INTERNATIONAL RAW MATERIALS PTY LTD -v- J.J. HAWKINS AND CO PTY LTD [2026] WASCA 105

[2026] WASCA 105 Page 1 JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA TITLE OF COURT : THE COURT OF APPEAL (WA) CITATION : INTERNATIONAL RAW MATERIALS PTY LTD - v- J.J. HAWKINS AND CO PTY LTD [2026] WASCA 105 CORAM : THOMSON P MITCHELL JA HEARD : 22 JULY 2026 DELIVERED : 22 JULY 2026 PUBLISHED : 22 JULY 2026 FILE NO/S : CACV 26 of 2026 BETWEEN : INTERNATIONAL RAW MATERIALS PTY LTD Appellant AND J.J. HAWKINS AND CO PTY LTD Respondent ON APPEAL FROM: Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA Coram : LUNDBERG J Citation : J.J. HAWKINS AND CO PTY LTD -v- INTERNATIONAL RAW MATERIALS PTY LTD [No 2] [2026] WASC 80 File Number : CIV 1088 of 2017 -- 1 of 17 -- [2026] WASCA 105 Page 2 Catchwords: Appeal - Practice and procedure - Application for stay of orders awarding damages against appellant in a contractual claim pending determination of the appeal - Whether appeal would be rendered nugatory if a stay is not granted - Whether appeal has reasonable prospects of succeeding - Whether balance of convenience favours grant of a stay in circumstances where appellant is not trading but faces the prospect of being wound up if damages award is enforced Legislation: Nil Result: Application for a stay dismissed Category: B Representation: Counsel: Appellant : F A Stanton Respondent : T J Langdon Solicitors: Appellant : Bennett Respondent : Sonia Edwards Legal Case(s) referred to in decision(s): Challenge Charter Pty Ltd v Curtain Bros (Qld) Pty Ltd [2004] VSCA 66; (2004) 9 VR 382 City of Wanneroo v Bakota [2023] WASCA 61 Cook's Construction Pty Ltd v Stork Food Systems Australasia Pty Ltd [2008] QCA 322; [2008] 2 Qd R 453 Eastland Technology Australia Pty Ltd v Whisson [2003] WASCA 307; (2003) 28 WAR 308 -- 2 of 17 -- [2026] WASCA 105 Page 3 Kalifair Pty Ltd v Digi-Tech (Australia) Ltd [2002] NSWCA 383; (2002) 55 NSWLR 737 Mareva Compania Naviera SA v International Bulkcarriers SA [1975] 2 Lloyd's Rep 509 Ryan v Urban Construct (SA) Pty Ltd [No 2] [2012] SASC 193; (2012) 114 SASR 410 Tradesman Technologies Pty Ltd v Ameduri [2012] WASCA 168 V601 Developments Pty Ltd v Probuild Constructions (Aust) Pty Ltd [2022] VSCA 77 Washburn Pty Ltd v Cardaci [2022] WASCA 43 Wright v De Kauwe [2023] WASCA 42 -- 3 of 17 -- [2026] WASCA 105 REASONS OF THE COURT Page 4 REASONS OF THE COURT: 1 At a hearing on 22 July 2026, we dismissed this application for a stay of the primary orders, for reasons to be published later. These are our reasons for dismissing the stay application. Background 2 The appellant leased industrial warehouse units from the respondent from 2005 to 2016. The appellant is an Australian subsidiary of a global fertiliser distribution company which has its headquarters in the United States of America. The appellant stored ammonium sulphate within the warehouse, which it screened using a shaker table. The ammonium sulphate was stored in bulk, largely uncovered, on the floor of the warehouse. 3 Ammonium sulphate is mildly acidic when exposed to moisture. It then has a corrosive, rusting effect on metals and concrete. During the lease, there was water ingress into the warehouse on a relatively regular basis. This occurred through leaks in the roof, through the large external doorways, and from the day-to-day operations of the business which involved trucks entering the warehouse. The loading, unloading, storage and screening of the ammonium sulphate led to ammonium sulphate dust spreading within, and outside, the warehouse. Over the course of the appellant's lease of the warehouse, the building suffered from extensive, destructive and continuous corrosion. 4 The primary decision resolved disputes between the parties as to the effect of the contractual obligations in the lease agreement,1 as to which party bore the legal responsibility to repair and maintain the warehouse, and as to which party was liable to repair the damage which has resulted. 