Ardela Holdings Pty Ltd v Hateley
[2016] WASCA 65
•19 APRIL 2016
ARDELA HOLDINGS PTY LTD -v- HATELEY [2016] WASCA 65
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2016] WASCA 65 | |
| THE COURT OF APPEAL (WA) | |||
| Case No: | CACV:105/2014 | 11 APRIL 2016 | |
| Coram: | MURPHY JA | 19/04/16 | |
| 10 | Judgment Part: | 1 of 1 | |
| Result: | Application for security allowed | ||
| B | |||
| PDF Version |
| Parties: | ARDELA HOLDINGS PTY LTD JUNE ELEANOR BROWN LAURENCE HATELEY SUSAN THOMSON GUNNADOO CORPORATION PTY LTD |
Catchwords: | Practice and procedure Security for costs in appeal Application by crossrespondents Crossappellants' grounds of appeal and submissions defective Failure to comply with pt 5 r 32 of the Supreme Court (Court of Appeal) Rules 2005 (WA) Crossappellants in 'dire financial situation' Whether delay Unrepresented respondents No dispute as to quantum claimed Application for security for costs granted |
Legislation: | Corporations Act 2001 (Cth), s 1335(1) Rules of the Supreme Court 1971 (WA), O 4 r 3(2) Supreme Court (Court of Appeal) Rules 2005 (WA), pt 5 r 44(1) |
Case References: | George 218 Pty Ltd v Bank of Queensland Ltd [2016] WASCA 56 Hateley v Ardela Holdings Pty Ltd [2014] WADC 103 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA TITLE OF COURT : THE COURT OF APPEAL (WA) CITATION : ARDELA HOLDINGS PTY LTD -v- HATELEY [2016] WASCA 65 CORAM : MURPHY JA HEARD : 11 APRIL 2016 DELIVERED : 19 APRIL 2016 FILE NO/S : CACV 105 of 2014 BETWEEN : ARDELA HOLDINGS PTY LTD
- First Appellant
JUNE ELEANOR BROWN
Second Appellant
AND
LAURENCE HATELEY
First-named First Respondent
SUSAN THOMSON
Second-named First Respondent
GUNNADOO CORPORATION PTY LTD
Second Respondent
ON APPEAL FROM:
Jurisdiction : DISTRICT COURT OF WESTERN AUSTRALIA
Coram : WISBEY AUDCJ
Citation : HATELEY -v- ARDELA HOLDINGS PTY LTD [2014] WADC 103
File No : CIV 3170 of 2011
Catchwords:
Practice and procedure - Security for costs in appeal - Application by crossrespondents - Crossappellants' grounds of appeal and submissions defective - Failure to comply with pt 5 r 32 of the Supreme Court (Court of Appeal) Rules 2005 (WA) - Crossappellants in 'dire financial situation' - Whether delay - Unrepresented respondents - No dispute as to quantum claimed - Application for security for costs granted
Legislation:
Corporations Act 2001 (Cth), s 1335(1)
Rules of the Supreme Court 1971 (WA), O 4 r 3(2)
Supreme Court (Court of Appeal) Rules 2005 (WA), pt 5 r 44(1)
Result:
Application for security allowed
Category: B
Representation:
Counsel:
First Appellant : Ms N Breach
Second Appellant : Ms N Breach
First-named First Respondent : In person
Second-named First Respondent : In person
Second Respondent : No appearance
Solicitors:
First Appellant : JNC Legal
Second Appellant : JNC Legal
First-named First Respondent : In person
Second-named First Respondent : In person
Second Respondent : No appearance
Case(s) referred to in judgment(s):
George 218 Pty Ltd v Bank of Queensland Ltd [2016] WASCA 56
Hateley v Ardela Holdings Pty Ltd [2014] WADC 103
- MURPHY JA:
Introduction
1 This matter came before the court by way of a Registrar's Notice to Attend, dated 2 March 2016, to consider an application for security for costs dated 26 February 2016. The application was brought in the cross-appeal, by the appellants in the appeal who are the respondents to the cross-appeal. In the application dated 26 February 2016, orders were sought to the effect that the cross-appellants provide security for costs in the cross-appeal in the sum of $18,689 within 14 days.
2 The application for security for costs was supported by an affidavit filed 26 February 2016 sworn by Mr Cianfrini, the solicitor for the respondents to the cross-appeal. As against Gunnadoo Corporation Pty Ltd (Gunnadoo), the appellants sought security under s 1335(1) of the Corporations Act 2001 (Cth) (Act). Otherwise reliance was placed on pt 5 r 44(1) of the Supreme Court (Court of Appeal) Rules 2005 (WA) (Court of Appeal Rules).
