Federal Court of Australia

Siemens WLL v BIC Contracting LLC (Stay Extension) [2024] FCA 2

ORDERS

THE COURT ORDERS THAT:

1.    The applicants be granted leave to file the interlocutory application dated 4 January 2024 (interlocutory application) in Court.

2.    The interlocutory application be made returnable instanter.

3.    The stay in Order 5 of the Orders dated 22 December 2023 be extended to 5pm on 17 January 2024.

4.    The applicants pay the garnishee’s costs of and incidental to the interlocutory application.

5.    Liberty be granted to any affected party to approach the chambers of the Duty Judge to seek a variation or discharge of these Orders.

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

REASONS FOR JUDGMENT

(delivered ex tempore, revised from the transcript)

LEE J:

A    INTRODUCTION AND BACKGROUND

1    This is an interlocutory application filed by the applicants (together, Siemens) which has been heard in my capacity as Duty Judge. By its application, Siemens relevantly seeks the following orders:

1.     The Applicants have leave to file this interlocutory application in Court.

2.     This interlocutory application be made returnable instanter before the Duty Judge.

3.     The stay in Order 5 made in these proceedings on 22 December 2023 be extended to 5:00pm on Wednesday, 17 January 2024.

2    The circumstances giving rise to this application may be stated in short compass.

3    On 22 December 2023, Stewart J set aside a garnishee order (Garnishee Order), which his Honour had granted earlier on 11 September 2023 following an ex parte application. The Garnishee Order provided, in substance, that LMENA Pty Ltd (Garnishee) pay to Siemens an amount representing debts due and accruing from the Garnishee to the respondent judgment debtor, BIC Contracting LLC (BIC): see Siemens WLL v BIC Contracting LLC (garnishee order) [2023] FCA 1664 (Garnishee Judgment). A relevant feature to note from the outset is that the situs of the debt the subject of the Garnishee Order is the United Kingdom (Garnishee Judgment (at [44])).

4    On the same date (that is, the last business day prior to Christmas last year), his Honour made a further order staying the order setting aside the Garnishee Order until 5pm, 5 January 2024 (that is, today): see Siemens WLL v BIC Contracting LLC (stay) [2023] FCA 1669 (Stay Judgment).

5    As can be seen from prayer 3 of the relief sought today, Siemens seek an extension of the stay until 5pm on 17 January 2024.

B    THE STATE OF PLAY

6    The current position is set out in an affidavit of Mr Timothy Charles Jones, the solicitor for Siemens, which was affirmed on 4 January 2024 and read on the application (Jones Affidavit).

7    I am told that Siemens is “seriously considering” filing an appeal of the Garnishee Judgment, but that any final decision will be informed by (Jones Affidavit (at [16])):

(1)    interrelated advice from counsel in both England and Australia;

(2)    any other enforcement options available to Siemens in respect of the judgment debts against BIC; and

(3)    other commercial considerations, such as any undertaking as to damages.

8    It is apparent that the solicitors for Siemens (Clayton Utz) have, since 22 December 2023, considered both the merits of an appeal of the Garnishee Judgment and the legal significance of the situs of the debt the subject of the Garnishee Order being the United Kingdom.

9    In relation to the latter, I am informed that on the evening of 22 December, Siemens sought to ascertain the availability of London counsel at a set of chambers known as Twenty Essex Chambers (Twenty Essex). Once the availability of counsel was confirmed, on 24 December, a brief was prepared and issued to unnamed counsel from Twenty Essex. Between late December and early January, there have been, apparently, subsequent discussions between counsel located in Australia and London and Clayton Utz. I am told, however, that (Jones Affidavit (at [14])):

It is not expected that definitive advice from Counsel in England and Counsel in Australia will be obtained for at least another week from the time of affirming this affidavit. Siemens will then need to consider the effect of such advice in deciding whether or not to appeal the Judgment.

10    Accordingly, Siemens does not anticipate that it will be able to make any final decision until at least 5pm on 16 January 2024, hence the application before me today.

