Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Gray t/as Clarence Valley Plumbing v Ware Building Pty Ltd [2012] NSWCA 438 Hearing dates: 10 December 2012 Decision date: 10 December 2012 Before: Ward JA Decision: Orders for security for costs and stay of execution of judgment below [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: PRACTICE AND PROCEDURE - application for security for costs - special circumstances to be shown - appellant failed to attend trial in order to resist proceedings below - quantum of security sought not broken down into components PRACTICE AND PROCEDURE - application for stay of judgment pending appeal - where security of costs order already made in favour of respondents - order sought under s 135 Civil Procedure Act to stay execution of the writ for levy of property Legislation Cited: Civil Procedure Act 2005 (NSW) Cases Cited: Adeels Palace Pty Ltd v Moubarak [2009] NSWCA 130 Alexander v Cambridge Credit Corporation Limited (1985) 2 NSWLR 685 Preston v Harbour Pacific Underwriting Management Pty Ltd (2007) NSWCA 247 Category: Interlocutory applications Parties: Robert Gray t/as Clarence Valley Plumbing Services (Applicant/Appellant) Ware Building Pty Ltd (Respondent) Representation: Counsel: K Pierce (Applicant on motion for stay/Respondent on motion for security for costs/Appellant on Appeal) Ms L Thomas (Respondent on motion for stay/Applicant on motion for security for costs/Respondent on Appeal) Solicitors: Barraclough Jones & Associates (Respondent on motion for stay/Applicant on motion for security for costs/Respondent on Appeal) File Number(s): CA 12/318523 Decision under appeal Date of Decision: 2012-06-14 00:00:00 Before: Toner DCJ File Number(s): 10/210587 Judgment (EX TEMPORE) 1HER HONOUR: Before me on referral from the Registrar are two applications. The first is an application for security for costs of an appeal brought from a decision in the District Court of Toner DCJ. The applicant on that motion is the respondent to the appeal (Ware Building Pty Limited). That motion was filed on 27 November 2012. An affidavit sworn by Richard Michael Barraclough on 5 December 2012 has been read in support of that application. The second application is an application by the appellant in the appeal proceedings (Mr Robert Gray trading as Clarence Valley Plumbing Services) seeking a stay of the judgment the subject of the appeal pending the determination of the appeal. (To avoid confusion, I will refer to the applicants/respondents on the respective motions by their names.) 2At the outset it was indicated by Counsel for Ware Building Pty Limited (Ms Thomas) that if there were to be either security ordered for the costs of the appeal or security provided for part of the underlying judgment debt, then the respondent would consent to the grant of the stay. 3Mr Gray did not consent to the provision of security. The position of Mr Gray (as explained by his Counsel, Mr Pierce) is that a writ for levy of property has been issued on behalf of Ware Building and that the fact of the issue of that writ, together with an undertaking from Mr Gray and his wife (that Mr Pierce informed me he was instructed to give) not to sell or encumber the property pending a further order of the Court should be sufficient in effect to provide security for the respondent, in circumstances where the appeal is to be in the call over list in early next year and is anticipated to receive a hearing date in around May or June next year. 4The decision the subject of the appeal is one from Toner DCJ in the District Court. The circumstances in which that judgment was entered, and certain of the submissions in relation to the matter before his Honour as well as his Honour's judgment, were put before me. Relevantly, the matter was listed for hearing on 12 June 2012. On that occasion there was an application for a change of venue and/or for an adjournment of the hearing date. His Honour dismissed both of those applications. (Mr Gray was represented by a solicitor when the hearing commenced on 12 June 2012.) On the following day (13 June 2012) there was no appearance for or on behalf of Mr Gray. The hearing proceeded in the absence of Mr Gray on that date. There was further argument on 14 June and judgment was given on that date. 5Judgment was given against Mr Gray in the order of around $600,000. 6An Amended Notice of Appeal has been filed on 20 November 2012, in which an appeal from the whole of the decision below is brought. It is contended that Mr Gray was denied procedural fairness both in the hearing of the matter and with respect to his (unsuccessful) motion to transfer the proceedings to Grafton. It is also contended, further or in the alternative, that his Honour erred in finding or purporting to find various matters; in failing to construe, or properly construe, the provision of the contract between the parties; and in relation to other matters in respect of the damages award that his Honour made. 7There are also in the appeal grounds the contentions that his Honour failed to give any reason, or reasons sufficient in law, for the findings made or purported to be made and, failed to have any, or any adequate, regard to the reasons of the adjudicator. (I interpose to note that there had been a separate decision by the adjudicator in relation to certain matters and it is said that the primary judge had erred in failing to find issue estoppels between the parties contrary to purported findings or findings arising from the reasons of the adjudicator. Those matters, as I understand it, relate at least in part to the determination of whether there was an insolvency event that permitted the termination of the contract in question giving rise to the claim for damages on which Ware Building was successful in the proceedings below.) Security for costs 8On the application by Ware Building for security for costs the parties accept that special circumstances must be shown (Preston v Harbour Pacific Underwriting Management Pty Ltd (2007) NSWCA 247 (at [18])). There, the following principles were identified: that no order for security for costs should be made in the absence of special circumstances; that consideration of what may constitute special circumstances should not be fettered by some general rule of practice; that impecuniosity without more will usually be insufficient; that an order may be appropriate if the appeal is shown to be hopeless, unreasonable or of an harassing nature; that where a bona fide and reasonably arguable appeal would be stifled by an order for security such an order should usually not be made; and that the subject matter of an appeal may provide a reason for not imposing a security order which would stifle the continuation of the appeal. The last two factors, it was suggested by Basten JA, might better be seen as influencing the exercise of the discretion rather than as potential special circumstances engaging the power. 9The special circumstances that it is contended by Ware Building arise in the present case are that Mr Gray did not appear at the trial in the District Court. I have referred briefly to the circumstances in which that occurred. It is submitted by Ms Thomas that there was no specific evidence as to why no one had appeared on the second day of the hearing and it was noted that Toner DCJ had made some comments suggesting that the non appearance was indicative of an attempt to avoid the issue being determined. Mr Pierce noted that there was an explanation proffered to Toner DCJ the previous day (and it is submitted that the judge had failed or failed adequately to take that into account). 