DEE WHY VILLAGE PTY LTD v RECREATIONAL PLANNING ASSOCIATION PTY LTD; RIPOLL HOLDINGS PTY LTD v RECREATIONAL PLANNING ASSOCIATION PTY LTD SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL PRIESTLEY JA 29 April 1988 [1988] NSWCA 35 APPLICATIONS for security for costs in two related appeals — no new point involved. ORDERS 1. Applications dismissed. 2. Costs of each application to be costs in the appeal in which it was made. Priestley JA I think I should say that I do not find this an easy case in which to exercise discretion. Two applications are before the court for security of costs. They arise in relation to two separate appeals from proceedings which were heard together before Cohen J. In one set of proceedings the substantial claim was that a company known as Recreational Planning Associates Pty Limited, which I shall simply call Planning, was beneficially entitled to a share of property held in trust by a company called Ripoll Holdings Pty Limited, which I shall call simply Ripoll. The issue raised in the proceedings involved a great deal of evidence and concerned, so far as I can make out, trust property potentially of a very considerable value. I do not intend to go through any of the detail and the facts surrounding the central issue beyond the following summary version. Planning had entered into transactions with a company called Dee Why Village Pty Limited which involved the purchase of land and later the building of a retirement village on the land. Planning had a beneficial interest in the project being undertaken by Dee Why Village Pty Limited, but for present purposes it is not material to try and describe the nature of that interest. Dee Why Village Pty Limited had entered into a contract to buy land and to pay a sizeable deposit upon a sizeable purchase price. Difficulties arose in regard to the financing of the whole project and the payment of the purchase price on the land. The three main principals concerned in the venture originally being carried out by means of Dee Why Village Pty Limited were Mr Colbron, Mr Poignand and Mr Courtney. When difficulties arose in regard to the completion of the transaction, the purchase of the land, Messrs Poignand and Courtney entered into a transaction whereby Ripoll became the purchaser of the land by an arrangement in which Dee Why Village Pty Limited took part. Thereafter the project was carried out through the vehicle of Ripoll. At the time when the change of vehicle took place there were conversations and transactions between the three main parties concerned, Planning, Dee Why Village Pty Limited and Ripoll. The greater part of these transactions between the parties took place on 28 and 29 August 1985. Put very shortly, Mr Colbron who was the moving spirit behind planning, claims that on 29 August 1985 an agreement was reached whereby planning became entitled to a beneficial interest in the project thenceforth to be carried out 2 UNREPORTED JUDGMENTS by Ripoll. Messrs Poignand and Courtney as well as Dee Why Village Pty Limited and Ripoll denied such an arrangement was made. Before Cohen J the conversations, transactions and documents which took place and came into existence on 28 and 29 August 1985 were examined in great detail. He came to the conclusion that although basic agreement between the parties might well be thought to have been reached on 28 August, no decisive arrangement was ever made on 29 August as claimed by planning. Again stated extremely shortly, his opinion was that whatever the arrangements were between the parties they had Not reached a stage where he could find any clear evidence of what trust it was that was alleged to have arisen in favour of planning, or, putting it another way, what interest it was that planning had in any trust. The case failed simply because in his Honour's view arrangements had not reached a stage where the relevant beneficial interest, as claimed, had come into existence. The other proceedings which were heard at the same time involved another company of Mr Colbron, Recreational Retirement Associates Pty Limited. This company had been engaged as a consultant to the project, certainly during the time that Dee Why Village Pty Limited was a vehicle through which the project was engaged to be carried out. I do not think it is necessary to mention in detail all its claims, which were against Dee Why Village Pty Limited, save to say that its various claims all seemed to me to be ancillary to and dependent on the principal question in the other case, namely whether planning had obtained any beneficial interest in the project on 29 August 1985. Both planning and Retirement appealed against the dismissal of the proceedings they had brought. The appeals were filed in timely fashion and in an equally timely fashion the present motions were filed seeking security for costs of the two appeals. The aggregate amount of security sought for the two appeals is $8,579.43, an amount which I say immediately seems to me to be a very moderate amount for the respondents to the appeals to seek. When the applications came on for hearing it was made clear that they were brought by the claimants, both under s533 of the Companies Code and Pt51 r11 of the Supreme Court Rules. Those provisions are not identical. The rules, in contrast to s533, say that the Court of Appeal may in special circumstances order that such security as it thinks fit be given for the costs of the appeal to the Court of Appeal, whereas s533 which deals with a much wider range of proceedings than appeals to the Court of Appeal, makes no mention of special circumstances. In the course of the presentation of evidence relating to the applications, some questions concerning admissibility were argued and in regard to some of