Jones v Invion Limited[2014] QCA 178

COURT OF APPEAL

HOLMES JA

Appeal No 6136 of 2014

SC No 1671 of 2012

STEPHEN GEORGE BURCH JONESApplicants

JASON RICHARD YEATES

JAMES GREIG

v

INVION LIMITEDFirst Respondent

CHARTIS AUSTRALIA INSURANCESecond Respondent

BRISBANE 

TUESDAY, 29 JULY 2014

JUDGMENT

HOLMES JA:  The appellants, Messrs Jones, Yeates and Greig, have applied for a stay of execution of orders giving judgment against them in favour of the first respondent.  The application is expressed as a stay of execution of all the orders subject to the appeal, but since those orders include dismissal of a counterclaim and a third party claim, it is, plainly, too widely expressed.

The considerations relevant to a granting of a stay are set out in Cook’s Construction Pty Ltd v Stork Food Systems Australasia [2008] 2 Qd R 453.  It is not appropriate to grant a stay unless a sufficient basis is shown to outweigh the consideration that judgments of the trial division should not be treated as merely provisional.  A successful party in litigation is entitled to the fruits of its judgment.  The prospects of success of the proposed appeal, so far as they can be weighed on a preliminary assessment, are a significant consideration.  The further consideration is one of disadvantage: whether the refusal of the stay might render an appeal nugatory or cause irremediable harm to the appellants is identified as relevant in Cook’s Construction.

Each of the appellants has sworn to an incapacity to pay the judgment and costs orders and it seems to be common ground, although not sworn to, that bankruptcy notices have issued, with the period for compliance expiring on 1st of August 2014. Counsel for the first respondent pointed out that in Cook’s Construction the Court did not accept that the refusal of a stay would render the appeal nugatory, even if it were to lead to receivership or liquidation of the appellant, because the receiver or liquidator might be prepared to proceed with an appeal nonetheless. He also relied on a Victorian Court of Appeal case, Bresam Investments Pty Ltd v Shmee Pty Ltd [2008] VSCA 251.  In that case the Court similarly did not accept a contention that an appeal would be rendered nugatory by the bankruptcy of the appellants for the reason that a trustee or receiver could elect to prosecute the appeal, but the Court also pointed out that it would be open to the appellants to seek an extension of time for compliance with the bankruptcy notice.

In the present case, it is not inevitable that the appellants will become bankrupt; they may be able to obtain an extension of time or a stay.  There is some prospect that if they do, a trustee will be prepared to proceed with the appeal.  It cannot be said, therefore, that their becoming bankrupt would necessarily render the appeal nugatory.  Nonetheless, there can be no doubt that refusal of the stay would considerably diminish the prospect of the appeal’s continuing, and I proceed on the basis that that is a significant consideration in determining whether a stay should be granted.

The respondent Invion Limited – which previously had a different name, CBio, but I will refer to it by the name which it subsequently took – sued the three appellants to recover compensation for breaches of statutory duty (under s 1317H of the Corporations Act 2001) and breach of fiduciary duty in respect of termination payments made to Mr Jones’ company, SGB Jones Proprietary Limited, Mr Yeates and Mr Greig.  The three appellants sought indemnity under an insurance policy with the second respondent; hence the third party claim.

The company SGB Jones Proprietary Limited was engaged as a consultant to Invion; Mr Greig was Chief Financial Officer; and Mr Yeates was Chief Executive Officer.  The consultancy agreement and employment contracts provided for Invion to give specified periods of notice in terminating the agreements.  In March 2011, Invion’s board resolved to amend the contracts, to extend the termination notice period to 12 months.

In April of that year, however, Mr Greig agreed to an amendment of the SGB Jones Proprietary Limited consultancy agreement which provided that either party could terminate at any time, in which case Invion would pay 12 months of fees, and signed the amended agreement to that effect.  He made a similar agreement with Mr Yeates, who signed an equivalent agreement for Mr Greig’s benefit.  The effect was that they could terminate their respective arrangements with Invion at any time and be paid 12 months’ fees, without having to provide any further service.

The essential issue before the trial judge was whether the appellants had authority to amend the agreements in that way and their states of mind in doing so.  Mr Jones, who had been a director since 2000, gave evidence that in that year he reached agreement with the two other directors at that time that any of them acting alone could exercise the board’s authority.  But the two other directors denied any such agreement, and the trial judge accepted their evidence in preference to Mr Jones’.  He also rejected Mr Yeates’ suggestion that as a managing director he could make changes to the agreements, given the absence of any conferral of such a power in the company’s constitution, or that Mr Greig could have honestly believed he could make such a change.  He did not find any of the appellants credible.  He rejected the third party claim against the insurer, on the basis that it was entitled to rely on exclusions in the relevant policy.

The appellants have filed a notice of appeal which is not in any proper form and seems, largely, to re-advance arguments not accepted below.  It asserts that the judge erred by making various statements in the judgment.  Some of the 45 paragraphs alleging such errors appear to attribute to the trial judge statements which he did not make.  Others, more importantly, appear to rest on a contention that his Honour should have preferred the appellants’ evidence and been swayed by the matters they relied on, in preference to the matters advanced for the respondents.  So, for example, they say that other instances where the board did not take issue with the directors’ changing employment conditions and the fact that the company’s auditors raised no point about the alterations, together with the fact that when the payments were finally to be made to them the board made no complaint, should have convinced the trial judge that their actions were proper.

But the trial judge also had regard to other evidence - an admission that any authority of the appellants remained subject to the direction or decision of the board; various board minutes and the company’s financial reports, suggesting that the board retained the authority to deal with matters of employment and remuneration; the fact that there previously had been the March resolution of the board in relation to extending the termination period; and the appellants’ failure to inform the board of the changes when they occurred - to reach a different conclusion on the question of authority and draw an inference about the intent of the three appellants. To say that he should not have done so, and to complain about the weight he attached to various pieces of evidence is not to indicate error, but to complain of his exercise of judgment.

The written submissions assert that the trial judge misused his advantage in making credibility findings and acted on evidence inconsistent with ‘incontrovertibly established’ facts.  But it is not apparent from the judgment that there were facts of that kind precluding his Honour’s findings on credit. I do not propose to say any more about the merits; it is enough to say that on this notice of appeal, it is not obvious to me that there is a good arguable case.  Consequently, although I accept that there is a disadvantage to the appellants – and a significant one – should a stay not be granted, on balance, because I do not consider that an arguable case has been demonstrated, I do not propose to order a stay of any of the trial judge’s orders.

I dismiss the application for a stay.

…

HOLMES JA:  I order that the applicants pay the first and second respondents’ costs of the application.