Breaksea Fishing Company Pty Ltd v Pretar Pty Ltd - [2020] WADC 116

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS

LOCATION:   PERTH
CITATION:   BREAKSEA FISHING COMPANY PTY LTD -v- PRETAR PTY LTD [2020] WADC 116
CORAM:   GETHING DCJ
HEARD:   14 AUGUST 2020
DELIVERED          :   14 AUGUST 2020
PUBLISHED           :   21 AUGUST 2020
FILE NO/S:   APP 31 of 2020
APP 28 of 2020
(Consolidated by orders of 14 August 2020)

BETWEEN: BREAKSEA FISHING COMPANY PTY LTD
Appellant
AND
PRETAR PTY LTD
First Respondent
STEPHEN CHARLES MCWHIRTER
Second Respondent

ON APPEAL FROM:
Jurisdiction              :   MAGISTRATES COURT OF WESTERN AUSTRALIA
Coram:   MAGISTRATE HUSTON
File Number            :   PER/GCLM/1011/2016

Catchwords:

Magistrates Court appeal - Application to suspend enforcement - Application for security for costs - Turns on own facts

Legislation:

Civil Judgments Enforcement Act 2004 (WA), s 15
Corporations Act 2001 (Cth), s 1335

Result:

Execution of judgment in the Magistrates Court suspended
Appellant ordered to pay security for costs

Representation:

Counsel:

Appellant	:	Mr B Wheatley
First Respondent	:	Mr D Tassone
Second Respondent	:	Mr D Tassone

Solicitors:

Appellant	:	Brian Wheatley
First Respondent	:	Williams & Hughes
Second Respondent	:	Williams & Hughes

Case(s) referred to in decision(s):

Airwaves Goldcoast Pty Ltd v Caneflight Enterprises Pty Ltd [2013] WADC 24
Allesch v Maunz [2000] HCA 40; (2000) 203 CLR 172
Avsar v Binning [2009] WASCA 219
Badran v Public Transport Authority of Western Australia [2017] WASCA 28
Bell Wholesale Co Pty Ltd v Gates Export Corp [1984] FCA 34; (1984) 2 FCR 1
Blenkinsop v Holland [2018] WADC 146
BPM Pty Ltd v HPM Pty Ltd (1996) 131 FLR 339
Brocklehurst v Wolinski [2015] WADC 36
Buckley v Bennell Design & Construction Pty Ltd (1974) 1 ACLR 301
Butler v Bennett [2007] WADC 107
Dalma Formwork Pty Ltd v Concrete Constructions Group Ltd [1998] NSWSC 472
East Metropolitan Health Service v Martin [2017] WASCA 7
Fox v Percy [2003] HCA 22; (2003) 214 CLR 118
Frigger v Murfett Legal Pty Ltd [2016] WADC 71
George 218 Pty Ltd v Bank of Queensland Ltd [2016] WASCA 56
Harpur v Ariadne Australia Ltd [1984] 2 Qd R 523
Jones v Darkan Hotel [2014] WASCA 133
McKessar v Pascoe [2020] WASCA 106
Melunu Pty Ltd v Claron Constructions Pty Ltd [2004] NSWSC 1064
NewTrend Pty Ltd v Oceanic Life Ltd [1990] WAR 1
Pearson v Naydler [1977] 1 WLR 899
Pioneer Park Pty Ltd (in liq) v Australia and New Zealand Banking Group Ltd (2007) 65 ACSR 383
Remm Construction (SA) Pty Ltd v Allco Newsteel Pty Ltd (1992) 57 SASR 180
Robinson Helicopter Co Inc v McDermott [2016] HCA 22; (2016) 331 ALR 550
Sami v Roads Corporation [2009] VSCA 44
Spence Financial Group Pty Ltd v GE Commercial Corporation (Australia) Pty Ltd [2007] WASC 15
Tianqi Lithium Kwinana Pty Ltd v MSP Engineering Pty Ltd [2020] WASCA 128
Tradesman Technologies Pty Ltd v Ameduri [2012] WASCA 168
Unified Pty Ltd v Cancer Council Western Australia Inc (No 3) [2011] WASC 161
Westonia Earthmoving Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd [2013] WASC 57
Yazarloo v Assadi [2003] WASCA 326

GETHING DCJ:

In August 2014 Breaksea Fishing Company Pty Ltd (Breaksea), the appellant, offered (Offer) to purchase from Pretar Pty Ltd (Pretar) a commercial fishing vessel by the name of Elizabeth Maria II (the Vessel). The Offer followed negotiations between Christopher Black, a director of Breaksea, and Stephen McWhirter, a director of Pretar. Both Mr McWhirter and Mr Black had been involved in the commercial fishing industry in Western Australia, the former for much longer than the latter, and had known each other for some time. The Offer provided for the payment of the purchase price for the Vessel on terms including interest over the following four years, as well as Breaksea being able to use certain commercial fishing rights owned by Pretar. The Offer was accepted by the conduct of Pretar in allowing Mr Black to take possession of the Vessel and operate it in accordance with the terms of the Offer (Contract).[1]
[1] Magistrates Court Transcript (MC ts) 13 May 2020, page 32.
Things did not go well for Breaksea. The payments of capital and interest in the first year were late, and no payments were made after 30 June 2015.[2] In May 2015 the gearbox on the Vessel was destroyed whilst it was out at sea as a result of a mooring rope being entangled in the propeller.[3] The destruction of the gearbox was devastating financially for Breaksea.[4] The Vessel was not able to be easily repaired.[5] On 27 December 2015, Mr Black telephoned Mr McWhirter.[6] What was said in this conversation is in issue, but the outcome was that Pretar retook possession of the Vessel the same day or at least by 1 January 2016.[7]
[2] MC ts 13 May 2020, page 34.
[3] MC ts 13 May 2020, page 35.
[4] MC ts 13 May 2020, page 36.
[5] MC ts 13 May 2020, page 36.
[6] MC ts 13 May 2020, page 37.
[7] MC ts 13 May 2020, page 38.
Mr McWhirter tried to assist Breaksea with its difficulties.[8] Eventually, the relationship broke down and litigation was commenced in the Magistrates Court.
[8] See for example: MC ts 13 May 2020, page 57.
Following a protracted litigation process (which I describe below), on 13 May 2020 the Magistrate dismissed Breaksea's claim against Pretar and Mr McWhirter and allowed Pretar's counterclaim. In the counterclaim, damages of $35,585 were assessed at trial and made payable forthwith, with programming orders made to assess the remaining damages claimed.
The decision of the Magistrate has been appealed to the District Court.
Two interlocutory applications have been filed in the appeal. The first was by Breaksea seeking a suspension of execution pending the appeal. The second was by Pretar and Mr McWhirter seeking security for the costs of the appeal. Both applications were heard by me on 14 August 2020. At the conclusion of the hearing, I made orders in the following terms:
1.The enforcement of the judgment given by the Magistrates Court of Western Australia in PER/GCLM/1011/2016 on 13 May 2020 for Pretar Pty Ltd and Stephen Charles McWhirter against Breaksea Fishing Company Pty Ltd in the sum of $35,585.00, be suspended until judgment in the appeal or further order.
2.The respondents be prohibited from taking any further steps in relation to the statutory demand issued against the appellant.
3.Unless by 30 October 2020 the appellant pay the amount of $30,000 into Court by way of security for costs, the appeal be stayed until further order.
4.In the event that the appeal remains stayed as at 22 January 2021, the appeal is dismissed, the stay in paragraphs 1 and 2 lapses and the appellant is to pay the respondents' costs of the appeal to be taxed if not agreed.
5.The hearing of the appeal listed to 1 September 2020 be vacated.
6.The appeal be listed for mention before his Honour Judge Gething on 19 November 2020 at 9:15am with each party having liberty to apply for an earlier directions hearing.
7.Upon compliance with the order in paragraph 3, the parties have leave to, by consent, have the appeal listed for a mediation conference before a registrar of this court, on condition that Christopher Black and the second respondent attend in person.
8.The costs of the appellant's application for a stay and the respondents' application for security for costs be in the appeal.
I advised counsel that I would provide written reasons for making these orders, which are as follows.

Proceedings in the Magistrates Court

Breaksea's claim had four components:[9]
(a)a claim for $35,000 plus interest of $13,222.50, for instalments of the purchase price paid to Pretar who failed to transfer the Vessel to Breaksea;
(b)a claim for $1,470.74 for insurance paid by it for the period 1 January 2016 to 21 February 2016, when the Vessel was in the possession of Pretar and Mr McWhirter;
(c)a claim for $9,222.22 for lease payments for unconsumed fishing rights paid for by Breaksea in breach of the terms of the Contract; and
(d)a claim for $35,043.04 for conversion of goods on the Vessel when it was seized by Pretar and Mr McWhirter on 1 January 2016.
[9] Affidavit of Christopher Black, filed 19 June 2020 (First Black Affidavit), par 2.
In response, Pretar and Mr McWhirter defended the claim on the basis that it was Breaksea who repudiated the Contract.[10] They counterclaimed to recover:
(a)the cost of repairs carried out by them to restore the Vessel to the condition it was in at the time Breaksea took possession; and
(b)amounts owing under the Contract which accrued prior to termination.
[10] Affidavit of Daniel Tassone, filed 26 June 2020 (Tassone Affidavit), par 8.
The trial took place on 12 to 16 February 2018 and 5 and 6 November 2018.
It is evident from the transcripts of hearings in the Magistrates Court that the Magistrate had considerable difficulty with the manner in which the parties conducted the trial and in securing compliance with orders made to endeavour to program the claim through to an efficient conclusion.[11] The Magistrate went so far as to describe the preparation and conduct of the trial as being 'shambolic', 'chaotic' and 'disorganised'.[12]
[11] See generally: MC ts 1 May 2020, pages 12 ‑ 27; MC ts 8 May 2020, pages 2 ‑ 12; for example: MC ts 13 May 2020, pages 41, pages 43 ‑ 45, page 54.
[12] MC ts 1 May 2020, page 12.
The Magistrate delivered oral reasons over hearings on 1, 8 and 13 May 2020 (Decision). For the purposes of determining the two interlocutory applications it is only necessary for me to refer to the Decision in summary terms. Specifically:
(a)the Magistrate had significant concerns about the honesty and reliability of the evidence of Mr Black, describing his testimony as 'troubling';[13]
[13] MC ts 13 May 2020, page 33, also pages 45 - 46, pages 50 - 51, pages 58 - 59.
(b)on the other hand, the Magistrate described Mr McWhirter's testimony as being 'impressive';[14]
[14] MC ts 13 May 2020, page 39, also pages 45 - 46, pages 52 - 53.
(c)the terminology used in the Offer, which was prepared by Mr Black, in relation to payment, was 'absolutely clear';[15]
[15] MC ts 13 May 2020, page 55.
(d)the Vessel was in good working order for its age at the commencement of the Contract;[16]
[16] MC ts 13 May 2020, page 38.
(e)the Contract was terminated by Mr Black in the phone call on 27 December 2015, which constituted a repudiation as a matter of law;[17]
(f)by retaking possession of the Vessel on 27 December 2015, which it was legally entitled to do, Pretar accepted the repudiation of the Contract by Breaksea;[18]
(g)Pretar did not seek to terminate the Contract on the basis of non-payment by Breaksea;[19]
(h)Pretar did not breach, terminate or repudiate the Contract;[20]
(i)the claim insofar as it alleged the poor condition of the Vessel from the time Breaksea took possession had not be proven;[21]
(j)the claim insofar as it alleged an act or series of actions by either Pretar or Mr McWhirter which amounted to a repudiation of the Contract, prior to 27 December 2015, had not been proven;[22]
(k)the claim must be dismissed;[23]
(l)on retaking possession, the Vessel was not in the same condition in which it was sold, such that Pretar was required to expend substantial moneys to get the Vessel seaworthy and able to work again;[24]
(m)the amounts sought in the counterclaim to bring the Vessel back to working condition were proven and necessary, in the amount of $38,585;[25] and
(n)while Pretar is entitled to damages for the wrongful termination of the Contract, a further hearing is required to assess those damages.
[17] MC ts 13 May 2020, pages 37, 54, 57, 60.
[18] MC ts 13 May 2020, pages 38, 54, 58.
[19] MC ts 13 May 2020, page 57.
[20] MC ts 13 May 2020, page 38, pages 57 - 58.
[21] MC ts 13 May 2020, page 58.
[22] MC ts 13 May 2020, page 59.
[23] MC ts 13 May 2020, page 58.
[24] MC ts 13 May 2020, pages 39 - 40, page 58.
[25] MC ts 13 May 2020, page 60.
The formal orders made by the Magistrate on 13 May 2020 included that (Judgment):
(a)Breaksea's claims against Pretar and Mr McWhirter be dismissed; and
(b)there be judgment on the claim against Breaksea in the counterclaim in the amount of $38,585, payable forthwith.
The Judgment also contained programming orders for the determination of further losses claimed by Pretar and Mr McWhirter as well as interest and costs.

