ALLIED ASPHALT COMPANY PTY LTD v CITRA CONSTRUCTIONS LTD [1990] NSWCA 6

ALLIED ASPHALT COMPANY PTY LTD v CITRA CONSTRUCTIONS LTD

SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

SAMUELS AP 5 November 1990

[1990] NSWCA 6

Samuels AP This is an application for security for costs by the claimant, Citra Constructions Ltd, which is the respondent in an appeal brought by the opponent as appellant, Allied Asphalt Company Pty Ltd.

The proceeding arises out of a contract between the two companies by which the opponent subcontracted to the claimant which was in turn a subcontractor in respect of building work in the construction of the new Parliament House.

It will suffice to say that disputes arose between them which were referred to a referee who in due course made a report to Mr Justice Cole in the Commercial Division. Mr Justice Cole, having considered the matter, entered judgment for the claimant, although the referee had himself found one of two claims in favour of the opponent.

The appeal is brought against that judgment and, if it is successful, will recover a sum of the order of $249,000.

Evidence in the case indicates - and this is indeed common ground - that the opponent's financial situation is extremely parlous. It has a deficiency of capital which substantially exceeds the amount of its claim and even if that sum were recovered the opponent would still in my view be insolvent.

Pt51 rll provides that the Court of Appeal may, in special circumstances, order that such security as the Court of Appeal thinks fit be given for the costs of an appeal to the Court of Appeal.

It is clear from cases such as Kennedy v McGeechan, which is reported only as a note in (1978) 1 NSWLR 315, that impecuniosity has been consistently held to be "special circumstances" so as to satisfy the requirements of the rule. There may well be an exception to that conclusion where the impecuniosity which puts the respondent at risk for costs in the event of the respondent's success may be displaced if it arises from the very matter which lies at the heart of the appeal so that the appellant seeks to overturn the judgment which has placed it in a vulnerable position to an application for security.