Federal Court of Australia

Brady v NULIS Nominees (Australia) Limited in its capacity as trustee of the MLC Super Fund (Stay Application) [2025] FCA 588

ORDERS

THE COURT ORDERS THAT:

1.    The applicant’s interlocutory application filed on 28 March 2025 is dismissed.

2.    The applicant is to pay the respondent’s costs of the interlocutory application.

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

REASONS FOR JUDGMENT

MARKOVIC J:

1    On 12 February 2025 I made orders in this proceeding, including an order that the proceeding be dismissed.

2    On 26 February 2025 I made the following orders (February Orders) in relation to the costs of the proceeding:

1.    The applicant is to pay the respondent’s costs of the proceeding on a party and party basis.

2.    Subject to Order 4 below:

(a)    each party is to pays its own costs of the respondent’s application for indemnity costs after 11 August 2023 and the applicant’s application for a stay; and

(b)    the applicant is to pay the respondent’s costs of and incidental to the hearing of the issues arising in relation to the common questions on a party and party basis.

3.    Pursuant to r 40.02 of the Federal Court Rules 2011 (Cth), the respondent’s costs the subject of Orders 1 and 2(b) above are to be assessed on a lump sum basis, with such assessment to be undertaken by a Registrar of the Court.

4.    If any party wishes to apply to vary all or part of Order 2 above, they are to notify the Associate to Markovic J in writing of their intention to do so, including by setting out the grounds for their application, by 5.00 pm on 5 March 2025.

3    The applicant, Mervyn Lawrence Brady, has filed a notice of appeal and an amended notice of appeal from the orders made in the proceeding including the February Orders. The respondent, NULIS Nominees (Australia) Limited in its capacity as the trustee of the MLC Super Fund, had filed a notice of contention in the appeal proceeding.

4    By interlocutory application filed on 28 March 2025 Mr Brady seeks a stay of Orders 1, 2(b) and 3 of the February Orders. I will refer to those orders as the Costs Orders in these reasons. NULIS opposes that application.

5    Mr Brady and NULIS relied on affidavits made by their respective solicitors and tendered some additional documents.

Statutory framework and legal principles

6    It is convenient to set out a summary of the principles which guide the exercise of the Court’s discretion to grant a stay.

7    The Court’s power to grant a stay is found in s 29 of the Federal Court of Australia Act 1976 (Cth) which relevantly provides that where an appeal to the Court from another court has been instituted the Court or judge of that other court may order, on such conditions (if any) as it or he or she thinks fit, a stay of all or any proceedings under the judgment appealed from.

8    Rule 36.08 of the Federal Court Rules 2011 (Cth) relevantly provides that:

(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.

9    In Quach v MLC Limited [2022] FCAFC 202 a Full Court of this Court (Collier, Perry and Thomas JJ) considered the appellant’s application for a stay of costs orders made by the primary judge pending the outcome of his appeal. The Full Court summarised the principles that apply to the exercise of the discretion to grant a stay by reference to the decision in National Retail Association v Fair Work Commission (No 2) [2014] FCA 664 at [11] noting, among others, the following observations made by that Court at [81]:

•    Further, the discretion of the Court in granting a stay ought not be exercised lightly, and only in circumstances where there would be so adverse and serious a consequence that interlocutory intervention should take place notwithstanding that there has not been an opportunity for full consideration of the appeal Nikolaides v Legal Services Commissioner [2005] NSWCA 91 per Bryson JA at [18]; Thomson v Young [2013] NSWCA 300 at [8]. Circumstances warranting the grant of a stay have been described as “exceptional” (Jennings Construction Ltd v Burgundy Royale Investments Pty Ltd (No. 1) [1986] HCA 84; (1986) 161 CLR 681 at 683; Rahme v Commonwealth Bank [1993] HCA 62; (1993) 117 ALR 618 at 620; Petrotimor Companhia de Petroleos S.A.R.L. v Commonwealth of Australia [2003] FCAFC 82 at [24]; Batistatos v Roads and Traffic Authority of New South Wales [2006] HCA 27; (2006) 226 CLR 256).