3 An affidavit in response was filed by Mr Hateley and Ms Thomson on 18 March 2016 (the cross-appellants' affidavit). The parties filed written submissions on 29 March 2016 and 4 April 2016 respectively.
4 Following the hearing, I ordered security to be given and said that I would publish my reasons. These are my reasons.
Background
5 The second cross-appellant (Gunnadoo) is (and was) a trustee company established by the first cross-appellants (Mr Hateley and Ms Thomson). The first respondent to the cross-appeal (Ardela Holdings Pty Ltd (Ardela)) was at all material times the company associated with the second respondent to the cross-appeal (Ms Brown).
6 The appeal, and cross-appeal, are against a decision of Wisbey AUDCJ in Hateley v Ardela Holdings Pty Ltd1 (primary reasons).
7 In broad terms, the primary proceedings involved a dispute as a result of the purchase by Gunnadoo of a newsagency business from Ardela in 2010. In relation to the sale and purchase of the business, Gunnadoo acted through Mr Hateley and Ms Thomson, and Ardela acted through Ms Brown. Gunnadoo borrowed funds from National Australia Bank (NAB) to assist in the purchase and operation of the business.2
8 In general terms, Gunnadoo (with Mr Hateley and Ms Thomson) sued Ardela and Ms Brown for alleged misleading or deceptive conduct in relation to the sale of the newsagency and for certain alleged breaches of contract. In addition, Gunnadoo claimed that Ms Brown, after the sale of the business, had taken money from the till and was liable to Gunnadoo in conversion.
9 The primary judge dismissed the claims in relation to misleading or deceptive conduct and for breach of contract. His Honour allowed the claim in conversion, and ordered judgment in the sum of $1,558. His Honour also ordered, in effect, that the plaintiffs (Gunnadoo, Mr Hateley and Ms Thomson) pay 75% of the costs of the defendants (Ardela and Ms Brown).
10 Ardela and Ms Brown have appealed the decision in relation to the judgment on the conversion claim and in relation to the decision as to costs. In relation to the costs decision, they claim that they should have been awarded 100% of their costs and not just 75% of the costs of the action.
11 Gunnadoo, Mr Hateley and Ms Thomson have cross-appealed the decision in relation to the dismissal of the claims for misleading or deceptive conduct and breach of contract.
Appeal chronology
12 On 4 September 2014, the appellants (Ardela and Ms Brown) filed an appeal notice. The appellants' case was filed on 17 October 2014. The respondents (Gunnadoo, Mr Hateley and Ms Thomson) filed their Respondents' Answer on 21 November 2014. An Amended Answer was filed on 11 September 2015.
13 After various extensions of time, the respondents filed their Respondents' Case on the Cross-Appeal on 22 April 2015. The respondents were also given leave to file a Respondents' Amended Case of Cross-Appeal, and this was filed on 23 July 2015.
14 The appellants filed the Appellants' Answer on the Cross-Appeal on 4 August 2015. The appeal books were filed on 22 December 2015.
15 The appeal was listed for hearing on 6 April 2016. The date was subsequently vacated upon the application of the first respondents after the respondents ceased to have legal representation.
16 The appeal has now been listed for 18 July 2016.
Grounds of appeal
17 The grounds of appeal contained in the Respondents' Amended Case on the Cross-Appeal are prolix and fail to comply with pt 5 r 32 of the Court of Appeal Rules. The submissions in support are also prolix and discursive.
18 Ground 1 alleges in general terms that the judge should have preferred the evidence of Mr Hateley and Ms Thomson over the evidence of Ms Brown, given that Ms Brown was found to have acted dishonestly in relation to the conversion of money from the business. Ground 1 is not a proper ground of appeal. Such a sweeping allegation does not identify properly any specific, material, error by the judge. If it is sought to be alleged that there were any specific findings made by the judge which were not open to him, the findings would need to be identified and proper grounds identifying error should be alleged. It is inappropriate to assert in general terms that one side's evidence should have been preferred over the other on all issues.
19 Ground 2 alleges that the judge erred in finding that it had not been established that financial documentation provided to the purchasers was incorrect. However, the judge made detailed findings about many documents and the ground does not identify which documents are the subject of complaint and how and why, in relation to those particular documents, error is alleged. The submissions in respect of ground 2 are prolix and do not relevantly engage with the judge's and findings.
20 Ground 3 alleges that the judge erred in finding that Mr Hateley had the capacity to make his own assessment of the financial information provided to him. There is no challenge to the finding that Mr Hateley was a retired bank manager and licensed finance broker who had been involved for 44 years in the banking industry, much of which time was spent in assessing the viability of businesses and making valuations and financial assessments for lending purposes.3 Rather, the particulars to this ground involve a discursive set of allegations about the nature and extent of the documentation which was 'established in the course of the trial', without reference to any particular findings by the judge about the documentation.