those questions evidence was admitted subject to objection. I do not propose to rule upon the admissibility of the evidence which was admitted subject to objection because that particular evidence does not seem to me to affect the main matters in the applications which I will be taking into account in reaching my decision upon the two applications. I should mention also at this stage that although there was a great deal of evidence before me, I will mention very little more than the summary I have already given. This is because in this case I see no middle course between taking a very broad view of the prospects of the opponents in the appeal and becoming enmeshed in a detailed consideration of these prospects, little different from hearing the appeal itself. I do not intend to take the latter course. UWREE WHY VILLAGE PTY LTD v RECREATIONAL PLANNING ASSOCIATION PTY LTL8 RIPOLL HOLDINGS PTY LTD v RECREATIONAL PLANNING ASSOCIATION PTY LTD (Priestley JA) The factors which seem to me to be relevant in this particular case can be put into three groups. From the opponents' (appellants') point of view, I take the following factors into account. The appeals seem to me to be genuine appeals, in the sense that they are not brought for any purpose, so far as I can see, other than the purpose of seeking to obtain a different decision on the facts from that which was given by Cohen J. That seems to me to be a different kind of situation from that arising in appeals, sometimes called sham appeals, which are put on for the purpose of delay or obstruction of the opposing parties. In this case the proceedings which were brought have been dismissed and there is no legal restraint upon the claimants. They are unaffected in any way, in a legal sense, by the appeals being on foot. Related to the question of whether the appeal is a genuine appeal is the question of the prospects of its success. Here, it seems to me to be impossible to form any more than a preliminary view based on a broad reading of the material in the case of the prospects of success. It seems to me, not having formed anything like a final view on the matter and indeed without being in a position to form such a view, that the appeal or the appeals will be extremely difficult ones from the appellants' point of view. But although extremely difficult, it does not seem to me that they can be classed as frivolous or hopeless The next factor I take into account is that the two appellants, that is the opponents, are impecunious; that is admitted by Mr Colbron on their behalf and accepted by the claimants. The claimants said, however, that Mr Colbron himself is not or should not be taken to be impecunious and further that his father's estate being interested in the outcome of the proceedings should be considered, in the sense that if any person interested in the father's estate has any funds, then since that person will stand to benefit if the appellants succeed, that person's position should also be looked at to see whether that person has funds which could be used for security. In dealing with this point it seems to me that the practicalities of the matter should be looked at. Mr Colbron gave evidence about his own position from which it appears clear that he is presently unable even to fund the appeal itself. The only prospect of the appeal going forward is if he can channel income from his practice as a solicitor from which funds will be available to pay what seems to me to be likely to be the considerable expense of getting the appeal books in this case ready and doing the other matters which have to be done before the appeals will be ready for hearing. The impression I have is that unless Mr Colbron can raise the funds through his own efforts, the appeals will not go forward at all. I am prepared therefore to approach the security applications on the footing that if security were granted, the probable result is that the appeals will either never come forward or by likely to have their progress long delayed, and in saying that I recognize that I am setting on one side the possibility that there is somewhere a rich relation entitled in the estate of Mr Colbron senior, who stands to benefit if the appeal should succeed. Although recognising that possibility, it seems to me to be very much on the theoretical side of things, whereas the impression that the evidence leads me to as a practical matter is that these appeals are likely to be long delayed or stop altogether if security is ordered. The next factor, still looking at it from the opponents' point of view, is one earlier mentioned, that there has been no delay in the bringing of either of the proceedings in the first place which were heard by Cohen J or the preliminary steps in the appeal. 4 UNREPORTED JUDGMENTS Finally, from the opponents' point of view, I bear in mind that s101 of the Supreme Court Act gives the appellants a right to appeal. The factors to be taken into account from the claimants' point of view are that they have not received the costs of the proceedings which they won at first instance and that they will be put to further costs, which on the present evidence will be unrecoverable if the appeals proceed and are dismissed, which is a result they have good reason to think is likely. In saying this, I am not expressing any different opinion from the one I have already mentioned, that the appeals appear to me to be very likely to be difficult ones from the opponents' point of view but not completely beyond possibility of success. There is also the factor of the moderate amount of security which is asked for. In addition to these factors which summarise the respective interests of the claimants and the opponents, is a third group of matters to be taken into account. The