5 The trial judge upheld the respondent's contractual claim for breach of cl 3.9(a) of the lease agreement, which provided: 3.9 Maintain and Repair Premises (a) Generally The Lessee must maintain and keep the Premises in good and substantial repair, order and condition except in the event of damage by explosion, earthquake, aircraft, riot, civil commotion, fire, flood, lightning, storm, 1 The trial judge found that there were two lease agreements, which his Honour referred to as the Original Lease and the Varied Lease. For the purposes of this stay application, it is sufficient to refer to them collectively as the 'lease agreement'. -- 4 of 17 -- [2026] WASCA 105 REASONS OF THE COURT Page 5 tempest, act of God, war, fair wear and tear and any other risk insured against by the Lessor PROVIDED THAT this exception shall not apply if the damage is caused by the neglect, default or misconduct of the Lessee and the Lessor's insurances are invalidated by an act, neglect or default of the Lessee. The Lessor must maintain and repair the Premises to prevent water ingress. (emphasis added) 6 The trial judge accepted the respondent's construction of this clause. Under that construction, the proviso applied to the 'fair wear and tear' exception if the damage was caused by the neglect, default or misconduct of the Lessee. It was not also necessary to show that the Lessor's insurances were invalidated by an act, neglect or default of the Lessee. That second limb of the proviso applied only to the exception relating to risks insured against by the Lessor. The second paragraph of cl 3.9(a) was construed as subject to the primary repair obligations in the first paragraph and did not require the Lessor to repair damage caused by the Lessee's neglect, default or misconduct.2 7 In construing the second paragraph of cl 3.9(a), the trial judge observed that:3 The opening obligation in the first paragraph places a maintenance and repair obligation on the lessee, limited by the term 'good and substantial' and introduces a regime to deal with exceptions as well as default on the part of the lessee. In this context, adopting an unrestricted reading of the second paragraph would tend to seriously undermine the operation of the first paragraph. 8 The trial judge referred to authorities indicating it is permissible to depart from the ordinary meaning of the words of one provision so far as is necessary to avoid an inconsistency between that provision and the rest of the instrument.4 His Honour then observed:5 In the present context, I favour the view that the broader obligation in the first paragraph, which operates as a central repair obligation in the [lease agreement], ought be regarded as qualifying or limiting the scope of the second paragraph. In essence, the 12 words which appear in the second paragraph should be read to exclude responsibility on the part of the lessor where water ingress is brought about by the neglect, default or 2 Primary decision [528] - [543], [567] - [579], [585], [598] - [601]. 3 Primary decision [581]. 4 Primary decision [581] - [584]. 5 Primary decision [585] - [586]. -- 5 of 17 -- [2026] WASCA 105 REASONS OF THE COURT Page 6 misconduct of the lessee, but will render the lessor liable for repair and maintenance which forms part of the fair wear and tear of the building. That represents a harmonious reading of the clause as a whole, and gives both provisions work to do. [T]he apparent breadth of the second paragraph of cl 3.9(a) must also be seen in the context of the yielding up provision in cl 3.23 of the [lease agreement]. By reason of cl 3.23, the lessee is obliged to peaceably surrender and yield up the premises to the lessor 'in good and substantial repair and condition as nearly as possible in the same condition as the commencement' of the lease, subject to the usual exception for fair wear and tear. There is a real tension between this obligation on the lessee, and a literal reading of the second paragraph of cl 3.9(a) to the extent it might be read as placing an unconstrained obligation on the lessor. 9 The trial judge found that the warehouse premises had not been maintained or kept in good and substantial repair and that the damage to the premises did not fall within the concept of 'fair wear and tear'.6 His Honour also held that, even if he was wrong in that conclusion, the damage was caused by the neglect, default or misconduct of the appellant so that the proviso to the 'fair wear and tear' exception applied.7 10 The trial judge also found that the respondent had established its contractual claim for breach of cl 3.23 of the lease agreement, which provided: 3.23 Yielding Up Upon the expiry or sooner determination of the Term the Lessee must: (a) Peaceably to surrender and yield up to the Lessor the Premises subject to the other provisions of this Lease, clean and free from rubbish and in good and substantial repair and condition as nearly as possible in the same condition as at the commencement of the Term fair wear and tear excepted … (emphasis added) 11 The trial judge found that the appellant left the premises in a state of dilapidation, caused by the corrosive and other effects arising from the storage of ammonium sulphate in the warehouse over a lengthy period without taking proper steps to prevent or minimise the damage. The state of the premises when surrendered by the appellant in November 2016 could not reasonably be attributed to fair wear and tear over the life of the appellant's tenancy. On that basis the respondent had established a 6 Primary decision [605] - [609], [617]. 