21 Ground 4 alleges that the judge erred in finding that Gunnadoo was not, in any event, induced by any of the alleged misrepresentations. The ground alleges that the finding on reliance 'must be erroneous in the circumstances of the evidence of' two specified matters. The ground does not purport to address the many parts of the judge's reasons which deal with the evidence and findings in relation to reliance, including primary reasons [32], [37], [39], [54], [56], [58], [59], [61] - [63], [65], [85], [165] - [170], [173], [175] - [176]. Amongst other things, Gunnadoo had alleged in the primary proceedings that it had relied upon a document provided by Mr Teh which was described as an 'executive summary'. Mr Hateley and Ms Thomson refer to the significance of this document in their written submissions in this application.4 There is no challenge to the finding that Mr Teh was not the agent of Ardela (the vendor of the business).5 Further, it is of significance that the judge found that Mr Hateley's evidence involved part reconstruction and a not unnatural subconscious imperative to attribute fault to Ms Brown, and that his evidence at times demonstrated confusion and, in a number of instances, was self-conflicting.6
22 Ground 5 alleges that the judge erred in 'omitting to find' that Ardela had certain obligations under pt 5 of the Trade Practices Act 1975 (Cth) and that there were certain alleged breaches of contract. The particulars read like a series of conclusionary statements of those matters in a statement of claim. The ground does not identify error with reference to the judge's findings. The submissions in support appear to be repetitive of other allegations in earlier grounds and submissions.
23 Ground 6 is also defective for the same reasons. It alleges that the judge erred 'in omitting to find' certain alleged contraventions of s 52 of the Trade Practices Act without reference to the judge's findings and reasons.
24 Grounds, 7, 8, 9 and 10.1 are, largely, consequential allegations of error arising from the earlier grounds. Ground 10.2 alleges that the judge erred in failing to assess damages for breach of contract. It does not challenge the finding that in relation to the alleged breaches of contract for the supply of allegedly defective equipment, there was no evidence which would enable the court to quantify any loss allegedly suffered.7
25 The grounds of appeal and submissions in form and in substance, do not comply with pt 5 r 32 of the Court of Appeal Rules. They do not elucidate in any proper way any alleged errors made by the judge in relation to the misleading or deceptive conduct claim and the claims for breach of contract. The deficiencies are not overcome by a consideration of the document purporting to be a document complying with Practice Direction 7.4.
Disposition of the stay application
26 The principles were not in dispute. They have been recently canvassed in George 218 Pty Ltd v Bank of Queensland Ltd.8
27 Mr Cianfrini's affidavit indicates that the principal cross-appellant, Gunnadoo (being the party which purchased the business allegedly on the strength of the alleged misrepresentations) is a trustee company for a family trust. There is no real property registered in its name. It has paid up capital of $1,000. The Personal Properties Securities Register indicates that its assets are charged in favour of NAB. As at 30 June 2013, it had accrued losses in excess of $185,000. There is an outstanding costs order from the primary proceedings in respect of costs taxed in the sum of approximately $74,000 on 29 January 2016, which remains unpaid. I am satisfied that the statutory threshold under s 1335(1) of the Act has been met. That is a significant factor in the favour of an order for security.
28 The grounds of appeal are defective for the reasons given earlier. Although there has arguably been some delay in making the application, the impecuniosity of the cross-appellants was effectively first acknowledged in a letter from their solicitors to Mr Cianfrini dated 7 January 2016, at around which time the solicitors ceased acting for the cross-appellants. A few days later, those solicitors lodged a caveat over the property owned by Ms Thomson and Mr Hateley, referred to below, as equitable mortgagee in respect of their costs. Whilst there may have been grounds to suspect that the cross-appellants would be unable to satisfy an order for security prior to that time, the statement in correspondence by the cross-appellants' solicitors that the cross-appellants were in 'a dire financial situation', together with the solicitors ceasing to act, and the lodgement of their own caveat on the property, provide important contextual background for the timing of the application. The application for security was foreshadowed and made shortly after these events. In all the circumstances of this case, I would not consider delay to be a disentitling factor.
29 The cross-appeal by Gunnadoo could only be proceeded with by solicitors: O 4 r 3(2) of the Rules of the Supreme Court 1971 (WA) (RSC). Gunnadoo presently has no solicitors. Even if it were assumed for the purposes of this application (without deciding) that Mr Hateley and Ms Thomson may be given leave to advocate on behalf of Gunnadoo at the hearing of the cross-appeal,9 it remains appropriate to order security against Gunnadoo. As Gunnadoo will be the principal beneficiary of any successful cross-appeal, the whole of the cross-appeal should prima facie be stayed pending provision of security by Gunnadoo.