Appeal to the District Court

By notice of appeal filed 15 May 2020, Breaksea appealed from the Decision as regards Mr McWhirter (McWhirter Appeal), being given the file reference APP 28 of 2020. The McWhirter Appeal was filed within the requisite 21 days of the Decision.[26] The grounds of appeal are detailed.
[26]Magistrates Court (Civil Proceedings) Act 2004 (WA) (MCCPA) s 40(3).
By notice of appeal filed 21 May 2020, Breaksea appealed from the Decision (Pretar Appeal) as regards Pretar, being given the file reference APP 31 of 2020. The Pretar Appeal was filed within the requisite 21 days of the Decision.[27] Again, the grounds of appeal are detailed.
[27] MCCPA s 40(3).
On 5 June 2020 both Mr McWhirter and Pretar filed a notice of respondent's intention in their respective appeals in which each stated that they intended to take part in the appeal and argue that the Decision should be upheld both on the grounds relied on by the Magistrate and additional grounds which each specified.
By application filed 19 June 2020 in the Pretar Appeal, Breaksea sought an order that enforcement of the Judgment be suspended until judgment in the appeal or further order (Suspension Application).
In the 19 June application, Breaksea also sought an order that the McWhirter Appeal (APP 31 of 2020) and the Pretar Appeal (APP 28 of 2020) be consolidated.
By application filed 26 June 2020 in its appeal Pretar sought an order that Breaksea provide security for its costs of the Pretar Appeal and the McWhirter Appeal (Security for Costs Application).
At a directions hearing in the McWhirter Appeal on 30 June 2020, the court made orders:
(a)giving Breaksea leave to amend its Notice of Appeal in the McWhirter Appeal in accordance with a minute dated 29 June 2020; and
(b)consolidating the McWhirter Appeal with the Pretar Appeal.
On 3 July 2020 the court made orders by consent in the Pretar Appeal:
(a)that Breaksea have leave to amend its Notice of Appeal in the Pretar Appeal in accordance with a minute dated 1 July 2020 (Amended Appeal Notice);
(b)consolidating the McWhirter Appeal with the Pretar Appeal (which I will refer to as the Appeal), with the Pretar Appeal to be the lead appeal, Pretar to be the first respondent and Mr McWhirter to be the second respondent (henceforth I will refer to Pretar and Mr McWhirter as the Respondents); and
(c)programming the interlocutory applications to hearing.
The parties agreed that the affidavits filed in relation to each application can be taken into account on both applications.
Breaksea relies on two affidavits in relation to the interlocutory applications:
(a)Mr Black, filed 19 June 2020 (First Black Affidavit); and
(b)Mr Black, filed 20 July 2020 (Second Black Affidavit).
The Respondents rely on two affidavits in relation to the interlocutory applications:
(a)Daniel Tassone, a solicitor employed by the Respondents' lawyers, filed 26 June 2020 (Tassone Affidavit); and
(b)Mr McWhirter, filed 14 July 2020 (McWhirter Affidavit).
The two interlocutory applications are to be determined in the context of the appeal regime in the District Court. The District Court must decide the Appeal on the material and evidence that was before the Magistrates Court.[28] The court can give leave to admit other evidence, but only in exceptional circumstances.[29] No party has sought to adduce further evidence. The Appeal is by way of a 'reconsideration of the evidence' that was before the Magistrates Court.[30] It is not the role of the appeal court to retry the facts or to substitute its own view of the facts for that of the Magistrate.[31] Rather, the appeal is to be undertaken by way of a rehearing.[32] Breaksea must demonstrate that there has been an error of a recognised genre that falls to be corrected and which entitles it to the orders that it seeks.[33] Specifically, the appellate powers of the District Court are only exercisable if Breaksea demonstrates that the Decision was the result of some legal, factual or discretionary error.[34] The appeal is to be a 'real review' of the trial and of the reasons for decision at first instance, respecting the advantages which the magistrate has that 'derive from the obligation at trial to receive and consider the entirety of the evidence and the opportunity, normally over a longer interval, to reflect upon that evidence and to draw conclusions from it, viewed as a whole'.[35] The onus is on Breaksea as the appellant, to demonstrate this error.[36]
[28] MCCPA s 40(4)(a).
[29] MCCPA s 40(4)(b), s 40(5).
[30] District Court Rules 2005 (WA) (DCR) r 50(1).
[31] Yazarloo v Assadi [2003] WASCA 326 [17], [35] (Scott J); Blenkinsop v Holland [2018] WADC 146[14] (Gething DCJ).
[32] Blenkinsop [14]; Brocklehurst v Wolinski [2015] WADC 36 [14] (Derrick DCJ); Butler v Bennett [2007] WADC 107 [6] ‑ [10] (Bowden DCJ).
[33] Avsar v Binning [2009] WASCA 219 [37] (Owen JA, with whom Miller & Newnes JJA agreed).
[34] Robinson Helicopter Co Inc v McDermott [2016] HCA 22; (2016) 331 ALR 550 [43] (judgment of the court); Allesch v Maunz [2000] HCA 40; (2000) 203 CLR 172 [23] (Gaudron, McHugh, Gummow & Hayne JJ); Blenkinsop [14].
[35] Fox v Percy [2003] HCA 22; (2003) 214 CLR 118 [23] - [25] (Gleeson CJ, Gummow & Kirby JJ); Frigger v Murfett Legal Pty Ltd [2016] WADC 71 [34] (Gething DCJ).
[36] Jones v Darkan Hotel [2014] WASCA 133 [31] (judgment of the court); Blenkinsop [14].
It is convenient to deal with the Suspension Application first then the Security for Costs Application, before considering what interlocutory orders are appropriate.