7 Primary decision [610], [618]. -- 6 of 17 -- [2026] WASCA 105 REASONS OF THE COURT Page 7 breach of cl 3.23 of the lease agreement.8 The breach of cl 3.23 was an independent basis for liability in relation to the state of the premises when surrendered. 12 The trial judge also upheld the respondent's claim for breach of cl 3.23 of the lease agreement based on a failure to repair access holes in the warehouse.9 13 The trial judge assessed damages for breach of the lease agreement in the following amounts: Claim Amount Assessed (excl GST) Costs of rectification of the warehouse $2,662,894.3910 Loss of rent during rectification works $173,902.3211 Loss of tenant's payment of outgoings during rectification works $48,628.6712 Interest (as at 3 May 2024) $217,445.9213 Total $3,102,871.30 14 The trial judge also upheld the respondent's claim for unpaid rent for the period from January 2014 to November 2016 in the amount of $494,416.21 (exclusive of GST) plus interest.14 15 The trial judge dismissed the appellant's counterclaim for damages arising from alleged breaches of the lease agreement. This included a claim for damages for repair work done by the appellant alleged to be required as a result of a breach of the respondent's obligation under 8 Primary decision [631] - [637]. 9 Primary decision [638] - [650]. 10 Primary decision [859]. 11 Primary decision [882]. 12 Primary decision [888]. 13 Primary decision [896] - [897]. 14 Primary decision [988] - [989]. -- 7 of 17 -- [2026] WASCA 105 REASONS OF THE COURT Page 8 cl 3.9(a). That claim was rejected on the basis of the trial judge's construction of cl 3.9(a), and that:15 The repair work in question was required to be undertaken by reason of the [appellant's] own neglect, default or misconduct, from which it follows that the [appellant] was obliged to undertake that repair work by reason of the first paragraph of cl 3.9(a) of the [lease agreement]. 16 Against the contingency that he was wrong in that conclusion, the trial judge provisionally assessed damages for the respondent's alleged breach of cl 3.9(a) in the following amounts: Claim Amount Assessed Appellant's repair costs $105,048.8016 Loss of value of ammonium sulphate resulting from water ingress $153,018.2517 Cost of relocating ammonium sulphate $18,713.7518 Total $276,780.80 17 After making adjustments for interest to the date of judgment, the trial judge entered judgment for the respondent, inclusive of interest to 25 March 2026, in the amount of $4,463,019.35. The respondent's claim was otherwise dismissed, and the appellant's counterclaim was dismissed. The appeal to this court 18 The appellant appeals against the primary orders on the following two grounds: 1 The learned trial judge erred in law in construing the proviso within the first paragraph of clause 3.9(a) of the relevant lease such that the word 'and' used between the two limbs of that 15 Primary decision [1104]. 16 Primary decision [1105]. 17 Primary decision [1110]. 18 Primary decision [1118], [1122]. -- 8 of 17 -- [2026] WASCA 105 REASONS OF THE COURT Page 9 proviso was not given its ordinary conjunctive meaning. (Reasons [570]) 2 The learned trial judge erred in law in finding that: 2.1 the first and second paragraphs of clause 3.9(a) of the relevant lease are inconsistent with one another; and 2.2 resolution of that inconsistency requires a construction that qualifies or limits the scope of the second paragraph of clause 3.9(a) such that it has no application where water ingress is brought about by the neglect, default or misconduct of the appellant. (Reasons [585]) 19 The grounds of appeal do not challenge the trial judge's findings that the damage to the leased premises did not constitute 'fair wear and tear' and was caused by the neglect, default or misconduct of the appellant. The trial judge's assessment of the respondent's damages and provisional assessment of the appellant's damages are also not challenged. Nor is there any challenge to the trial judge's construction of cl 3.23 of the lease agreement or to the finding that the appellant breached the obligation contained in that clause. The stay application 20 By application in an appeal filed on 20 May 2026, the appellant seeks a stay of the primary orders pending the determination of the appeal, either under s 15 of the Civil Judgments Enforcement Act 2004 (WA) or the court's inherent jurisdiction. 