Obtaining a Stay of Judgment, pending Appeal

As most readers would know, many trial decisions can be appealed if the unsuccessful party believes the judge made an error. Less widely known is that lodging an appeal does not, of itself, have the effect of "staying" the trial judge's orders. The general rule is that the successful litigant is entitled to the benefit of any judgment in its favour, pending the outcome of the appeal.

If the unsuccessful litigant wants to stay the proceedings, they must make a specific application to do so. The grant of a stay is discretionary, and is usually obtained only if the applicant shows both that they have arguable grounds of appeal; and also that there is a significant risk that money paid under the orders will be unrecoverable (or difficult to recover). The applicant must also show that a stay is fair, balancing the interests of both litigants.

The NSW Court of Appeal recently considered a stay application following a primary judgment in a dispute flowing from the dissolution of a joint venture for a building project. Although factually complex, in practical terms, one joint venturer (Ms Drinkwater) "bought out" the other (Mr Nadinic) and agreed to grant a mortgage for a substantial sum of money over the (former) joint venture property. After the settlement was implemented, Ms Drinkwater came to believe she had been misled concerning the basis for the settlement and took proceedings to have the settlement set aside. The primary judge held that Mr Nadinic had misled Ms Drinkwater and ordered him to pay a sum of approximately $1.68M, plus interest. Mr Nadinic filed an appeal but also sought a stay of the orders for payment – it appears because Ms Drinkwater not only had substantial other existing obligations, but also as she had submitted she was entitled to use any money paid under the judgment as she sought fit (including, by inference, to pay the other debts).

Ultimately, it was unnecessary for the Court to consider the merit of the arguments because Ms Drinkwater volunteered an undertaking not to deal with the money paid to her except on particular terms - and the judgment debtor accepted the undertaking. Costs of the application were ordered in favour of Mr Nadinic since the undertaking (in the form accepted) was only offered after the hearing had concluded.

The case does not establish any new law. It does, however, serve as a reminder that obtaining a stay of a judgment is not as simple as lodging an appeal against a judicial decision; and that a stay will not automatically be granted even if it is applied for: Nadinic v Cheryl Drinkwater ATF the Cheryl Drinkwater Trust [2019] NSWCA 142.