstrated. That is to say, in the present context, the balance of convenience was only to be considered after it had been shown by those seeking the stay that despite the ordinary entitlement to enforce a judgment pending the appeal there was some concern that the appeal right would be rendered nugatory. As the appeal concerned liability to make payment of the Ordered Amounts, the question was whether there was any real concern that the amounts may not be repaid in the event that the appeal was successful (noting that special circumstances are not limited to that situation, see Federal Commissioner of Taxation v Myer Emporium Ltd (1986) 160 CLR 220 and different issues may arise where matters of public interest are at stake).

12    As to the risk of repayment, WSP Australia had made an open offer to Chubb and Tokio Marine to the effect that it is willing to undertake to the Court that if their appeal succeeds it will repay any amounts paid by Chubb and Tokio Marine pursuant to the Court's orders. By unchallenged evidence on the stay application, it was established that WSP Australia is a substantial commercial enterprise with thousands of employees, net assets that far exceed the amounts involved and an annual turnover in 2022 of more than $1 billion. It is also the party who paid the amount for which indemnity is sought. That is to say, it has already met that liability from its own funds. In those circumstances, provided the undertaking that has been proffered is forthcoming, I was not persuaded that there was any real concern that WSP Australia would not repay the amounts if the appeal was successful.

13    Further, the fact that the stay would deprive a third party (albeit a party related to WSP Structures) from being able to receive the benefit of the payment of the Ordered Amounts was a matter that also counted against the grant of stay.

14    For those reasons, I made orders for a stay only until an undertaking to the Court under the corporate seal of WSP Australia has been filed and served. The undertaking was required to be as to repayment of the relevant amounts with interest. I reserved liberty to any party to apply should any issue arise as to the terms of the undertaking.

15    On the basis that the application for a stay related to the appeal, I ordered that the costs of the application for a stay should be costs in the appeal.

Associate:

Dated:    15 December 2023