Is Breaksea entitled to a suspension of enforcement?

As at the date of the hearing before me, Breaksea had not paid the $35,585 as required by the Judgment.
The specific order sought in the Stay Application is that:
The enforcement of the judgment given by the Magistrates Court of Western Australia in PER/GCLM/1011/2016 on 13 May 2020 for Pretar Pty Ltd and Stephen Charles McWhirter against Breaksea Fishing Company Pty Ltd in the sum of $35,585.00 be suspended until judgment in the appeal or further order.
Breaksea requested an amendment to the orders sought to add the words 'and that payment of the judgment debt be prohibited while the suspension order has effect', referring to Civil Judgments Enforcement Act 2004 (WA) (CJEA) s 15(5)(e). At the hearing on 14 August 2020 I allowed that amendment.
The power of the court to order a stay in an appeal to the District Court is found in CJEA s 15(1)(b). The central principle is that 'the court may only make such an order if there are special circumstances that justify doing so'.[37]
[37] CJEA s 15(3).
The discretionary principles were recently summarised by the Court of Appeal in McKessar v Pascoe (so far as is relevant):[38]
1.The successful litigant is ordinarily entitled to enforce a judgment pending the determination of any appeal.
2.It is for the applicant for a stay to move the court to a favourable exercise of its discretion. Under s 15(3) of the Civil Judgments Enforcement Act 2004 (WA) this court may only make a suspension order if there are 'special circumstances' that justify doing so …
3.The central issue will be whether the grant of a stay is perceived to be necessary to preserve the subject matter or the integrity of the litigation or whether a refusal of a stay could create practical difficulties in respect of the relief which may be granted on appeal. This may shortly be described as requiring the court to consider whether the right of appeal will be rendered nugatory if a stay is not granted.
4.If it can be demonstrated that the right of appeal will be rendered nugatory if a stay is not granted, the stay will generally still be refused unless it can be established that the appeal has ultimately reasonable prospects of success.
5.Finally, the stay may still be refused where it appears that the balance of convenience does not lie in favour of the applicant where, for example, the grant of a stay will occasion hardship to the respondent which may not be alleviated by the terms upon which the stay may be granted.
[38] McKessar v Pascoe [2020] WASCA 106 [88] (reasons of the court). See also: Tianqi Lithium Kwinana Pty Ltd v MSP Engineering Pty Ltd [2020] WASCA 128 [58] (judgment of the court).