•    To that extent the balance of convenience plays an important role in determining whether an order ought be made: Bannister & Hunter Pty Ltd v Transition Resort Holdings Pty Ltd [2014] NSWCA 87 per Ward JA at [18].

•    The Court may be minded to refuse a stay where it is satisfied that there are no serious questions for the determination in the appeal or review: Kalifair Pty Ltd v Digi-Tech (Australia) Ltd [2002] NSWCA 383; (2002) 55 NSWLR 737 at [18]; ACES Sogutlu Holding Pty Ltd v Commonwealth Bank of Australia [2014] NSWCA 84 at [6]. Conversely, the Court may be minded to grant a stay where, on a preliminary assessment of the case, the Court is satisfied that grounds of appeal or review have merit: Alexander v Cambridge Credit Corporation Ltd (1985) 2 NSWLR 685 at 695; Attorney-General for the State of Queensland v Fardon [2013] QCA 299 at [15].

•    The Court may be minded to grant a stay where it is satisfied that any subsequent appeal or review would be rendered nugatory should a stay be refused: Alexander v Cambridge Credit Corporation Ltd (1985) 2 NSWLR 685 at 695; Jennings Construction Limited v Burgundy Royale Investments Proprietary Limited [1986] HCA 84; (1986) 161 CLR 681; Paringa Mining & Exploration Co PLC v North Flinders Mines Ltd (No 2) [1988] HCA 53; (1988) 165 CLR 452; National Australia Bank Limited v Norman [2009] FCAFC 13 at [43].

•    Decisions at first instance should not be treated as merely provisional. A successful party in litigation is entitled to the fruits of its judgment, and courts should not be disposed to delay the enforcement of orders. A sufficient basis must be shown to outweigh these considerations: Keane JA in Cook’s Construction Pty Ltd v Stork Food Systems Australasia Pty Ltd [2008] 2 Qd R 453 at 455; Attorney-General for the State of Queensland v Fardon [2013] QCA 299 at [15]; Julia Farr Services Inc v Hayes [2003] NSWCA 142 at [24].

•    The Court will consider whether a stay is warranted in the interests of justice: Alexander v Cambridge Credit Corporation Limited (1985) 2 NSWLR 685 at 694; NSW Bar Association v Stevens [2003] NSWCA 95 at [83]; ACES Sogutlu Holding Pty Ltd v Commonwealth Bank of Australia [2014] NSWCA 84 at [5].

10    In Viagogo AG v Australian Competition and Consumer Commission [2021] FCA 175 Abraham J summarised the principles at [10]-[13]:

10    Rule 36.08 confers a broad discretion. Generally, there must be demonstrated “a reason or an appropriate case” to warrant the exercise of discretion in favour of granting a stay. It is not necessary to establish special or exceptional circumstances for the grant of a stay: Powerflex Services Pty Ltd v Data Access Corp (1996) 67 FCR 65 at 66.

11    Two questions must be considered: first, is there an arguable point on the proposed appeal: Nolten v Groeneveld Australia Pty Ltd [2011] FCA 1494 (Nolten) at [24] or some “rational prospect of success” in relation to any of the grounds of appeal: Burns v AMP Finance Ltd [2005] FCA 761 at [5]; and second, does the balance of convenience favour the grant of a stay: Nolten at [24], [46].

