Bundanoon Sandstone Pty Ltd v Cenric Group Pty Ltd

[2018] NSWCA 256

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation:	Bundanoon Sandstone Pty Ltd v Cenric Group Pty Ltd [2018] NSWCA 256
Hearing dates:	5 November 2018
Date of orders:	07 November 2018
Decision date:	07 November 2018
Before:	Macfarlan JA
Decision:	(1)   Order that until determination of the appeal Order 2 made in the Equity Division on 25 October 2018 be stayed to the extent only that the judgment for which the Order provides exceeds $566,426.97. (2)   Dismiss Cenric’s Notice of Motion seeking an order that Bundanoon provide security for Cenric’s costs of the appeal. (3)   Order that the costs of Bundanoon’s and Cenric’s Notices of Motion be costs on the appeal.
Catchwords:	APPEAL – stay application refused in part – security for costs application refused – security order and absence of stay likely to render appeal nugatory
Legislation Cited:	Uniform Civil Procedure Rules 2005 (NSW), rr 51.44, 51.50
Cases Cited:	Alexander v Cambridge Credit Corporation Ltd (1985) 2 NSWLR 685 Transglobal Pty Ltd v Yolarno Pty Ltd (2004) 60 NSWLR 143; [2004] NSWCA 136
Category:	Procedural and other rulings
Parties:	Bundanoon Sandstone Pty Ltd (Applicant) Cenric Group Pty Ltd (First Respondent) TWT Property Group Pty Ltd (Second Respondent)
Representation:	Counsel: M Ashhurst SC / GP Gee (Applicant) CRC Newlinds SC / R Thrift (First Respondent)   Solicitors: Mills Oakley (Applicant) Clyde & Co (First Respondent)
File Number(s):	CA 2018/323797
Decision under appeal	Court or tribunal: Supreme Court Jurisdiction: Equity – Technology and Construction List Citation: [2018] NSWSC 1570 Date of Decision: 25 October 2018 Before: McDougall J File Number(s): SC 2018/99816

Judgment

1. HIS HONOUR: By judgment of 18 October 2018 McDougall J, sitting in the Technology and Construction List of the Equity Division, delivered judgment on a claim by Cenric Group against TWT Property Group and Bundanoon Sandstone Pty Ltd ([2018] NSWSC 1570). The claim related to the harvesting and sale of sandstone at a development site in Pyrmont. His Honour’s orders of 25 October 2018 included a declaration that Bundanoon holds certain sale proceeds on trust and an order that judgment be entered in favour of Cenric against Bundanoon in the amount of $3,958,651.08.

2. Bundanoon has appealed but its appeal does not challenge an amount of $566,426.97 comprised in the judgment against it. TWT has not appealed but the time for appeal has not yet expired.

3. By Notice of Motion filed in this Court, Bundanoon sought a stay of the whole of the money judgment against it (Order 2) and his Honour’s order that Bundanoon pay Cenric’s costs of the proceedings (Order 7). For its part, by Notice of Motion, Cenric sought security from Bundanoon for Cenric’s costs of the appeal.

4. At the hearing of the Motions, senior counsel for Bundanoon satisfied me that the two principal submissions to be advanced by Bundanoon on the appeal (as to when royalties were payable and as to how they were to be calculated) are reasonably arguable. Indeed, senior counsel for Cenric conceded that the first submission was arguable.

5. The commencement of an appeal does not automatically stay orders made below but the Court has a discretion to grant a stay (r 51.44 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR)). It is not necessary that the applicant for a stay establish special or exceptional circumstances (Alexander v Cambridge Credit Corporation Ltd (1985) 2 NSWLR 685 at 694). It is relevant to the exercise of the Court’s discretion that the Court’s preliminary assessment of the appellant’s prospects of success is that it has an arguable case and that “there is a risk that the appeal will prove abortive if the appellant succeeds and a stay is not granted” (ibid at 695). As to the latter consideration, Bundanoon adduced uncontested evidence that it has insufficient financial resources to pay the judgment sum and that if a stay is not granted Bundanoon’s sole director will need to place Bundanoon in liquidation, effectively terminating the appeal.

6. In these circumstances, I consider that it is appropriate to grant a stay. The stay should not however extend to that part of the judgment sum that is not challenged on appeal. Whilst the existence of an unstayed judgment for a significant sum may, despite the stay of the remainder, render the appeal futile, the prospects of that occurring seem to me to be significantly less than if a stay is not granted in respect of any part of the judgment. It is not therefore a reason not to grant a qualified stay. As the unchallenged part of the judgment would have been a sufficient foundation for the costs order that his Honour made, that order should also not be stayed.

7. A respondent to an appeal is only entitled to an order that security be provided to it for its costs of the appeal if it establishes “special circumstances” (UCPR r 51.50). Impecuniosity does not of itself constitute “special circumstances” (Transglobal Pty Ltd v Yolarno Pty Ltd (2004) 60 NSWLR 143; [2004] NSWCA 136 at [30]-[31]). Indeed, an appellant’s impecuniosity may indicate that its appeal will be rendered futile if it is ordered to provide security for costs and that consideration favours the refusal of an order (ibid at [32]). In this regard, Bundanoon’s balance sheet reveals that it has a substantial excess of liabilities over assets, suggesting that it would be unable to comply with any order for provision of security, and it has not been submitted that Bundanoon might have other means of obtaining the relevant funds.

8. In these circumstances, I do not consider that an order for the provision of security should be made. Bundanoon has a genuine, reasonably arguable appeal which might well be frustrated if an order for security were made.

9. For these reasons, I make the following orders:

1. Order that until determination of the appeal Order 2 made in the Equity Division on 25 October 2018 be stayed to the extent only that the judgment for which the Order provides exceeds $566,426.97.

2. Dismiss Cenric’s Notice of Motion seeking an order that Bundanoon provide security for Cenric’s costs of the appeal.

3. Order that the costs of Bundanoon’s and Cenric’s Notices of Motion be costs on the appeal.

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Decision last updated: 07 November 2018