Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Riva NSW Pty Limited v Gerace [2011] NSWCA 146 Hearing dates: On the papers Decision date: 08 June 2011 Before: Beazley JA at 1; Hodgson JA at 2 Decision: Summons for leave to appeal dismissed with costs. [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] Catchwords: PROCEDURE - Security for costs - Application for leave to appeal - Whether prospects of success sufficient. Category: Principal judgment Parties: RIVA NSW PTY LIMITED (ACN 113 881 815) (applicant) Maria GERACE (first respondent) T G R PARKER (second respondent) Representation: J O'Sullivan (applicant) M R Elliott (respondents) Leon M Ratner & Associates (applicant) Gilchrist Connell Solicitors (first respondent) McCabe Terrill Lawyers (second respondent) File Number(s): 2009/334794 Decision under appeal Date of Decision: 2010-09-10 00:00:00 Before: McLoughlin DCJ File Number(s): 1762/2009 Judgment 1BEAZLEY JA: I agree with Hodgson JA. 2HODGSON JA: The applicant (Riva) is the trustee of the Cavallino Unit Trust. Riva acquired land at Point Piper that was burdened by a covenant restricting any development to two storeys in height. The first respondent (Ms Gerace) and the second respondent (Mr Parker) acted as Riva's solicitor and counsel respectively. In reliance on their advice, Riva commenced proceedings in the Supreme Court of New South Wales seeking, inter alia , a declaration that the covenant was unenforceable. Master McLaughlin declined to grant the relief sought. Riva appealed from the Master's decision, and Gzell J dismissed the appeal on 31 March 2004 and ordered Riva to pay costs. 3On 28 April 2009 Riva commenced proceedings in the District Court alleging that the respondents had been negligent in giving advice with respect to the Supreme Court proceedings, and claiming damages in the sum of over $400,000. 4Ms Gerace filed a notice of motion on 23 December 2009 seeking security for her costs in the District Court proceedings in the sum of $123,760. Mr Parker filed a notice of motion on 8 February 2010 seeking security for his costs in the District Court proceedings in the sum of $158,000. On 10 September 2010 Judge McLoughlin DCJ ordered that Riva provide security for Ms Gerace's costs in the sum of $123,760, and for Mr Parker's costs in the sum of $158,000; and that Riva pay their costs of the motions. 5Riva seeks leave to appeal from that interlocutory decision on the following grounds: 1 The learned trial judge erred in ordering the appellant to provide security for the first respondent's costs. 2 The learned trial judge erred in ordering that the amount of security to be provided for the first respondent's costs should be $123,760.00. 3 The learned trial judge erred in ordering the appellant to provide security for the second respondent's costs. 4 The learned trial judge erred in ordering that the amount of security to be provided for the second respondent's costs should be $158,000.00. 5 The learned trial judge erred in finding that the appellant, being a corporation, will be unable to pay the costs of the defendants if ordered to do so. 6 The learned trial judge erred in failing to find that the appellant, as trustee for the Cavallino Unit Trust, will have a right of recourse to the assets of the trust to indemnify it for costs in the proceedings. 7 The learned trial judge erred in failing to accept or properly take into account the undertakings to the Court proffered by the appellant that it and the beneficiaries of the trust would preserve the assets of the trust pending further order of the Court. 8 The learned trial judge erred in finding that attempts by the appellant to lead .evidence as to its financial position were unreliable. 9 The learned trial judge erred in taking into account the fact that the previous trustee of the trust was liable for a judgment debt of $140,000 to $150,000. 10 The learned trial judge erred in finding that there had been deterioration in the economic circumstances of the appellant and failed to take into account the fact that although the trust's cash assets had diminished by $1.5M, it had in the meantime acquired real property worth approximately $2.35M. 11 The learned trial judge erred in placing undue emphasis on the fact that there was no "up to date" report prepared by Ernst & Young in evidence as to the financial position of the plaintiff. 6A written summary of argument prepared by counsel on behalf of Riva was filed in December 2010 and a written response on behalf of the respondents was filed on 10 February 2011. The matter was listed for hearing on 17 March 2011. On that day, Riva was represented by a solicitor Mr Iacono, who had been briefed only the previous day and had no documents. Mr Iacono applied for an adjournment. 7Ultimately without opposition from either party, the Court gave the following directions: 1. Direct that the Summons for Leave to Appeal proceed on the papers. 2. Direct that the applicant file and serve its reply, if any, on or before 4 pm on 31 March 2011. 3. Direct that the reply, in triplicate, be delivered to the chambers of Justice Beazley by that date and time. 4. Note that if the respondent objects to any portion of the reply on the basis that it raises a new matter such objection must be taken by the 6 April 2011 in writing delivered to the chambers of Justice Beazley. 5. No order for costs of to-day's proceedings on the basis that the Court will deal with costs as part of its determination of the Summons for Leave to Appeal. 8No submissions in reply were filed or served by Riva within the time limited or since, so the Court is determining the matter on the papers, on the basis of Riva's written summary of argument and the respondents' written response. 9The main contentions for Riva are (1) that (as the primary judge should have found) the trust had assets of approximately $2.35 million; (2) that (as the primary judge should have found) Riva had a right of indemnity from those assets; and (3) that the primary judge erred in the quantum of the security ordered, particularly in that he should have ordered the provision of security in stages. 10Having regard to the submissions for the respondents, which set out detailed problems with the evidence given for Riva, I do not think the prospects of making out proposition (1) are such as to justify granting leave to appeal. Proposition (2) on its own could not justify the grant of leave to appeal; and in any event the right of indemnity of a corporate trustee, with no assets of its own, may not be sufficient to defeat an application for security for costs, even if the trust were to have sufficient assets to cover costs. 11As regards proposition (3), it appears that Riva did not submit to the primary judge that security should be provided in stages; and in my opinion the prospects of Riva showing that the orders made by the primary judge involved an error of principle, or were outside the range of reasonable discretionary decision-making, are not such as to justify the grant of leave to appeal. 12For those reasons, I would propose that the summons for leave to appeal be dismissed with costs. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 08 June 2011