I turn first to whether the Appeal will be rendered nugatory without a suspension order.
Mr Black deposes that Breaksea does not have the financial capacity to pay the Judgment. He annexes some financial statements of Breaksea to support this conclusion.[39]
[39] First Black Affidavit, pars 13 - 17, Annexure G.
The financial position of Breaksea as at 30 June 2019 is as follows:[40]
(a)a net loss after tax of $105,597;
(b)cash at bank $14,059;
(c)total current assets of $36,024;
(d)total assets of $125,369;
(e)current liability of $100,183;
(f)total liabilities of $347,417; and
(g)a deficit of assets over liabilities of $221,048.
[40] First Black Affidavit, Annexure F.
Breaksea does not appear to have any other assets which can be realised to pay the Judgment.[41] The valuable assets it does have are secured, albeit in some instances in favour of members of Mr Black's family.[42]
[41] Tassone Affidavit, pars 22 ‑ 27; Second Black Affidavit, pars 24 ‑ 26.
[42] Tassone Affidavit, pars 24, 25; Respondent's submissions, pars 25 ‑ 27.
In the financial statements, Mr Black certifies that, as at 30 June 2019, in his opinion, 'there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable'.[43] The position has moved on in the following 12 months. The statement by Mr Black in the First Black Affidavit that Breaksea cannot pay the Judgment is to the effect that Breaksea cannot now pay all its debts as and when they fall due, those debts including the Judgment.[44]
[43] First Black Affidavit, page 77.
[44] First Black Affidavit, par 14.
I am satisfied that Breaksea does not have the financial capacity to immediately pay the Judgment. On the materials before the court it is thus unable to pay all its debts as and when they fall due, and is currently insolvent.
On 2 June 2020 the Respondents served on Breaksea a statutory demand relating to the Judgment amount of $35,585 (Statutory Demand).[45] Breaksea has until 2 December 2020 to comply with the Statutory Demand.[46] At the hearing on 14 August 2020 I advised the parties that the hearing of the Appeal would not occur until the proceedings in the Magistrates Court has been completed. This was because, in my view, there is a real risk that the determination of the balance of the claim will generate a further appeal. All appeals arising from the claim need to be determined together. I made programming orders with this in mind. The net effect is that the Appeal is unlikely to be determined prior to the time for compliance with the Statutory Demand.
[45] First Black Affidavit, par 13, Annexure E.
[46] Corporations Act 2001 (Cth) (CA) s 459F; Corporations Regulations 2001 (Cth) reg 5.4.01AA (this being a temporary COVID-19 arrangement).
The fact that the Respondents have served the Statutory Demand on Breaksea, which it cannot meet, means that there is a real risk that it will be placed into liquidation prior to the determination of the Appeal. It would be open to Breaksea to challenge the Statutory Demand on the basis that there was is a 'genuine dispute' between the parties.[47] However, the determination of this issue would involve a separate application in the Supreme Court canvassing the issues to be determined in the Appeal, at additional cost to both parties, something which should be avoided.
[47] CA s 459H.
Mr Black opines that in the event that Breaksea is wound up it is unlikely that a liquidator would procced with the Appeal given the factual complexity, cost and lack of means to fund the litigation.[48] In my view, that is a fair observation.
[48] First Black Affidavit, par 16, Annexure G.
I am satisfied that there is a real risk that the Appeal will be rendered nugatory without an order suspending enforcement of the Judgment.[49]
[49] Tradesman Technologies Pty Ltd v Ameduri [2012] WASCA 168 [26] (Pullin JA).
As to whether the Appeal has reasonable prosects of success, necessarily this is a preliminary assessment.[50] As the Victorian Court of Appeal has observed:[51]
Whilst generally avoiding speculation about the prospects of success, the court considering a stay application in relation to an order the subject of an appeal will make a preliminary assessment as to whether the applicant has an arguable case, in order to protect a judgment debtor from a hopeless appeal designed to delay execution.
[50] McKessar [76].
[51] Sami v Roads Corporation [2009] VSCA 44 [33] (Williams AJA, with whom Redlich JA agreed).
Inherent in a number of grounds is a challenge to the findings of the Magistrate on the credibility of Mr McWhirter and the lack of credibility of Mr Black (Amended Appeal Notice, grounds 1, 2, 3 and 5). There is only a limited scope for appellate review of findings of fact. The appellant must do more than show that an alternative finding was available on the facts.[52] Rather, the appellant must show that a factual error was made by the Magistrate.[53] An appellate court should not interfere with a magistrate's findings of fact unless they are demonstrated to be wrong by 'incontrovertible facts or uncontested testimony', or they are 'glaringly improbable' or 'contrary to compelling inferences' or where the Magistrate failed to use, or has palpably misused, his advantage as a trier of fact.[54] An error of this kind is not immediately apparent to me. Moreover, there was ample objective evidence from which it was open for the Magistrate to conclude that it was Breaksea which repudiated the Contract, and not Pretar.[55]
[52] Badran v Public Transport Authority of Western Australia [2017] WASCA 28 [65] (reasons of the court).
[53] Badran [65].
