Stay of execution, exceptional and special circumstances: Sopov & Ors v Kane Constructions Pty Ltd [2009] VSCA 216 (25 September 2009)

September 30, 2009 |

In Sopov & Ors v Kane Constructions Pty Ltd the Court of Appeal again traverses the well worn path of applications for stay of execution. The applicants sought a stay of a Court of Appeal decision pending a special leave application to the High Court. I most recently analysed the approach to stays by the Court of Appeal in my post on Gangemi v Osborne.

In this proceeding the applicants/appellants sought to distinguish a stay application to the High Court from other stay applications, submitting that the former did not require special or exceptional circumstances (par 45). The other bases for the application, which constituted exceptional circumstances were:

  • the applicants did not have the resources to pay the judgment debt and their accountant said they would face bankruptcy if the orders were enforced. This meant they could not prosecute their appeal (par 45);
  • there was a substantial prospect that special leave would be granted (par 46);and
  • the respondents had already received substantial monies (par 46)

At paragraphs 52 & 53 their Honours restated the well settled proposition that the principles applying to stays pending a High Court special leave applications do not differ from other stay applications, stating:

52 In relation to the application for a stay, the well-established rule applied by the Court has been that there must be special or exceptional circumstances existing to justify an order staying the execution of a judgment and that such circumstances will exist where there is a real risk that the appeal if successful will prove abortive if the applicant were not granted a stay. The case cited by the appellants, Carter v Geoff Layton & Co Pty Ltd, suggests that no different principle applies pending the hearing of an application for special leave to appeal. In that case, Cooper J said that the Court would not stay proceedings pending the hearing of an application for special leave to appeal unless satisfied that a stay was required to preserve the subject matter of the litigation or to otherwise ensure that any right to appeal was not rendered nugatory eg where execution would deprive an appellant of the means of prosecuting the appeal. The court would also consider whether there was a substantial prospect of leave being granted, whether the stay would cause loss to the respondent and the balance of convenience.

53 In Palmer v Permanent Custodians Ltd, on an application in this Court for a stay of execution pending an application for special leave to appeal to the High Court, the Court expressed the view that, in its inherent jurisdiction as well as under the rules, the traditional test of special or exceptional circumstances remained applicable to such an application

On the question of bankruptcy being a special circumstance the principles are less consistent. By reference to previous decisions the Court said:

  1. bankruptcy would be irreversible even if the appeal succeeded (pars 55 & 58) constitutes exceptional circumstences & a stay granted;
  2. an appeal which has arguable prospects of success would be rendered nugatory, with reputational effect (par 56) – stay granted;
  3. where a bankruptcy notice is served the prospect of a sequestration order constitutes special circumstances where the respondent is not prepared to refrain from proceeding with the creditors petition pending the appeal(par 57)- stay granted;
  4. but bankruptcy & liquidation were not decisive factors per se. The circumstances will determine the weight given to those factors (par 59)
  5. even though bankruptcy may constitute special circumstances there has to be sufficient material evidencing the financial situation and evidence that the applicant will be bankrupted (par 60)- stay refused

In this matter the fatal weaknesses in the application were:

  1. insufficient evidence that a stay will stop the special leave. The applicants had assets (par 61).
  2. the threat of bankruptcy or liquidation had not crystalised (par 61);
  3. there was little if any prospect of success in the special leave application (par 62)

Issues to note

Timing is crucial. The threat of bankruptcy/liquidation is not sufficient. It is also important to set out the applicant’s financial situation sufficient to make the submission that it will either prevent an appeal which has an arguable prospect of success proceeding or the effect of the bankruptcy/liquidation would be irreversible even if successful.

One Response to “Stay of execution, exceptional and special circumstances: Sopov & Ors v Kane Constructions Pty Ltd [2009] VSCA 216 (25 September 2009)”

  1. John

    Hi , I note your interest to stay on any orders or pending adverse interlocutary costs order – I am researching this issue and related issue -: do the same principle apply to a pending taxation for costs order for interlocutary matter – can that be stayed in the victorian Supreme Court if the rights of the plaintiff to proccced with the substantive proceeding is affected by enforcement of pending a interlocutary taxed costs order – can an order be made to stay such a pending order using the similar principles referred to above and if so are there more specifics case law dealing with this specific issue . Is such stay order with the costs court or the Main court

    Kind regards

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