10As far as the application for security for costs is concerned I am satisfied that the case falls within circumstances where there are special circumstances, namely that the respondent to the appeal proceedings is potentially to be put to the expense of running appeal proceedings brought to set aside a judgment obtained in circumstances where the appellant had failed (albeit for reasons that the appellant has now explained) to attend in order to resist the proceedings below. I am concerned that the evidence is not particularly detailed in relation to matters going to a number of the other factors to which I must have account. One is the question of the impecuniosity or otherwise of the appellant and the other is as to whether the appeal would be stultified by an order for security. I accept for the purposes of the present application that the Amended Notice of Appeal and the material put before me establish that there are at least reasonably arguable bases for an appeal from the decision made by Toner DCJ (without, I should add, expressing any view as to the likely prospects of success of the appeal or the merits of the appeal in general). 11The evidence that was put forward in relation to Mr Gray's position is limited. He is the registered proprietor of a property at Woombah. He is, as I understand it, the registered proprietor of that property as a tenant in common in equal shares with his wife but he has deposed to having only a one-quarter interest in that property (on the basis that he has deposed he always told his wife he would recognise her contributions). Therefore he claims that he holds the balance (ie one quarter) of his registered interest exclusively for his wife. 12Mr Gray deposes that the property is subject to a mortgage to Westpac, currently the balance of which is $474,423.02. Annexed to Mr Barraclough's affidavit is material that suggests that, at least at the time of the District Court hearing, it was asserted that the value of the property was in the order of some $1.3 million. 13Mr Gray contends that his current financial situation came about because of the termination of the contract in purported reliance on a particular clause that (it is said in his Amended Notice of Appeal), was wrongly construed by his Honour. Mr Gray's argument was that he was merely suffering a temporary difficulty with liquidity (not sufficient to amount to an insolvency event under the contract). There is reference in the transcript of the proceedings before his Honour to an ability to borrow from his son, although I accept that that is not evidence as to what his current position is or may be. 14Paragraph 11 of Mr Gray's affidavit deposes to him not, to date, having been able to afford to retain a solicitor to brief counsel but I note that Mr Gray has been represented by Counsel on the present application. It is not immediately apparent that the effect of provision of an order for security for costs, at least in a relatively small amount, would stultify the appeal. 15It is submitted by Ms Thomas that it could not be said that Mr Gray is impecunious, albeit that he might be cash poor, in circumstances where he has recourse at least to an interest in the property jointly held with his wife in the amounts that I have referred to above. 16The other aspect of the evidence that is not particularly satisfactory is as to the basis on which the amount sought by way of security for costs has been quantified. The solicitor for Ware Building has deposed to the difficulty of providing costs estimates and to the difficulty of anticipating what material may be served by the appellant but estimates that the costs of the appeal inclusive of counsel's fees would be likely to exceed $35,000. That does not break down the components of the estimated costs and does not provide me with much assistance, if any, in determining whether the assessment of costs would be a reasonable assessment. 17In the circumstances I am not satisfied that the making of an order for security for costs would stultify the appeal. I accept that there have been special circumstances established that would warrant an order for security for costs (those being the fact that the present situation is in effect a product of Mr Gray's own conduct in not attending the hearing) but I do not believe that the amount that has been put forward as the estimate for costs is one in which I can place much reliance. At present the matter has not been listed for hearing on the appeal but it is anticipated that it will be of at least one day's duration. 18In the circumstances I consider that the appropriate order to be made would be an order for the provision within 14 days of security for costs of the appeal in the sum of $10,000 and that the appeal proceedings should be stayed pending provision of that security by payment into court of the amount or by the provision of a bank guarantee or such other form of security as is acceptable to Ware Building. 19I will give the parties liberty to re list the matter if security is not provided within that time. Stay of judgment 20That brings me to the application for a stay. 21The principles applicable on such an application are as set out in Alexander v Cambridge Credit Corporation Limited (1985) 2 NSWLR 685. 22In Adeels Palace Pty Ltd v Moubarak [2009] NSWCA 130 it was noted that any stay must take into account the fairness as between the respective interests of the parties. I am satisfied that it is in order to make an order staying the execution of the judgment appealed from in circumstances where the subject matter of the appeal may be rendered futile and there are at least reasonably arguable grounds of appeal. I have already determined the security for costs application in favour of the respondent so that there is a measure of protection of the interests of Ware Building. It seems to me that the position of Ware Building will be protected in relation to the stay if there is a direction made pursuant to s 135 of the Civil Procedure Act 2005 (NSW) prohibiting the sheriff from taking any further action on the writ of levy of property pending the determination of the appeal. 23I also note that Counsel for Mr Gray confirmed his instructions to offer an undertaking by Mr Gray and his wife not to dispose of or encumber the property. 24Therefore I will order the stay of execution of the judgment on the basis of the undertakings proffered to the Court by counsel on behalf of the appellant and on behalf of the appellant's wife not to dispose of or further encumber the property pending the determination of the appeal. I will make a direction under s 135 of the Civil Procedure Act in relation to the stay on execution of the writ for levy of property. Costs 25In the circumstances there has been mixed success by both parties in relation to the applications before me. The appropriate order is that each party bear its own costs of the respective motions. ********** 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: 19 December 2012