12    The party seeking the order bears the onus of demonstrating a proper basis for a stay, which must be fair to all parties: Alexander v Cambridge Credit Corporation Ltd (receivers appointed) (1985) 2 NSWLR 685 (Alexander) at 695. That party must demonstrate that there is a real risk that it will suffer prejudice or damage if a stay is not granted, which will not be redressed by a successful appeal: Kalifair Pty Ltd v Digi-Tech (Australia) Ltd, McLean Tecnic Pty Ltd v Digi-Tech (Australia) Ltd [2002] NSWCA 383; (2002) 55 NSWLR 737 (Kalifair) at [18]; Flight Centre Limited v Australian Competition and Consumer Commission [2014] FCA 658 (Flight Centre) at [9(f)]. This requirement will be satisfied if a successful appeal will be rendered nugatory unless a stay is granted: Ali v Australian Competition and Consumer Commission [2020] FCA 860 at [11]; Australian Competition and Consumer Commission v BMW (Australia) Ltd (No 2) [2003] FCA 864 (BMW) at [5]; Alexander at 695; Kalifair at [18].

13    The successful party at first instance is entitled to presume that the judgment appealed from is correct: Powerflex Services Pty Ltd v Data Access Corp (1996) 67 FCR 65 at 66, citing Re Middle Harbour Investments Ltd (in liq) (unreported, Court of Appeal NSW, 15 December 1976); Flight Centre at [9(b)]; Wooldridge v Australian Securities and Investments Commission [2015] FCA 349; (2015) 106 ASCR 551 (Wooldridge) at [11]; Urban Alley Brewery Pty Ltd v La Sirène Pty Ltd (No 2) [2020] FCA 351 at [48], [51].

Consideration

11    There was no dispute between the parties that Mr Brady’s appeal is bona fide and that it raises arguable grounds. Rather, the parties were at odds as to where the balance of convenience lies. The question for the Court is whether Mr Brady has demonstrated that he would suffer adverse and serious consequences that could not be redressed on appeal should a stay of the Costs Orders not be granted.

12    Mr Brady submits that the balance of convenience favours the grant of a stay of the Costs Orders for a number of reasons.

13    First, Mr Brady submits that NULIS has had the benefit of security for its costs the subject of the February Orders in the form of a deed poll from his funder, Omni Bridgeway Limited (formerly IMF Bentham Limited) (Funder). That is so. I accept, and NULIS does not dispute, Mr Brady’s ability, because of the role of the Funder, to pay NULIS’ costs once assessed. This is not a case where there is risk of dissipation of assets pending the hearing of the appeal.

14    Secondly, Mr Brady submits that the evidence from both parties establishes that the assessment of costs on a lump sum basis is very likely to be lengthy, time consuming and resource intensive. He contends that if the burden of a costs assessment is assumed now significant costs and resources of the parties together with the Court’s resources will be wasted (in whole or in part) unless the appeal is wholly unsuccessful and there is no alteration of the February Orders.

15    Mr Brady relies on a report prepared by Kerrie-Ann Rosati, principal at DGT Costs Lawyers in which she estimates that the total time to prepare the material to enable a registrar to determine the lump sum costs is up to 23 weeks and that thereafter the registrar is likely to take four to six weeks to undertake a determination of the costs. Ms Rosati does not provide an estimate of Mr Brady’s likely costs of preparing a costs response and submissions for consideration by the registrar but notes that her current charge out rate is $715 per hour (incl GST) and her paralegal’s current charge out rate is $275 per hour (incl GST).

16    NULIS relies on evidence given by Damian Gordon Lovell, a partner of King & Wood Mallesons (KWM), solicitors for NULIS. Mr Lovell gives evidence of the total fees incurred by NULIS which are the subject of the Costs Orders, being $12,569,244.71 (excl GST). Mr Lovell also gives evidence, having briefed Charlotte Morson, a costs consultant with The Legal Costs Consultants with relevant material, of the likely time for the parties to complete the steps necessary to enable a registrar to undertake the lump sum assessment. Mr Lovell notes that Ms Morson estimates that the likely time to complete those steps is up to 17 weeks.