[54] McKessar [76]; Robinson Helicopter [43]; Badran [65]; East Metropolitan Health Service v Martin [2017] WASCA 7 [99] (reasons of the court).
[55] See generally: Respondent's Submissions, par 17.
Most of the grounds of appeal refer to the fact that the Decision was delivered some 18 months after the conclusion of evidence. I do not consider that the delay between the conclusion of the trial and the delivery of reasons constitutes an arguable ground of appeal, in particular given that the cause of the delay was the intransigence of the parties (see [11] above) and how transparent the Magistrate was in disclosing his notes of his observations of the witnesses.[56]
[56] MC ts 13 May 2020, pages 51 ‑ 52.
Amended Appeal Notice ground 4 takes issue with the approach of the Magistrate in assessing damages in the counterclaim based on the repair of the Vessel, asserting that the damages should be assessed on the basis of the difference between the contract price and the value of the Vessel at the time of repossession. However, this misconceives the nature of the Respondents' damages claim. That claim was for breach of an express or implied term to the effect that Breaksea would maintain the Vessel in good working order until title passed. The damages claimed, and assessed, were those necessary to place Pretar in the position it would have been in had that term been performed.[57]
[57] Respondent's submissions, pars 22 - 23.
Amended Appeal Notice ground 1A challenges the Magistrate's finding that the poor condition of the Vessel at the time Breaksea took possession was not proven. However, it does so, among other grounds, on the basis that the poor condition of the Vessel was irrelevant to any of the elements of Breaksea's claim. If that is so, the finding under challenge will have no bearing on the substantive outcome of the Appeal.
On the other hand, it does appear that the Magistrate did not specifically address the issues in Amended Ground of Appeal 2, being:
(a)whether Breaksea was entitled to the return of the payments of capital ($35,000) and interest ($13,222.50) made by it when it did not obtain title to the Vessel;
(b)whether Breaksea was entitled to the paid amount of $1,470.74 which it paid out for insurance of the Vessel in the period from 1 January 2016 to 21 February 2016 when the Respondents had retaken possession of the Vessel;
(c)whether Breaksea is entitled to a refund of the amount of $9,222.22 for unconsumed fishing rights; and
(d)the determination of Breaksea's claim for $35,043.04 for conversion of goods which were on the Vessel when it was seized by the Respondents on 1 January 2016.
However, in the hearing on 14 August 2020, counsel for the Respondents submitted that these claims were pleaded and argued at trial as being claims for breach of the Contract, payable due to it being repudiated by the Respondents. The Magistrate, having found that it was Breaksea who repudiated the Contract, and not the Respondents, did not need to consider these consequential claims for damages. On the materials before me, it appears that after the conclusion of evidence Breaksea sought to amend its claim to assert an additional basis on which these amounts should be paid, but that it has not yet obtained leave to so amend its claim.[58]
[58] MC ts 8 May 2020, page 10.
Given the disorganised, and still fluid, state of the pleadings, I am not able to form any preliminary view one way or the other as to the merits of these assertions, that is, whether Breaksea is entitled to the amounts identified.
On balance, and as a preliminary assessment, I am not persuaded that the Appeal as a whole has a reasonable prospect of success.
As to the balance of convenience, from the perspective of Breaksea, the key point in terms of the balance of convenience is that if the Judgment is not stayed, it cannot pay the Judgment and will likely go into liquidation as a result of the Statutory Demand.
Mr McWhirter's evidence is that:[59]
(a)his health is poor;
(b)the Vessel is able to be used for fishing trips, but as Mr McWhirter has to employ a skipper, this generates a limited financial return to Pretar;
(c)the Vessel is not currently fully functional;
(d)a key reason the Vessel is not fully functional is that it does not have the appropriate gearbox;
(e)Breaksea sourced an appropriate gearbox with the proceeds of an insurance claim, but it was not in the Vessel when Pretar retook possession, and has not been provided to him;
(f)an appropriate gearbox would cost in the order of $40,000 and would require the Vessel to be steamed from Esperance to Albany, to be taken out of the water, repaired and steamed back to Esperance, all of which costs money he does not have; and
(g)due to the Coronavirus pandemic, he has not be able to obtain accurate quotes for the work that needs to be done.
[59] See generally: McWhirter Affidavit.
It is apparent that Mr McWhirter seeks to have the damages paid immediately so that he can repair the Vessel and ultimately sell it.
Counsel for Breaksea relied on the fact that the Vessel is currently advertised for sale for $200,000, and that the Respondents retain certain managed fishing rights which at one point had been advertised for sale for $800,000.[60]
[60] Appellant's Submissions, 30 July 2020, par 26; Second Black Affidavit, pars 38 - 39.
There is one further factor of some weight. This is that the trial in the Magistrates Court is yet to be completed.
I will return to the issue of whether a stay should be granted once I have considered the application for security for costs.

