An appeal does not stop the judgment below from being enforced. To achieve that you need a stay, and every stay application in Papua New Guinea since 2000 has been argued on this case.
Gary McHardy v Prosec Security and Communication Ltd trading as Protect Security [2000] PGSC 31; [2000] PNGLR 279; SC646
Supreme Court, Waigani — Amet CJ, Jalina and Kirriwom JJ, 30 June 2000. Application under section 19 of the Supreme Court Act.
What happened
Mr McHardy left Prosec and took a job with a competitor. Prosec sued to enforce a 12-month restraint of trade clause in his employment contract and obtained an interim injunction in the National Court stopping him from working in a similar business until trial. By then he had already been in the new job for six months.
He applied for leave to appeal and, pending that application, asked the Supreme Court to stay the injunction so that he could keep working.
What was argued
Prosec relied on the line of authority, drawn from the National Court decision in PNG v Kapal [1987] PNGLR 302 and adopted by the Supreme Court in PNG v Gulf Provincial Government, that a stay requires “special” or “exceptional circumstances”. Loss of employment and income, it said, was not exceptional. Mr McHardy said he and his family would be left without income while the appeal ran.
What the Court decided
The Supreme Court is the highest court of unlimited jurisdiction, with an inherent discretionary power to do justice, and it may itself say what factors are relevant to a stay. Any such list cannot be exhaustive. The factors are guidelines to assist the Court and the parties, not “hard and fast pre-conditions”.
To say that the test is “special” or “exceptional circumstances”, or “good reason”, or “an appropriate case”, is restrictive. What matters is to articulate the factors that may be relevant in differing cases.
Whether leave to appeal is required and has been obtained. Any delay in applying. Possible hardship, inconvenience or prejudice to either party. The nature of the judgment to be stayed. The financial ability of the applicant. A preliminary assessment of whether the applicant has an arguable case. Whether the record shows an apparent error of law or procedure. The overall interests of justice. The balance of convenience. Whether damages would be a sufficient remedy.
Mr McHardy lost. Loss of salary was a compelling reason for wanting a stay, but granting one would defeat the very purpose of an interim injunction obtained to protect a restraint of trade. Nothing else in the balance of convenience favoured him. The application was dismissed with costs.
Did it make new law?
Yes. The Court declined to follow the “special or exceptional circumstances” formula that had come into Supreme Court practice from the National Court in Kapal, preferring the approach of the New South Wales Court of Appeal in Alexander v Cambridge Credit Corporation. This is therefore a case where the Supreme Court corrected, rather than affirmed, a National Court line of authority. The Court also noted that under section 14(3) of the Act no leave is needed to appeal the grant or refusal of an injunction.
Why it matters
A stay application is decided on a weighing exercise, not a threshold. An applicant who cannot point to something unusual is not shut out, but an applicant who shows only that the judgment is inconvenient will not succeed either.
The factors also shape the evidence. An affidavit in support should address delay, hardship on both sides, the strength of the appeal, and why damages would not do.
Procedure is separate. A stay must be sought by an application in the proper form under the Supreme Court Rules 2012, and a notice of motion is incompetent for the purpose: see the stay entries in the Legal Index.
What it does not decide
McHardy was a civil case about an interim injunction. In criminal matters the Court has said that its multiple factors, developed for civil stays, may be less apt than a holistic assessment of all the circumstances. It also says nothing about stays granted by the National Court itself pending an application to it, which are governed by the National Court Rules.
Recent cases applying it
- Sonk v Marape [2025] PGSC 132; SC2836 — described as “the often-cited case”; stay of orders in an employment dispute refused after applying the factors.
- Paraka v The State [2023] PGSC 85; SC2439 — Cannings J confirmed that the power to stay National Court proceedings pending appeal exists under sections 5(1)(b) and 19 in both civil and criminal cases, while noting that a stay of a verdict of guilty would be almost unprecedented.
- Yai-Pupu v Yai-Pupu [2023] PGSC 16; SC2364 — Makail J set out the McHardy factors in full in a deceased estate dispute.
- VJ Holdings Ltd v Ngusu Glan Ltd [2022] PGSC 145; SC2353 — the full Court called McHardy the “locus classicus” and declined to disturb a single judge’s stay absent an error of principle.
Sources
- McHardy v Prosec Security and Communication Ltd [2000] PGSC 31; [2000] PNGLR 279 (Amet CJ, Jalina and Kirriwom JJ, 30 June 2000). Also indexed as [2000] PGSC 22; SC646.
- Supreme Court Act (Chapter 37) — ss 5(1)(b), 14(3), 19
- Supreme Court Rules 2012
- Sonk v Marape [2025] PGSC 132; SC2836; Paraka v The State [2023] PGSC 85; SC2439; Yai-Pupu v Yai-Pupu [2023] PGSC 16; SC2364; VJ Holdings Ltd v Ngusu Glan Ltd [2022] PGSC 145; SC2353
PNG v Kapal [1987] PNGLR 302 and PNG v Gulf Provincial Government are cited as the judgment describes them; neither could be located under those names in the PacLII indexes for this brief.
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