17    While Ms Rosati and Ms Morson differ on the total time estimates, with Ms Rosati estimating up to 23 weeks for the parties to complete all steps and Ms Morson estimating up to 17, both agree that it is NULIS as the costs applicant that will have to spend more time and thus resources in preparing the lump sum costs assessment. NULIS makes no complaint about that and does not claim any prejudice. Putting that to one side, the difference in their respective estimates, six weeks, is not of much consequence when broken down between the various tasks and when viewed in terms of the overall life of this long running matter.

18    The more critical question is whether the burden of preparing for and undertaking the lump sum costs estimate should be undertaken now. Mr Brady relies on Zonia Holdings Pty Ltd v Commonwealth Bank of Australia Limited (No 6) [2024] FCA 1097 which he says is on all fours with this case. In that case, which was also a representative proceeding, the applicants who were unsuccessful at first instance, sought a stay of the assessment of the respondent’s costs. As is the case here the applicants in Zonia submitted that the assessment of the respondent’s costs on a lump sum basis would involve a lengthy, time-consuming, and resource-intensive process for all parties which was likely to take approximately 26 weeks from the date of its commencement, that their appeals, which were listed to be heard approximately two months later, were at least arguable and that there was no risk that they would not be in a position to meet a costs order if the appeals were unsuccessful: Zonia at [38].

19    Justice Yates granted a stay. In doing so his Honour noted that the determination of the appeals may result in a different outcome and thus a different costs order and, accepting that the assessment of costs on a lump sum basis might well be lengthy, time consuming and resource intensive, if the burden was assumed at the time, work would have been undertaken and costs incurred unnecessary. In those circumstances his Honour concluded that “the better course [was] to await the outcome of the appeals so that there is no wastage in undertaking the lump sum assessment, including wastage of the Court’s resources”: Zonia at [43]-[44].

20    It is difficult to apply the way in which a Court exercises a discretion in one case, having regard to the relevant facts, to a different case. Each case and thus the exercise of the Court’s discretion must be considered having regard to its own unique facts. In my view there are several critical differences between the facts as they existed at the time of the decision in Zonia and the facts before me. Most critically when Yates J came to consider the application for a stay in Zonia, the appeal from the orders made following the trial was to be heard some two months later. Here the amended notice of appeal was filed on 9 April 2025. No hearing date has been allocated to the appeal. It is not listed in the Court’s Full Court & Appellate Sitting Dates in July-August 2025. In the evidence before me, Mr Lovell opines that, having regard to the likely length of the hearing, the first available date for hearing of the appeal is likely to be during the November 2025 or March 2026 Full Court & Appellate Sitting Dates and that it is unlikely that a judgment will be published by the Full Court following the hearing for several months following its conclusion. When the appeal might be listed is a matter of speculation only but the earliest it can be listed is in the Court’s November 2025 Full Court & Appellate Sitting Dates which is six months away.

21    In addition, there is evidence before me of the quantum of NULIS’ costs incurred in defending the hearing. There does not appear to have been such evidence before Yates J in Zonia. Those costs are significant. NULIS having been successful in its defence of the proceeding, should not be shut out from recovering any amount to which it is entitled for an extended period.

22    Turning to the Court’s resources, I accept that they should be deployed wisely. However, there is no rule that a lump sum costs assessment where ordered should be deferred pending the outcome of an appeal nor can a stay be justified because of the use of those scarce resources in this case where, as I have already observed, there is no certainty as to when the appeal will be finally resolved.

23    Thirdly, and relatedly, Mr Brady submits that given the terms of his funding agreement with the Funder, if he is required to respond to a costs assessment now and he is ultimately successful in whole or in part on appeal such that the Costs Orders are set aside or varied, the wasted costs of the work undertaken will be sheeted home to him and other group members, rather than to the Funder. I accept having regard to the terms of the Funder’s costs agreement which was in evidence before me that that is so. However, that contractual obligation cannot be considered in isolation. If Mr Brady is successful on appeal, it will likely follow that the Costs Orders will be reversed, and an order made for NULIS to pay Mr Brady’s costs at first instance. Although a matter for another day, Mr Brady’s reasonable costs expended in meeting the assessment for lump sum costs are likely to be recoverable as part of the costs of the proceeding at first instance, particularly when viewed in light of NULIS’ opposition to the application for a stay and the relevant statutory framework.