Are the Respondents entitled to an order for security for costs?

The specific orders sought in the Security for Costs Application are:
1.An order that unless by 7 July 2020 the appellant in APP 31/2020 and APP 28/2020 (Appeals) pay the amount of $30,000 into Court by way of security for costs, the Appeals be stayed until further order.
2.In the event that the Appeals are stayed pursuant to the order in paragraph 1 for a period in excess of three months, then the Appeals be hereby dismissed, with the appellant to pay the respondents costs of the Appeals to be taxed if not agreed.
3.The appellant pay the costs of this application.
In Frigger v Murfett Legal Pty Ltd I concluded that:[61]
(a)there is no express power in the DCR to order an appellant to provide security for the costs of an appeal;
(b)the power in Rules of the Supreme Court 1971 (WA) (RSC) O 25 to order a 'plaintiff' to provide security for costs does not apply to a District Court appeal as, in the context of the RSC, the term 'plaintiff' is limited to first instance cases; and
(c)the District Court in its incidental jurisdiction may make an order that an appeal be stayed until such time as the appellant provides security for costs.
[61] Frigger [27].
However, as Breaksea is a corporation, there is an additional head of power being CA s 1335.[62] The parties filed submissions on the basis that the Security for Costs Application was to be determined in the inherent jurisdiction of the court, which is what I have done. Given the orders made, there was no need for me to consider CA s 1335.
[62] The definition of 'court' in CA s 1335(1) meaning 'any court': CA s 58AA(1).
The principles governing the exercise of the discretion to order security for costs in the context of an appeal were recently summarised by the Court of Appeal in McKessar in the following terms:[63]
1.The power to order security is exercised to serve the interests of justice.
2.The discretion to order security is unfettered but must be exercised judicially.  'Special circumstances' do not have to be shown before an order for security for costs is made against an appellant.
3.An appellant's inability to satisfy a costs order should the appeal fail is generally a significant factor in favour of an order for security for costs.  However, if the respondent has caused the appellant's impecuniosity, that may be a relevant countervailing factor.
4.Impecuniosity is not in itself generally the sole ground for the making of an order for security.  Even where the appellant is impecunious, in all the circumstances, the interests of justice may properly be served by not making such an order.
5.Other factors generally include the appellant's prospects of success, whether the appellant would be shut out of the appeal if security for costs were ordered, and whether there has been any delay in the respondent filing the application for security for costs.
6.Ultimately, each case will turn on its own circumstances, and it is not possible to set out an exhaustive list of the relevant considerations.
7.Where security is ordered against an impecunious appellant, the amount ordered should not be greater than is absolutely necessary.
[63] McKessar [73]. See also: Frigger [29].
The exercise of the discretion in this case required the court, on the facts established, 'to make the decision as to security which [is] considered just, having regard to the competing interests and situations of the respective parties, after taking into account and giving appropriate weight to all relevant considerations and excluding all irrelevant considerations'.[64] The court will be concerned to achieve a balance between ensuring the respondent to an appeal is adequately and fairly protected, and avoiding injustice to an impecunious appellant company by unnecessarily shutting it out or prejudicing it in the conduct of the appeal.[65]
[64] BPM Pty Ltd v HPM Pty Ltd (1996) 131 FLR 339, 343 (Anderson J, with whom Kennedy & Ipp JJ agreed).
[65] Spence Financial Group Pty Ltd v GE Commercial Corporation (Australia) Pty Ltd [2007] WASC 15 [38] (Newnes M); Unified Pty Ltd v Cancer Council Western Australia Inc (No 3) [2011] WASC 161 [10] (Allanson J); Buckley v Bennell Design & Construction Pty Ltd (1974) 1 ACLR 301, 304 (Street CJ).
I am satisfied on the evidence before me (which I have summarised above) that Breaksea is not likely to be able to satisfy an order for costs in favour of the Respondents if the Appeal is successful. This is 'a matter which not only opens the jurisdiction but also provides a substantial factor in the decision whether to exercise it'.[66]
[66] Pearson v Naydler [1977] 1 WLR 899, 906 (Megarry VC); BPM (343); George 218 Pty Ltd v Bank of Queensland Ltd [2016] WASCA 56 [42], [46] (Murphy JA).
Mr Tassone's estimate of those costs as being in the order of $55,000 (before taxation) is, in my view, reasonable.[67] Likewise, the amount of security sought, $30,000, is also reasonable.
[67] Tassone Affidavit, pars 33 ‑ 35, Annexure DT13.
Breaksea asserts that the Respondents have caused its impecuniosity by not paying the claim.[68] As to this submission, in Dalma Formwork Pty Ltd v Concrete Constructions Group Ltd Rolfe J observed:[69]
that there must be a real causal connection between the conduct and the impecuniosity which, in the exercise of the Court's discretion, would make it unjust to require security. That, in turn, requires a consideration of not only the causal nexus, but also the nature of the conduct. In my opinion, the fact that the defendant has not made payment to the plaintiff because there is a bona fide dispute between the parties, cannot, without more, exculpate the plaintiff from providing security for costs if the other requirements are met. If this were so a defendant may be required to abandon its defence simply to ensure that the plaintiff is in a better financial position than it would have been, but for the non payment of the money the obligation to pay which the defendant disputes. That would be a strange result and would apply whether the amount payable is relatively large or small. It may also mean that a defendant was bound to pay over money to an impecunious plaintiff in circumstances where, if the defendant was ultimately successful, it could not recover from the plaintiff. This would only make the result more odd. In my opinion, before this matter can be given any real weight, it must be established that the defendant has been guilty, in not making payment, of some form of misconduct or unacceptable business dealings qua the plaintiff.
[68] Second Black Affidavit, pars 18 ‑ 21.
[69] Dalma Formwork Pty Ltd v Concrete Constructions Group Ltd [1998] NSWSC 472 (Rolfe J). Referred to with approval in: Melunu Pty Ltd v Claron Constructions Pty Ltd [2004] NSWSC 1064 [31] (Brownie AJ) and Westonia Earthmoving Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd [2013] WASC 57 [45] (Edelman J).
In the present case, the non-payment of moneys by the Respondents is because of a bona fide dispute between the parties, as reflected in the Decision and the Appeal. Breaksea has not persuaded me[70] that the Respondents have, to use the expression of Rolfe J, been 'guilty, in not making payment, of some form of misconduct or unacceptable business dealings qua the plaintiff'. Their failure to pay the amounts claimed is inherently tied to the merits of the Appeal, so does not have any significant, independent, weight against ordering security for costs. Nor am I satisfied that the Security for Costs Application was brought for any improper purpose.[71]
[70] BPM (346).
[71] BPM (343).
Breaksea then asserts that an order for payment of security for costs would stultify the appeal because it has no means to pay such an order. This is a well-established factor in the context of CA s 1335.[72] In that context, a court will not be justified in declining to make an order on the basis that the proceedings will be stultified unless the impecunious company establishes that those who stand behind it are also unable to provide the requisite security for costs.[73] It is incumbent upon a company who wishes to resist an application for security on this basis to put before the court a full and frank statement of the assets and liabilities of the company, and also of its shareholders.[74] 'Without that evidence, no conclusion can properly be reached that the effect of an order for security will be to frustrate the [company's] claim'.[75] In the Pretar case there is limited evidence as to the financial position of Mr Black personally.
[72] Unified [13]; Spence [39]; Bell Wholesale Co Pty Ltd v Gates Export Corp [1984] FCA 34; (1984) 2 FCR 1, 4. See Airwaves Goldcoast Pty Ltd v Caneflight Enterprises Pty Ltd [2013] WADC 24 [73] (Principal Registrar Gething).
[73] BPM (344) - (345); Unified [13]; Spence [34]; Bell Wholesale (4).
[74] Unified [15]; Spence [39]; NewTrend Pty Ltd v Oceanic Life Ltd [1990] WAR 1, 3 (Master Staples).
[75] Unified [15].