21 The stay application is supported by an affidavit of David Sanders, a director of the appellant, affirmed on 20 May 2026. 22 Mr Sanders annexes the appellant's financial statements for the financial year ended 30 June 2025 and draft management accounts for the period 1 July 2025 to 28 February 2026. Those documents indicate that, over those periods and the financial year ended 30 June 2024, the appellant's assets (principally comprised of cash and cash equivalents) have been far exceeded by its liabilities (principally comprising 'trade and other payables' as current liabilities). Revenue has been exceeded by the costs of sales and resulted in significant annual losses. A snapshot of the position is indicated in the following table: -- 9 of 17 -- [2026] WASCA 105 REASONS OF THE COURT Page 10 As at 30 June 2024 As at 30 June 2025 As at 26 February 2026 Total assets $873,608 $483,991 $253,910 Total liabilities $3,125,081 $3,056,367 $2,952,494 Net assets ($2,251,473) ($2,572,376) ($2,698,584) Revenue $425,264 $317,250 $0 Total loss ($883,489) ($320,903) ($146,529) 23 The accounts do not appear to include the judgment sum among the appellant's stated liabilities. 24 Mr Sanders deposes: 12 Based on my review of the appellant's current financial statements, I believe that the appellant is not in a position to pay the Judgment Debt. 13 In the event that a stay of enforcement is not granted, I believe the appellant will become insolvent. 14 The appellant no longer carries on business. The appellant is, however, a wholly owned subsidiary of International Raw Materials Ltd, a company incorporated in the United States of America, which carries on business in North America. 15 I believe that if a stay of enforcement is not granted and the respondent sought to enforce the Judgment Debt before the determination of the Appeal this may cause reputational damage to International Raw Materials Ltd in connection with its own business activities. General principles 25 The general principles governing the grant or refusal of a stay of an award of damages pending the determination of an appeal against that award are well established. The following general summary, taken from -- 10 of 17 -- [2026] WASCA 105 REASONS OF THE COURT Page 11 this court's decision in Washburn Pty Ltd v Cardaci,19 is repeated here for ease of reference. 26 In Tradesman Technologies Pty Ltd v Ameduri,20 Pullin JA summarised the general principles governing the grant of a stay or the grant of a suspension order under s 15 of the Civil Judgments Enforcement Act: (a) The successful litigant is ordinarily entitled to enforce a judgment pending the determination of any appeal. (b) It is for the applicant for a stay to move the court to a favourable exercise of its discretion. Under s 15(3) this court may only make a suspension order if there are 'special circumstances' that justify doing so and in an application for a stay under the rules this is also a usual requirement. (c) The central issue will be whether the grant of a stay is perceived to be necessary to preserve the subject matter or the integrity of the litigation or whether a refusal of a stay could create practical difficulties in respect of the relief which may be granted on appeal. This may shortly be described as requiring the court to consider whether the right of appeal will be rendered nugatory if a stay is not granted. (d) If it can be demonstrated that the right of appeal will be rendered nugatory if a stay is not granted, the stay will generally still be refused unless it can be established that the appeal has ultimately reasonable prospects of success. (e) Finally, the stay may still be refused where it appears that the balance of convenience does not lie in favour of the applicant where, for example, the grant of a stay will occasion hardship to the respondent which may not be alleviated by the terms upon which the stay may be granted. 