24    Fourthly, Mr Brady submits that NULIS will not suffer any prejudice because it is kept out of its money or any interest which might accrue on those costs, once assessed. In support of that submission Mr Brady relies on extracts from the annual reports of the National Australia Bank Limited (NAB) for 2021 to 2024 inclusive. For example, the annual report for 2024 relevantly includes at Note 31 in relation to this and another proceeding:

NULIS and MLCN - class actions

In October 2019, litigation funder Omni Bridgeway (formerly IMF Bentham) and William Roberts Lawyers commenced a class action against NULIS Nominees (Australia) Limited (NULIS) alleging breaches of NULIS's trustee obligations to act in the best interests of the former members of The Universal Super Scheme in deciding to maintain grandfathered commissions on their transfer into the MLC Super Fund on 1 July 2016. NULIS filed its first defence in the proceeding in February 2020. An initial trial to make determinations on the individual claims of the applicant and one sample group member was held on 9 October 2023. Judgment has been reserved.

In January 2020, Maurice Blackburn commenced a class action in the Supreme Court of Victoria against NULIS and MLC Nominees Pty Ltd (MLCN) alleging breaches of NULIS's trustee obligations in connection with the speed with which NULIS and MLCN effected transfers of members accrued default amounts to the MySuper product. The matter is listed for trial commencing on 18 November 2024.

The potential outcomes and total costs associated with these matters remains uncertain. While NULIS and MLCN are no longer part of the Group following completion of the MLC Wealth Transaction, the Company remains liable for the costs associated with, and retains conduct of, these matters pursuant to the terms of the MLC Wealth Transaction.

25    The annual reports were provided as part of an exchange of correspondence between Mr Brady’s solicitors, William Roberts, and KWM in which William Roberts raised in their letter dated 2 May 2025 their client’s concern about the ability of NULIS to repay any amount Mr Brady paid for costs, once assessed or agreed, prior to the resolution of the appeal. William Roberts sought financial statements evidencing NULIS’ current financial position and an undertaking to place any money paid by Mr Brady for NULIS’ costs into an interest bearing account to be held pending determination of the appeal.

26    In response, by letter dated 7 May 2025, KWM, among other things, wrote:

In any event, we are instructed that:

(a)    as disclosed in the annual reports of the National Australia Bank Limited (NAB) each year since 2021,1 NAB retained liability for our client’s costs associated with the Proceeding following competition of the sale of our client by NAB to Insignia Financial Limited on 31 May 2021; and

(b)    accordingly, should our client’s costs be paid in accordance with the Costs Orders and the Costs Orders subsequently reversed, any amount to be repaid to your client will be met by NAB.

Footnote 1 referred to NAB’s annual reports for 2021 to 2024 inclusive.

27    Although the question of NULIS’ ability to repay any amount paid by Mr Brady for its costs following completion of the lump sum assessment process is not pressed on this application, that evidence, which goes no higher than to indicate that NAB is liable for NULIS’ costs of the proceeding, is relied on to submit that NULIS will not suffer any prejudice by being kept out of its money, i.e. the funds paid to meet the Costs Order and/or any interest to which NULIS will be entitled on the assessed amount once entered as a judgment pursuant to s 51A of the Federal Court Act. However, it is NULIS that is party to the proceeding and which has the benefit of the Costs Orders. It is thus the party entitled to payment of its costs, once the lump sum assessment is complete, and is able to do what it wishes with those funds once received. There may be a contractual obligation to pay the funds recouped to NAB or another party but that is ultimately a matter for NULIS.