Counsel for Breaksea submits that it would not be commercially practical or reasonable to expect Mr Black (as a director and shareholder) or his wife (as a shareholder), to make funds available to satisfy an order for security for costs.[76]
[76] Appellant's submissions, 30 July 2020, par 11.
It is instructive at this point to refer to the observations of the Court of Appeal in Queensland in Harpur v Ariadne Australia Ltd as to the mischief to which CA s 1335 is directed:[77]
The mischief at which the provision is aimed is obvious. An individual who conducts his business affairs by medium of a corporation without assets would otherwise be in a position to expose his opponent to a massive bill of costs without hazarding his own assets. The purpose of an order for security is to require him, if not to come out from behind the skirts of the company, at least to bring his own assets into play.
[77] Harpur v Ariadne Australia Ltd [1984] 2 Qd R 523, 532 (Connelly J, with whom Campbell CJ & Demack J agreed).
Those comments are apposite to the present context. On the facts before the court, it is apparent that Mr Black, through Breaksea, will, in the prosecution of the Appeal, in which he stands to benefit, expose the Respondents to significant legal costs without hazarding his own assets.
I accept that the 'question is not simply whether there is a person who will derive some benefit from the action should it be successful and who can put up security' and that it 'is also relevant to consider whether it is reasonable that he should do so'.[78]
[78] BPM (344).
As to the merits of the Appeal, as set out above, as a preliminary assessment, I am not persuaded that the Appeal as a whole has a reasonable prospect of success.
There has been no delay in filing the Security for Costs Application.
The ability of the Respondents to absorb the costs if successful is a relevant consideration. The court may have regard to the position of the Respondents, and may be 'more sympathetic to an application from a respondent with limited funds than a respondent which is a major corporation'.[79] Pretar cannot be described as a 'major corporation'. The evidence of Mr McWhirter's financial position is to the effect that he is on the pension but still working at the age of 72, notwithstanding ill health.[80] I am not satisfied that the Respondents have liquid assets which could readily absorb the costs of prosecuting the Appeal so as to count against an order for security for costs.
[79] Pioneer Park Pty Ltd (in liq) v Australia and New Zealand Banking Group Ltd (2007) 65 ACSR 383 [56] (Basten JA); Unified [16]; Remm Construction (SA) Pty Ltd v Allco Newsteel Pty Ltd (1992) 57 SASR 180, 186 (King CJ).
[80] McWhirter Affidavit, par 13.
Counsel for Breaksea also submitted that, in effect, the Respondents are liable to pay money to it which can be used to offset any order for costs in the Appeal.[81] However, this is tied up in the merits of the Appeal. I do not consider that it is an independent factor against an order for security for costs.[82]

What interlocutory orders are appropriate?

[81] Appellant's submissions, 30 July 2020, pars 13 - 14.

[82] In contrast to the factual position in Westonia [52] - [61].

Both the Suspension Application and the Security for Costs Application turn on what is in the interests of justice. Both flow from the financial position of Breaksea. It is clear on the evidence before me that Breaksea does not have the financial resources to pay either the Judgment or any costs order which the Respondents may obtain in the Appeal. The orders made need to balance the risks of injustice to both Breaksea and the Respondents.
In my view, the balance is best struck by making two orders.
The first is to suspend of execution of the Judgment pending the outcome of the Appeal. For the reasons I have outlined, I accept that if suspension is not ordered and Breaksea is placed into liquidation the right of appeal will be rendered nugatory. Balancing all the factors which I have identified, I am of the view that is in the interests of justice for the Appeal to proceed, with one caveat, being the second order.
The second is to order that Breaksea provide security for costs by payment of the amount of $30,000 into court.
These two conclusions are interlinked. The debt payable pursuant to the Judgment is presently due and payable. The evidence before the court is that Breaksea cannot pay this debt, and so it is prima facie insolvent. It can only trade, including to participate in this Appeal, with the support of those standing behind it, including to pay its solicitors to prosecute the Appeal. Those standing behind Breaksea stand to benefit if the Appeal is successful. Without an order for security for costs, they can expose the Respondents to significant further legal bills without hazarding their own assets.
Given Breaksea's financial position, I consider it unjust for it to compel the Respondents to continue to spend money on legal fees to defend the Appeal when there is no realistic prospect of the Respondents recovering any of that money should they be successful in the Appeal and obtain an order for costs in their favour. In all the circumstances, I consider it reasonable for those standing behind Breaksea to provide this security if it cannot.
As to costs, the appropriate order is that the costs of each application be in the Appeal. This is for two reasons. The first is that both applications were successful, normally indicating that costs should follow the event. However, in my view, it is not possible to meaningfully disentangle the costs of each application. The second is that each application is tied to the merits of the Appeal.
The formal orders made on 14 August 2020, set out at [6], took into account the practical considerations raised by counsel once I had informed them of the substance of the orders I proposed to make.

I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.
JM
Associate
21 AUGUST 2020