opponents are not in a position to proceed and the evidence satisfies me that carrying the appeals any further is at the moment beyond their means. If that position continues then of course, at some stage, they may be faced with an application that the proceedings be dismissed for want of prosecution. That involves other considerations than those presently to be taken into account and with different complications; they are not presently relevant and need not now be considered. Next, it does seem to me to be relevant that the proceedings before Cohen J were dismissed with costs and there is no legal impediment to the respondents going about their projects and their business, that is, no legal impediment arising out of these proceedings. It may be that the existence of the appeal casts a shadow on their commercial life. If that is so, the granting of a stay pending the provision of security will not particularly affect that position. The appeals will still be on foot. The only difference between ordering and refusing a stay from this point of view will be that the opponents will have to raise more money in the one case than the other before the appeals can proceed. Subject to one thing, in all these circumstances, it seems to me that the better exercise of discretion is to refuse to grant the orders sought, and to leave the parties to their non-discretionary rights. By that I refer, on the one hand, to the opponents' right of appeal, if they can get the money to pay for it, and on the other to the rights the claimants have under the orders of Cohen J dismissing the proceedings. The consideration that has caused me to hesitate in thus deciding the case is the comparatively small amount of security that is asked for by the claimants. The fact that the amount is small furnished argument both ways as to the exercise of discretion. On the one hand it could be said, why should not the opponents provide such security when on the most optimistic view of their appeals, they have a very difficult task ahead of them, and if they can get enough money to run the appeals they should also be able to get the comparatively small extra amount necessary for the security. On the other hand, the amount is so small against the overall figures involved in the litigation that if the court does not order it be provided, it would not seem to cause significant hardship to the claimants. In the end, my consideration of this aspect is influenced by my view of the comparatively small amount asked for. The present position of the opponents and of Mr Colbron is such that to order security for the appeals would be to bring the appeal to a lengthy delay if not bring it to a halt. If I am wrong in this view the truth is very likely to come to light at some stage raising obvious possibilities helpful to the claimants. By that I mean that if contrary to the evidence before the court Mr Colbron has greater means of access to funds than he has revealed to UWREE WHY VILLAGE PTY LTD v RECREATIONAL PLANNING ASSOCIATION PTY LTO§ RIPOLL HOLDINGS PTY LTD v RECREATIONAL PLANNING ASSOCIATION PTY LTD (Priestley JA) the court - I am not suggesting that he has but I am simply dealing with the possibility as raised by the claimants - then that will almost inevitably come to light at some stage before the appeal is heard and it will then be open to the claimants to take such further steps as they think fit. I am also influenced by another factor that I have not otherwise taken into account. The opponents have claimed that their impecuniosity has either been caused or contributed to by the actions of the claimants. It is not clear to me that this is so in the relevant sense, and what I have so far said is not influenced by any such consideration. One item related to this category which does seem to me to be relevant was mentioned by Cohen J in his reasons, that Mr Colbron had claimed legal fees from the claimants. I am not clear from which claimants the amount was demanded. It does not matter for present purposes. Cohen J mentioned also that the claim had been accepted and later disputed. It is agreed that the claim was in the amount of $15,000. I have no idea of the ultimate fate of this claim. It may turn out to be one that cannot be sustained. Nevertheless the fact that it was at one stage accepted by whichever of the claimants it was directed to, indicates that it may well be more than a simple frivolous or unjustified claim. When that is taken into account together with the other matters that I have mentioned, I return to what I earlier said that as a matter of discretion, the applications, which have much to be said for them both for and against the making of the orders as asked, should be dismissed. I mention that there was some argument about the question whether special circumstances as referred to in Pt51 rll were established in the present case. It does not seem to me to be necessary to decide this question because even on the assumption special circumstances were established Pt51 rll still leaves a discretion to the court to decide whether in the light of those special circumstances, security for costs should be ordered. Assuming in the claimants' favour that special circumstances in the relevant sense existed here, for the reasons I have indicated, I would still exercise my discretion against ordering security in the two appeals. (Mr Colbron asked for costs following the event of his Honour's orders.) HIS HONOR: In the circumstances of the case it seems to me that the appropriate order is that the costs of these applications should be costs in the appeal. The orders I make are that the applications are dismissed and the costs in each application are to be costs in the appeal in which the application was made.