11    Despite this, Siemens has provided the Court with a proposed draft notice of appeal. Ordinarily, Siemens, by operation of r 35.13 of the Federal Court Rules 2011 (Cth) (FCR) would have 14 days to file an application for leave to appeal (though that time would not run from 24 December to 14 January 2024: FCR 1.61(5)). As a result, the time for Siemens to file an application for leave to appeal expires on 29 January 2024.

12    In short, Siemens contends that it is taking the responsible course of not filing an application for leave to appeal until it has had the benefit of advice as to any alternative enforcement options open to it. It seeks a further indulgence from the Court given that if an application for leave to appeal is pursued, it would be rendered otiose without a further stay of the order setting aside the Garnishee Order until at least 5pm on 17 January 2024. This is because once the Garnishee Order is set aside, there is nothing to stop the Garnishee from paying the attached debts which may, Siemens submits, substantially erode, or destroy the subject matter of any appeal and/or any relief which the Full Court may grant.

13    Before going further, it is necessary to say something about his Honour’s findings in the Stay Judgment relevant to the disposition of the application before the Court today.

14    On 22 December, following the delivery of the Garnishee Judgment, counsel for Siemens, Ms Harris, made an oral application for a stay of the Court’s orders until 29 January 2024. At that time, there was no suggestion made by Ms Harris that it would be necessary to seek advice from counsel located in England. This was notwithstanding that the issue concerning the proper situs of the debt the subject of the Garnishee Order had been notified as early as 8 December in reply submissions filed by Siemens. When Ms Harris made the oral application for a stay on behalf of Siemens, the following submission was made (T2.25-32):

In light of the orders that your Honour has made today, the respondents seek a stay of the court’s orders of today. In short, we seek such a stay to enable the respondents to have time to read and digest your reasons and determine if any appeal will be brought. Such a stay is necessary in order to preserve the subject matter of the proceedings. As soon as the garnishee order is set aside, even today possibly, LMENA could be able to pay the debt the subject of the garnishee order, with the consequence that the subject matter of the litigation would be destroyed. Any potential appeal would be futile in those circumstances.

15    Although Stewart J rejected this application, his Honour was persuaded that it was appropriate to grant a stay for a shorter period in order to allow Siemens to consider its position: Stay Judgment (at [10]). In doing so, his Honour made the following important observations.

16    First, the essential considerations in ordering a stay are any loss or prejudice to the party applying for the stay if it is not granted; any loss or prejudice to the Garnishee (or other parties if it is granted); and any balance of convenience (at [2]).

17    Secondly, there is a debt of US$1 million which is presently payable by the Garnishee to the judgment debtor, BIC, which may be paid imminently and thereby lost to Siemens in the sense of no longer possibly being subject to any garnishee order of this Court (at [3]).

18    Thirdly, and critically, there is evidence that the delay in payment of the debt the subject of the Garnishee Order (at [6]):

… may be creating, at the very least, difficulties, not only for BICC, which is not my concern, but also for other parties. In particular, those difficulties may cause harm to the garnishee and its holding company, CIMIC, as well as to SALD. The garnishee has been prevented by the garnishee order from properly paying its debt to BICC for some three months. Some of that time was granted as an indulgence to the applicants for them to complete their evidence. There is a limit to how much longer the garnishee should be subject to a garnishee order that I have found is beyond the Court’s reach and is, in any event, inappropriate.

(Emphasis added).

19    His Honour went on to note (at [7]) that if the stay is granted, the Garnishee, CIMIC and SALD may suffer further commercial harm.

20    It was against these findings as to commercial harm that his Honour was required to balance the assessment concerning Siemens’ desire to be afforded more time to consider its position. Having rejected a lengthy stay, his Honour took into account (at [8]–[9]) (with respect, entirely appropriately) the fact that Christmas was fast approaching and the likely inconvenience to the practitioners involved. After balancing those considerations, his Honour fixed the stay period until 5pm today, 5 January 2024.