30 Further and in any event, assuming for present purposes (without deciding) that Mr Hateley and Ms Thomson have some interest as cross-appellants beyond an indirect interest in success by Gunnadoo in the cross-appeal, the order for security should also extend to them. For the reasons set out below, Mr Hateley and Ms Thomson should be ordered to give security.
31 Whilst Mr Hateley and Ms Thomson contend, in effect, that they have sufficient equity in their house to meet any adverse costs orders in the appeal, the following observations are relevant.
32 The property is mortgaged to NAB and has caveats on it lodged by their former solicitors in the primary proceedings and in the appeal. It also has a Notification lodged on the title relating to its proximity to Pearce air base.10
33 Further, the evidence in the cross-appellants' affidavit indicates that:
(a) they were unable to institute the appeal in 2014 because of financial hardship;11
(b) they have been intending to sell their property for some time and intended to pay their former solicitors from the sale proceeds, but the property has not been able to be sold;12
(c) throughout 2015 and March 2016 they could not pay their solicitors' costs in relation to the appeal and the cross-appeal;13
(d) they applied for an adjournment of the hearing of the appeal, after their solicitors had ceased to act for them, in the expectation that the extra time would allow them to raise funds for the appeal and cross-appeal;14
(e) they are unable to pay the security sought within 14 days;15
(f) NAB 'bundled' their home mortgage of $38,000 and their other debt which stood at $875,000 in June 2014, under a facility for $980,000, and the total debt has interest capitalised on it and is secured against the property;16
(g) the property was valued at market value of $2.92 million in February 2014, subject to the qualification that the price could be substantially less if, amongst other things, the property were to be sold under compulsion;17
(h) the property, despite active marketing and reductions in the proposed sale price on each occasion, remains unsold;18
(i) the first cross-appellants believe that the difficulty with selling the property is as a result of a downturn in the market and the property's location in an industrial precinct.19
34 Further, an earlier valuation of the property in 2008 had valued the property at $1.5 million.20 Also, NAB's letter of offer of finance for $980,000 included a term to the effect that loan approval was subject to the provision either of an unconditional offer to purchase the property, or an unconditional refinance approval sufficient to clear all NAB debt, on or before 31 December 2014.21 If any formal forbearance has been given by NAB in that regard, it is not in evidence.
35 The appeal is to be heard within a few months. The evidence is to the effect that Mr Hateley and Ms Thomson would not be in a position to pay any adverse costs orders, at least unless and until the property can be sold. Whilst ultimately the property may be sold either by the cross-appellants or by or on the instigation of a creditor, and there may prove to be sufficient net assets in the long run to pay costs to the respondents in the cross-appeal (if an order were made in that regard), it is not in the interests of justice for the respondents to the cross-appeal to bear the risks and delay associated with that course in relation to a cross-appeal which, for the reasons given earlier, is substantially defective.
36 Although Mr Hateley and Ms Thomson contended that their financial position is as a result of the misleading or deceptive conduct of Ardela and Ms Brown, that contention effectively ignores the judgment of the primary court and is not supported by an appellants' case compliant with the rules of court.
37 There was no dispute as to the quantum claimed in the application.
Conclusion
38 For the above reasons I ordered security for costs in the sum as sought in the appellants'/cross-respondents' application dated 26 February 2016, such security to be paid on or before 9 May 2016.
1Hateley v Ardela Holdings Pty Ltd [2014] WADC 103.
2 Primary reasons [56.22], [111], [169].
3 Primary reasons [31].
4 Written submissions, par 40.
5 Primary reasons [155].
6 Primary reasons [185] - [186].
7 Primary reasons [184].
8George 218 Pty Ltd v Bank of Queensland Ltd [2016] WASCA 56 [39] - [48].
9 See the discussion in Seaman's Civil Procedure in Western Australia[34.5.2].
10 Cross-appellants' affidavit, annexure 29, page 152.
11 Cross-appellant's affidavit, par 23.
12 Cross-appellant's affidavit, par 30.
13 Cross-appellant's affidavit, par 32.
14 Cross-appellant's affidavit, par 35.
15 Cross-appellant's affidavit, par 53.
16 Cross-appellant's affidavit, par 69, and annexure 30, page 193.
17 Cross-appellant's affidavit, annexure 29, pages 144, 188.
18 Cross-appellant's affidavit, pars 73 - 76.
19 Cross-appellant's affidavit, par 77.
20 Mr Cianfrini's affidavit, annexure 11.
21 Cross-appellants' affidavit, annexure 30, page 195.
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