27 Pullin JA identified three common ways in which an appeal might be rendered nugatory if a stay or suspension order is not granted:21 1. Where it can be demonstrated that there is a real prospect that, if the judgment sum is paid and yet the appeal succeeds, the respondent will not have the capacity to comply, or for some 19 Washburn Pty Ltd v Cardaci [2022] WASCA 43 [12] - [18]. 20 Tradesman Technologies Pty Ltd v Ameduri [2012] WASCA 168 [22], adopting Eastland Technology Australia Pty Ltd v Whisson [2003] WASCA 307; (2003) 28 WAR 308 [9]. 21 Tradesman Technologies [24] - [26]. -- 11 of 17 -- [2026] WASCA 105 REASONS OF THE COURT Page 12 other reason might not comply, with an order requiring repayment of the judgment sum paid by the appellant. 2. Where the respondent threatens enforcement of the judgment by sale of property owned by the appellant. If a sale occurs before the appeal is heard and the appeal succeeds, then it would be impossible for any order to be made restoring the property if it had already passed into the hands of a third party. 3. Where the appellant does not have the ability to pay the judgment sum and may be rendered bankrupt or a company may be wound up before the appeal is heard. In the present case, the appellant seeks to place itself in the third of these categories. 28 In relation to the third category, Pullin JA noted that the mere threat of service of a bankruptcy notice is not always, per se, sufficient to demonstrate special circumstances or that the appeal will be rendered nugatory. In Tradesman Technologies, the service of a bankruptcy notice on an individual respondent was not found to render an appeal nugatory where there was a real prospect that the appeal might be heard before a sequestration order was made. Further, where a corporate respondent's costs had not been taxed, there was no present liability for the company to pay any specified sum of money. His Honour held that there was not at that point any circumstance which might render the company's appeal nugatory.22 29 In Kalifair Pty Ltd v Digi-Tech (Australia) Ltd,23 multi-million dollar judgments had been awarded against corporate appellants, none of which had the capacity to pay. Only one of the corporate appellants had any significant assets. In a context where it was not necessary for the appellants to demonstrate special circumstances, the New South Wales Court of Appeal granted a stay subject to a Mareva24 undertaking by the company with assets not to dispose of them. The court observed:25 In the present cases if stays are refused the judgment creditor would be free to serve statutory demands and proceed to winding-up. The prosecution of the appeals would then be stayed automatically and the stays would continue unless and until the liquidator elected to prosecute the appeals. The directors would lose control of the litigation and the 22 Tradesman Technologies [27] - [29]. 23 Kalifair Pty Ltd v Digi-Tech (Australia) Ltd [2002] NSWCA 383; (2002) 55 NSWLR 737. 24 From Mareva Compania Naviera SA v International Bulkcarriers SA [1975] 2 Lloyd's Rep 509. 25 Kalifair [21] - [22], [24] - [26]. -- 12 of 17 -- [2026] WASCA 105 REASONS OF THE COURT Page 13 creditors, including the judgment creditor, would have a say in any decision to proceed. The directors would thus suffer delay and difficulty and incur additional expense in securing a decision from the liquidator to proceed with the appeals. … The judgment creditor and its solicitors evidently believe that the winding-up of the three appellants would be to their advantage. The Court should therefore infer that there is a real risk that the making of winding-up orders would prevent the prosecution of these appeals. Where the appellants have no assets the judgment creditor, as it has conceded, will not suffer any relevant prejudice if a stay is granted. The loss of its right to proceed to winding-up to prevent the appeals being heard on their merits does not constitute relevant prejudice for present purposes. The appellants may be required to give security for the judgment creditor's costs of these appeals, but the judgment creditor will not otherwise be financially prejudiced if the appeals proceed and fail on their merits. On the other hand the appellants would suffer irremediable prejudice if they were unable to prosecute appeals which might have succeeded. 