DALEY INVESTMENTS PTY LIMITED vy MELACARE INDUSTRIES OF AUSTRALIA PTY LIMITED SUPREME COURT OF NEW SOUTH WALES — COURT OF APPEAL CLARKE JA 29 April 1996 [1996] NSWCA 135 EXPEDITION OF APPEAL — APPLICATION PREVIOUSLY DISMISSED — CHANGE IN CIRCUMSTANCES — DETERIORATION OF APPELLANT'S HEALTH — SALEABILITY OF PROPERTY STAY OF COSTS ORDER — RECOVERABILITY OF AMOUNT ON APPEAL Clarke JA. The appellant has brought two applications to the Court. The first is an application for expedition of the appeal and the second for a stay of so much of the trial judge's orders as requires the payment by the appellant of the respondent's costs of the trial. The applications are of types commonly found in this Court. Notwithstanding, I have been supplied with an enormous amount of evidence covering material, much of which has little, if any, relevance to the applications. Because of the volume of material I informed the parties I would consider only those parts of the affidavits or other evidence to which my attention was drawn. The appeal is, in many ways, an unusual one. The present situation in which the parties find themselves is extremely unfortunate. The respondent company in 1987 purchased the goodwill of a tea-tree plantation business conducted by Mr and Mrs Daley from the appellant for $6.1 million. Theconsideration was provided in shares. Therein started a sequence of events which found both parties locked in combat, a state in which they have been since at least 1993. The actual decision of Hodgson J involved, as it transpired, a claim by the appellant that it had lawfully terminated an option granted to the respondent to purchase the property which the respondent already leased and on which the plantation business was conducted. The option and lease resulted, as I understand the chronological material before the Court, from attempts by both parties to resolve their differences, or the differences that then existed. Such attempts involved mediation in 1994 before Sir Laurence Street. Unfortunately on this occasion the mediation was not successful. The appellant lost its attempt to have the option declared to be lawfully terminated and it is from that decision that it has appealed. The appellant is, clearly enough, desirous of having this appeal concluded as quickly as possible. The respondent, for its part and for reasons which have been articulated but which I do not find completely compelling, has opposed the application for expedition. In the course of argument Mr Lever, counsel for the respondent, pointed out that in May last year a similar application was brought before Powell JA and dismissed. On that occasion his Honour, balanced, in a conventional way, the claims advanced in support of an order for expedition against the correctness of elevating this appeal above the many that are presently awaiting hearing in this Court. When his Honour gave his decision he expressly 2 UNREPORTED JUDGMENTS indicated that he was not intending to prejudice any subsequent application which might be made in the event of any change of circumstance. Mr Weber, counsel for the appellant, has submitted that there is evidence before the Court which was not before his Honour and, in one respect at least, demonstrates a change in circumstances. That evidence concerned the health of Mr Daley, a director of the appellant, and the saleability of the property on which the plantation is situate. The appellant supported the claim of ill health by a report from Dr Paul Kerkenezou dated 27 February 1996 in which the doctor said, after referring to a number of conditions from which Mr Daley suffered, that Mr Daley's health was continuing to deteriorate at a very rapid and worrying degree. It also said that his ability to cope and conduct his affairs was now just a shadow of his previous self. It was submitted that a quick reference to the chronology ought to demonstrate that Mr Daley's deterioration in health was, in substance, self-induced. The basis of that submission was that Mr Daley had been guilty of the initiation of rapid fire court cases or claims against the respondent. I am not satisfied that his deterioration in health is self-induced. It seems to me that anyone who has entered into a commercial transaction only to find that it has involved him in continuing disputation and litigation over a lengthy period of time would be likely to suffer significant health deterioration. On the other hand, I think it is true to say that there are many appellants awaiting a hearing in this Court who also suffer from health problems, some of whom may even have much greater health problems that Mr Daley. Nonetheless, this material was not before Powell JA and it does require reconsideration of the application. The second aspect was the evidence by a real estate consultant, Mr Roger Buck, that the continued existence of the option rendered the property substantially unsaleable. He said in a letter, which is before the Court, that thepresent lease would not necessarily put off purchasers but the option certainly would. Mr Lever submitted that this was not really new. His Honour had considered material in an earlier letter from Mr Buck in which he adverted to a prospective purchaser requiring the removal of the impediments on the title before continuing negotiations. No doubt the earlier letter provided some indication that, speaking generally, the option was an impediment to sale but, in my view, the additional material focused more clearly on the problem created generally, not only in relation to one purchaser, by the existence of the option. Having said all that, I must still express my concern in elevating this appeal above others. I would have to recognise that the grounds brought forward, whilst entitling, as I said, serious consideration, may not, in the context of the recent decision in Elders, be sufficient in themselves to justify the orders sought. The application is a difficult one for the balancing factors are fairly evenly weighted. Two things, however, have persuaded me in the end to place this appeal in the expedition list. They are, the time estimate agreed by the parties, being one day to one day plus, and the undoubted desirability of trying to conclude this chapter of the disputation in the hope that with its conclusion the parties may be able more quickly to see their way to a resolution of the whole sorry state of affairs. I should indicate to the Registrar, however, that the matter is not one calling for urgent expedition, but nonetheless the case should be placed in the expedition list. UWRLEY INVESTMENTS PTY LIMITED v MELACARE INDUSTRIES OF AUSTRALIA PTS LIMITED (Clarke JA) (Clarke JA) Mr Weber, in support of his second application, recognised that prima facie the respondent is entitled to the fruits of his victory, which includes a costs order secured below. He submits, however, upon an examination of the financial records relating to the respondent, which are before the Court, it will be understood that there is a real risk that if his client pays the costs, which are said to amount to between $70,000 and $100,000, it may not be able to recover the amount paid in the event of its succeeding in the appeal. In support of that application Mr Weber took the Court to a series of accounts which would tend to suggest that the respondent is still, to an extent, struggling to operate profitably. I have deliberately made that statement in a tentative way because I do not believe that my examination of the material would, in the context of the present application, entitle me to form a concluded view on the matter. One factor which mitigates strongly against the making of the order sought is that the respondent owns property, which was valued in 1993 at $3.7 million. That property is shown in the books of the respondent at its cost price, being some $700,000, and it is obvious that accounts reflecting that value indicate would give a different picture than ones showing the higher value. At the end of the day I simply am not persuaded that the risk to which Mr Weber adverts is so likely to eventuate that it is necessary to protect his client by a stay order. I appreciate that the projected takings may well be far rosier than the facts support. Nonetheless, I am not disposed, in the light of the financial evidentiary material to which my attention has been drawn, to make the order for the stay which is sought. Accordingly, the orders I propose are that the appeal will be placed in the expedition list and that the stay application be refused. In the circumstances I am of the opinion that each party should pay and bear its own costs. There is one further thing I wish to say. The Notice of Appeal has been drawn to my attention. It raises a number of discrete but not highly complex points. This is recognised by counsel in their time estimates for the appeal. For my own part, I believe that the Registrar should require both parties to prepare full written submissions and should require the appellant to provide an up-to-date chronology which includes references to the relevant pages of the appeal book, and a narrative statement of the facts which are broadly covered by that chronology. In the event that the Registrar does make that order, I think one day should be set aside for the appeal. (Counsel addressed on the question of costs.) At the request of both parties, I vacate my order for costs and make the costs of the application today costs in the appeal. Orders accordingly. Counsel for the claimant: R J WEBER Solicitors for the claimant: GADENS RIDGEWAY Counsel for the opponent: F LEVER Solicitors for the opponent: ANDREW THORPE