Procedural background of the NULIS class action

In December 2024, after the initial trial, the Federal Court of Australia handed down its judgment in the infamous "fees for no services" superannuation class action. The court dismissed all of the applicant's claims against the trustee of the MLC Super Fund, NULIS. These included allegations that NULIS breached its duties by paying grandfathered commissions to financial services licensees from the fund members' accounts following the transfer to a successor fund on 1 July 2016 (Brady v NULIS Nominees (Australia) Limited in its capacity as trustee of the MLC Super Fund (No 4) [2024] FCA 1374).

Following the dismissal of the proceeding, Markovic J made orders that, among other things, the applicant pay NULIS's costs on a party and party basis and that those costs were to be assessed on a lump sum basis by a Registrar (Brady v NULIS Nominees (Australia) Limited in its capacity as trustee of the MLC Super Fund (Costs) [2025] FCA 128)

Subsequently, the applicant filed an appeal and sought a stay of the costs orders made against it, pending the outcome of the appeal.

Federal court rejects stay of costs orders pending appeal determination

Legal principles governing stay applications

The Federal Court's powers to grant a stay of the execution of the judgment appealed from until the appeal is heard or determined are discretionary. Those powers are set out in section 29 of the Federal Court of Australia Act 1976 (Cth) and rule 36.08 of the Federal Court Rules 2011 (Cth).

In considering the applicant's stay application, Markovic J reiterated several legal principles derived from previous relevant decisions that apply to the exercise of the judicial discretion to grant a stay of the execution of the proceeding under the judgment appealed from. These can be summarised as follows:

• In determining whether to grant a stay, the Court must consider whether: (1) there is an arguable point on the proposed appeal or some “rational prospect of success” in relation to any of the grounds of appeal, and (2) the balance of convenience favours the grant of a stay.
• The party seeking the stay must demonstrate that, if the stay is not granted: (1) there is a real risk that it will suffer prejudice or damage, which will not be redressed by a successful appeal, or (2) a successful appeal will be rendered nugatory.
• The discretion of the Court in granting a stay: (1) ought not be exercised lightly; (2) ought only exercised where there is sufficient basis to outweigh the consideration that a successful party at first instance is entitled to fruits of its judgement.

Did the balance of convenience favour a stay?

As the parties agreed that the applicant's appeal raised arguable grounds, the issue for the Court's determination was whether the applicant had demonstrated that the balance of convenience favoured the grant of the stay.

The applicant relied on Zonia Holdings Pty Ltd v Commonwealth Bank of Australia Limited (No 6) [2024] FCA 109 (Zonia) to argue that the better course was to await the outcome of the appeal. This was to avoid wastage of the parties' and the court's resources in undertaking a lengthy, time consuming, and resource intensive lump sum cost assessment. Especially given that NULIS had obtained security for its costs from the applicant's funder, thus removing the risk of the applicant being unable to meet the costs orders if his appeal was unsuccessful.

Having observed that "[e]ach case and thus the exercise of the Court’s discretion must be considered having regard to its own unique facts" ([20]), Markovic J distinguished Zonia from the case at hand. This was because: (1) in Zonia, the appeal was to be heard only two months after Yates J had to determine the stay application. In the present case, the absolute earliest possible date for hearing of the appeal was six months away. "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" ([21]); and (2) NULIS had put forward evidence of the significant costs it had incurred in defending the proceeding, while no such evidence appeared before Yates J in Zonia. As to the Court's resources, Markovic J agreed that they should be deployed wisely, but observed that their scarcity alone could not justify the grant of a stay.

Impact of litigation funding on stay decision

The applicant also submitted that, pursuant to the terms of the funding agreement, if the appeal was wholly or partially successful, the wasted costs associated with the cost assessment undertaken before the appeal is determined would have to be borne by him and the group members. Markovic J was not swayed by this argument. These 'wasted' costs were likely recoverable as part of the applicant's costs of the proceeding at first instance that would then be ordered against NULIS , particularly considering NULIS’ opposition to the application for a stay.

Court’s discretion and resource considerations

Finally, the applicant contended that NULIS would not have suffered prejudice if the stay was granted because, as disclosed in the annual reports of the National Australia Bank Limited (NAB), NAB was liable for NULIS's costs associated with the class action.

Markovic J rejected this argument on the basis that NULIS (rather than NAB) was the party to the proceeding which was entitled to payment of its costs and was "able to do what it wishes with those funds once received", even if it was to refund NAB for the costs incurred.

Markovic J went on to observe that the considerations put forward by the applicant should be weighed against the following consequences of a stay: (1) the assessment of NULIS's costs would be deferred by at least six months; (2) NULIS would be unable to deal with the amount assessed until the appeal was determined; (3) NULIS would be kept out of what was likely to be a significant amount of interest following costs assessment until the date of payment; (4) the funder would gain a financial benefit if the applicant was unsuccessful on the appeal. Having considered these matters, her Honour concluded that economic benefits to the funder weighed against a stay, particularly where a correlative financial loss to NULIS would not be mitigated. The application for stay was dismissed, with the applicant ordered to pay NULIS's costs of the application.

Implications for class action respondents

• The way in which the Court chose to exercise its discretion to grant a stay of the costs order in a particular case would not be readily applicable to a different case – the exercise of judicial discretion is fact-specific. However, useful principles governing that discretion can be extracted from the decision.
• Where there is no dispute that an appeal raises reasonable grounds, the issue for judicial determination becomes whether the balance of convenience favours the grant of a stay.
• A party successful at first instance should not be shut out from recovering any amount to which it is entitled for an extended period.
• In considering whether to grant a stay of the costs orders pending the outcome of the appeal, an important consideration is which party should have use of the funds pending determination of the appeal.
• Where a grant of a stay would result in a financial benefit to a litigation funder on one hand, and a financial detriment to a beneficiary of the first instance costs orders on the other, the balance of convenience is likely to tip against the grant of the stay.
• While the Court's resources should not be unduly wasted in the process of cost assessment, their scarcity alone does not justify a grant of a stay of costs order pending determination of the appeal.

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

If you would like to find out more about our class actions capability, please reach out to the MinterEllison contacts below.