30 However, the decision in Kalifair has been treated with caution by courts in other states, both in relation to the statement of what appears to be an absolute rule and the equating of the position of directors with the position of their company.26 31 In Challenger Charter Pty Ltd v Curtain Bros (Qld) Pty Ltd, monetary judgments had been awarded against two corporate appellants, Timor Star and Challenger Charter. The latter had no capacity to pay the judgment debt. In refusing the stay in favour of Challenge Charter, Callaway JA (Chernov JA agreeing) observed:27 In my opinion, the relevance of a threat of liquidation and the weight to be given to it vary from case to case. Sometimes it is significant that a winding-up order will bring a company's business to an end or diminish the value of its assets or both or that the company, regarded as a legal person, will cease to exist when the winding up is completed. Whatever may be said of Timor Star, none of those considerations has much weight in relation to Challenge Charter. It has no significant business or assets 26 See Challenger Charter Pty Ltd v Curtain Bros (Qld) Pty Ltd [2004] VSCA 66; (2004) 9 VR 382 [16] - [17]. See also V601 Developments Pty Ltd v Probuild Constructions (Aust) Pty Ltd [2022] VSCA 77, [58] - [61]. 27 Challenger Charter [17]. This passage was adopted by the Queensland Court of Appeal in refusing a stay in Cook's Construction Pty Ltd v Stork Food Systems Australasia Pty Ltd [2008] QCA 322; [2008] 2 Qd R 453 [16] and the Supreme Court of South Australia in Ryan v Urban Construct (SA) Pty Ltd [No 2] [2012] SASC 193; (2012) 114 SASR 410 [40] - [42]. -- 13 of 17 -- [2026] WASCA 105 REASONS OF THE COURT Page 14 other than [a vessel subject to sale] and the shares in Timor Star. It has only one director and is the wholly-owned subsidiary of another proprietary company. In such a case it is not irrelevant that the liquidator may still pursue the appeal if he or she considers that to be worthwhile. The liquidator would take into account the director's views and the director would be well placed to assist the liquidator if the appeal proceeded. It is quite wrong to regard it as the director's appeal. It is the company's appeal. [Counsel for the appellants] submitted that it was unfair to the director to displace him, but that is not the test. I am not persuaded that it would be unfair to Challenge Charter for a liquidator to evaluate the prospects of its appeal. An unpaid creditor is prima facie entitled to use the processes of company law to recover a debt owing to it and there is a public interest in insolvent companies being wound up. (In some cases it may be relevant to the grant or refusal of a stay that a pending appeal may be taken into account on an application for winding up). (some footnotes omitted) 32 There is a further reason for treating the decision in Kalifair with caution. In Kalifair the court proceeded on the basis that, if a liquidator were appointed, the appeal in that case would be 'stayed automatically and the stays would continue unless and until the liquidator elected to prosecute the appeals'. That is the position which prevails under s 60(2) of the Bankruptcy Act 1966 (Cth) when an individual becomes bankrupt. However, we are not aware of any provisions in the Corporations Act 2001 (Cth) which would automatically stay proceedings brought by (as opposed to against) a corporation subject to a winding up order. Certainly, the continued prosecution of an appeal may depend on convincing a liquidator that the appeal has sufficient merit to prosecute and that there is adequate funding for the prosecution of an appeal. However, that is a different proposition to saying that the appeal would be automatically stayed if a winding up order were made against a corporate appellant. 33 While the above principles provide guidance in the exercise of the discretion, they are not inflexible or exhaustive, and at all times the ultimate question must be whether there are special circumstances to justify the court ordering a suspension.28 Disposition 34 It is not apparent that, in the circumstances of the present case, the appeal would be rendered nugatory if a stay of the primary orders is not granted pending the determination of this appeal. The appellant is not 28 See, for example, Wright v De Kauwe [2023] WASCA 42 [35]; City of Wanneroo v Bakota [2023] WASCA 61 [13]. -- 14 of 17 -- [2026] WASCA 105 REASONS OF THE COURT Page 15 trading, so that enforcement of the judgment debt will not bring an ongoing business to an end. The appellant's financial accounts indicate that it is insolvent on a balance sheet basis, even without taking the judgment debt into account. There is no evidence of the extent to which the appellant receives support from its parent company to enable it to continue in existence. On the limited evidence before the court as to the appellant's financial position, a winding up appears likely irrespective of the outcome of the appeal. If the enforcement of the judgment debt were to lead to the winding up of the appellant, it would be open to the liquidator to cause the appellant to pursue the appeal while in liquidation. There is no contention that the appellant may not be able to recover the judgment debt from the respondent if the appeal is allowed. 