21    After raising these matters with counsel today, I adjourned for a short period in order to allow counsel for Siemens, Mr Ball, to obtain instructions as to whether or not Siemens was prepared to offer the usual undertaking as to damages as the price for a further extension of the stay. I am told that no such undertaking will be proffered. It should be noted that the stay ordered by his Honour was made on the basis that no undertaking as to damages was given by Siemens, notwithstanding that it had been sought in the course of oral argument by Mr Harris, counsel then appearing on behalf the Garnishee, following delivery of the Garnishee Judgment.

C    THE RELEVANT PRINCIPLES

22    With respect, his Honour captured in the Stay Judgment the real issues concerning the broad nature of the discretion that the Court is called upon to exercise and the essential considerations relevant to that task, summarised above (at [16]–[19]). It is worth noting that there has been no suggestion made by the Garnishee that the proposed draft notice of appeal does not give rise to an arguable appeal, and oral argument today has proceeded on that basis.

23    As I noted earlier, this is, in effect, an application for a further indulgence from the Court. Justice Stewart made it plain in the Stay Judgment (at [10]) that if any extension of the stay was sought, he would have expected that an application for leave to appeal would have been filed by Siemens prior to 5pm today (by which time any application for a further stay would have been determined through the usual course of considering a stay pending the institution of an appeal). This is not such an application: it is a bespoke application by which Siemens seeks more time to consider its position.

24    Having said that, some of the considerations relevant to the Court’s discretion of whether or not to order a stay pending the institution of an appeal, as helpfully summarised by Jagot J in Sigma Pharmaceuticals (Australia) Pty Ltd v Wyeth (No 2) [2010] FCA 1212; (2010) 88 IPR 633 (at 638 [15]), are apposite and set out below:

The principles apparent from the decisions on which the parties relied may be summarised as follows:

(1)     “A successful party is presumed to be entitled to the benefits of the judgment obtained”: Advanced Building Systems v Ramset Fasteners (Aust) Pty Ltd (1997) 145 ALR 121 at 122; 38 IPR 289 at 290 (Advanced Building Systems).

(2)     An “applicant for a stay has the burden of persuading the court that it should be granted” (Advanced Building Systems at ALR 122; IPR 290) but it is not necessary to show special or exceptional circumstances: Henderson v Amadio Pty Ltd (1996) 65 FCR 66 at 69; 136 ALR 593 at 595 (Henderson) applying Alexander v Cambridge Credit Corp Ltd (1985) 2 NSWLR 685; 10 ACLR 42.

(3)     “The court, in the exercise of its discretion, will not hesitate to stay proceedings when it is necessary to preserve the subject matter or integrity of the litigation. Nor will the court hesitate to grant a stay where the refusal of a stay could create practical difficulties in terms of the relief which [the] court could grant”: Advanced Building Systems at ALR 122; IPR 290.

(4)     It is relevant to consider whether “there is a real risk that it will not be possible for a successful appellant to be restored substantially to his former position if the judgment against him is executed”: Federal Cmr of Taxation v Myer Emporium Ltd (No 1) (1986) 160 CLR 220 at 223; 64 ALR 325 at 327.

(5)     Another relevant consideration is whether the proposed appeal is genuine and based on reasonable grounds: Henderson at FCR 69; ALR 595.

(6)     Relevant also is the willingness or not of a party to give an undertaking as to damages. Hence, in Red Bull Australia Pty Ltd v Sydneywide Distributors Pty Ltd [2001] FCA 1750 at [10] (Red Bull) Red Bull’s refusal to give such an undertaking, thereby exposing Sydneywide to irrecoverable loss if Sydneywide succeeded in its appeal, was described as “a factor which is clearly relevant to the exercise of the discretion to grant a stay”, however it proved insufficient to displace the presumption that Red Bull was entitled to the benefit of its judgment: at [20].

D    CONSIDERATION

25    This seems to me to be very finely-balanced application. During the course of oral argument today, I raised two principal concerns in granting an extension of the stay period.

26    First, there is an element of chutzpah attending this application. About a fortnight ago, a contested argument took place before a Judge of the Court who clearly considered all of the relevant factors and determined that the stay should expire at 5pm today. What appears to have happened is that someone acting for Siemens has had an epiphany (almost coinciding with the feast itself) that it is now necessary to obtain the advice of English counsel. Notwithstanding that the Court made it plain that there would be an extension only until today, as I noted earlier, it appears that counsel for Siemens will not be in a position to form a view about the institution of any appeal until 16 January.