28    Weighed against those matters is the fact that NULIS, the beneficiary of the Costs Orders, is entitled to presume that those orders and the judgment underpinning them are correct. If a stay is granted NULIS will lose the opportunity; to have its costs quantified immediately as the process will be deferred for at least six months; and to deal with the amount assessed from the time of completion of the lump sum assessment process until the appeal is determined. In this case that amount is likely to be significant having regard to the total costs incurred in defending the proceeding (see [16] above).

29    If a stay is granted NULIS will also be kept out of any interest to which it would be entitled following assessment of the lump sum costs and entry of a costs judgment in the assessed amount until date of payment. In Stillwater Pastoral Company Ltd v Stanwell Corporation Ltd (No 2) [2025] FCA 316, the applicant, Stillwater Pastoral Company Ltd, sought a stay of the assessment and enforcement of costs pending resolution of its appeal. At [46] SC Derrington J referred to one of the arguments put by the two respondents:

…if a stay were to be granted, it should be on terms that protect the position of the respondents. By this submission, CS Energy asks the Court to weigh the possibility of wasted costs should the assessment proceed now and the appeal succeed, against the prejudice to the respondents of being kept out of the payment of costs should the appeal ultimately fail. Stanwell submitted that a stay of the assessment until the conclusion of the appeal would provide Stillwater with “a windfall benefit of several million dollars”.

30    At [49] and [52] her Honour said:

49    The real prejudice arises from the loss of interest which would otherwise continue to accrue, in circumstances where it is likely to take at least 18 months for the appeal to be finalised. Stanwell assessed the likely prejudice to it as being in the order of $2.3-$3.1 million, based on its “ball park” assessment of its recoverable costs to date of $15-$20 million. I accept that CS Energy’s likely prejudice is similar.

…

52    Stillwater submitted that the absence of power for the Court to order that interest be payable on a costs judgment from an earlier date does not “serve to highlight” any prejudice, as had been submitted by CS Energy. I agree. It does, nonetheless, make it more difficult to mitigate the risk that Stillwater may obtain a windfall benefit, in the event it loses on the appeal, which will be of a significantly higher order of magnitude than the costs that may be wasted by an immediate costs assessment should Stillwater succeed on appeal.

31    Here NULIS has not provided a calculation of the potential lost interest assuming the lump sum assessment process is deferred until resolution of the appeal. But, it submits that it has provided direct evidence of its total costs and disbursements and its likely recoverability. Having regard to those integers, the amount of interest accruing once costs are assessed would not be insignificant.

32    It seems that the real contest here is which party should have use of the funds pending determination of the appeal: the Funder, who in reality is liable to pay the costs once assessed; or NULIS, the beneficiary of the costs order. If a stay is ordered, NULIS will be kept out of its money pending the resolution of the appeal and the Funder will gain a financial benefit if Mr Brady is unsuccessful in his appeal. Neither the amount that might be foregone by NULIS or the amount Mr Brady will incur in potentially wasted costs in participating in a costs assessment has been quantified but I am satisfied that the former is sufficiently significant such that those economic consequences to the Funder weigh against a stay, particularly where the correlative benefit to NULIS cannot be mitigated.

33    Mr Brady has not established that there is a real risk that he will suffer prejudice or damage if a stay is not granted, which will not be redressed by a successful appeal. That is, if Mr Brady is successful on appeal, the Costs Orders will be reversed and, if any amount has been paid to satisfy those orders, it will need to be repaid. There is no issue that NULIS will be able to do so. On the other hand, I am satisfied that a stay would cause prejudice to NULIS.

34    In those circumstances the balance of convenience does not favour the grant of a stay.

Conclusion

35    It follows that the interlocutory application should be dismissed. As Mr Brady has been unsuccessful he should pay NULIS’ costs of the interlocutory application.

36    I will make orders accordingly.

Associate:

Dated:    5 June 2025