35 The appellant's contention that the trial judge misconstrued cl 3.9(a) of the lease agreement appears to be reasonably arguable, in the relevant sense, at this provisional stage. However, it is not apparent that success in that argument will necessarily lead to the whole of the damages award being set aside. In particular: 1. It is not clear how the misconstruction affected the award of $494,416.21 (exclusive of GST) plus interest for unpaid rent. 2. Nor is there any direct challenge to the trial judge's construction of cl 3.23 of the lease agreement, or his Honour's conclusion that there was a breach of that clause. The finding based on a breach of cl 3.23 provided an alternative basis for the award in respect of damage to the warehouse premises. 3. The trial judge found that the damage to the warehouse premises did not fall within the exception in cl 3.9(a) both because it did not constitute 'fair wear and tear' and because the proviso to that exception was engaged. Even if the trial judge erred in finding the proviso to be engaged on the basis alleged in appeal ground 1, the exception would still not apply on its own terms. 4. If the trial judge erred in construing the second paragraph of cl 3.9(a) in the manner alleged by appeal ground 2, that might affect the dismissal of the appellant's counterclaim. However, the unchallenged assessed value of that claim is only $276,780.80, which is a small proportion of the judgment sum. Although the point was raised in submissions, the ground does not allege that the trial judge erred by failing to construe the -- 15 of 17 -- [2026] WASCA 105 REASONS OF THE COURT Page 16 first paragraph of cl 3.9(a) as implicitly operating subject to the second paragraph of that clause. 36 Having regard to these matters, while we are prepared to proceed on the basis that the appeal has reasonable prospects of success in the relevant sense, we would not put it any higher than that. Even assuming that some of these obstacles can be overcome, it remains difficult, at this preliminary stage, to see on what basis the whole of the judgment sum would be set aside. 37 The balance of convenience favours the refusal of a stay. The financial accounts indicate that the appellant's financial position is deteriorating over time. The appellant does not offer to pay the judgment sum into court or provide any other security for the satisfaction of the judgment sum if the appeal is dismissed. The appellant's liabilities exceed its assets by a considerable margin, and the appellant is not trading. As such, the potential prejudice arising from enforcement of the judgment debt could only be to the appellant's creditors. Those creditors, or the appellant's parent company, could provide funding to a liquidator, who may cause the appeal to be pursued in the liquidation. On the other hand, delay in the appointment of a liquidator, who can investigate the appellant's affairs and any claims that might be made against third parties, potentially operates to the detriment of creditors including the respondent as a judgment creditor. If the appellant's parent company is concerned about reputational harm which might result from enforcement of the judgment sum, that harm could be avoided by the parent company paying the judgment debt itself on behalf of the appellant or placing the appellant in sufficient funds to pay the judgment debt. 38 Having regard to all the above matters, we were not satisfied that it was in the interests of justice to grant the appellant a stay of the primary orders pending determination of the appeal. We therefore made the following orders at the conclusion of the hearing: 1. The appellant's application in an appeal filed on 20 May 2026 is dismissed. 2. The appellant pay the respondent's costs of the application to be assessed if not agreed. -- 16 of 17 -- [2026] WASCA 105 REASONS OF THE COURT Page 17 I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia. LK Associate to the Hon Justice Mitchell 22 JULY 2026 -- 17 of 17 --