27    I am cognisant of the fact that this is a holiday period, but there are, no doubt, countless members of the London Bar who would have been available to give urgent advice on what enforcement steps may be taken in England in respect of the debt the subject of the Garnishee Order. I have not received any (let alone an adequate) explanation as to why those acting for Siemens considered it was appropriate to engage counsel in England and Australia who were evidently not in a position to provide advice within the time set by an Order of this Court.

28    Secondly, there is the issue of Siemens’ refusal to provide an undertaking as to damages. Some suggestion was made by counsel for Siemens, Mr Ball, that it was contrary to authority to require an undertaking as to damages in the present circumstances (see, for example, In-N-Out Burgers, Inc v Hashtag Burgers Pty Ltd (No 2) [2020] FCA 772 (at [67] per Katzmann J); Red Bull Australia Pty Limited v Sydneywide Distributors Pty Limited t/as Sydneywide Bottlers Australia [2001] FCA 1750 (at [9]–[10] per Hely J)).

29    I reject that notion. Every application of this kind necessitates a balancing of interests. The reality is that I am faced with findings made by a Judge of the Court, set out above (at [18]–[19]), that the imposition of a stay creates a real risk of commercial damage to parties other than BIC. One would usually expect in such circumstances that the price for seeking a further indulgence from the Court caused by the delay of the applicant would be to protect the position of third parties who may be adversely affected.

30    I have had regard to the other matters raised helpfully in the submissions made by Mr Ball and counsel for the Garnishee, Mr Letcher, and, given the nature of this application, I do not think it is necessary to set them out here. The two factors I have identified above are the key considerations militating against the relief sought by Siemens today.

31    Balanced against those factors, however, are three countervailing considerations.

32    First, Mr Jones has deposed that Siemens has not had an adequate opportunity to consider properly the merits of an appeal, notwithstanding that Stewart J regarded 5 January 2024 as the appropriate date upon which the stay should expire. Secondly, I am conscious that there is no direct evidence that there is any certainty or high degree of risk there would be any actual commercial harm (or real likelihood of immediate harm) consequent upon the continued existence of the Garnishee Order. The findings of his Honour are based on the issue of the risk of harm, and no evidence has been adduced before me as to any immediate harm. Thirdly, there is some force in Siemens’ submission that a lifting of the stay at this juncture would create a real risk of substantially eroding or destroying the subject matter of any appeal.

E    THE WAY FORWARD

33    On balance, the appropriate course in all the circumstances is to adopt a middle course.

34    I am prepared to grant Siemens a further stay until 5pm on 17 January 2024, subject to two conditions: first, that Siemens pay the Garnishee’s costs of and incidental to the interlocutory application; and secondly, that any affected party be granted liberty to apply urgently to the Duty Judge to seek a variation or discharge of the orders in the event that upon cogent evidence, a theoretical risk of commercial harm has transformed into a real or immediate risk.

35    If it had been thought by those acting for Siemens that the period of time fixed by Stewart J was inadequate for the purposes of Siemens considering the merits of any appeal and any enforcement options available to it in England, the issues raised today should have been the subject of detailed submissions before his Honour on 22 December. If that had occurred, and his Honour had been apprised of the fact that it was necessary to obtain advice from English counsel, it may be that his Honour would have granted a longer stay period.

36    It goes without saying that it should be made perfectly plain to counsel in England that their convenience in providing advice is not a matter that the Court would regard as relevant or appropriate in circumstances where one deadline set by a Judge of this Court has, apparently, been regarded with such insouciance. Notwithstanding that I have determined to grant a further extension subject to the conditions I have outlined above, Siemens should not expect that any further indulgence would be granted by the Court (a fortiori without proffering the usual undertaking as to damages).

F    ORDERS

37    Accordingly, I will make orders facilitating the course I have outlined. I am grateful for the helpful submissions of counsel today, which made it possible to deliver these reasons immediately.

Associate:

Dated:    9 January 2024