Clark v Lester [No 2] - [2019] SASC 194

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
CLARK & ORS v LESTER & ORS [NO 2]
[2019] SASC 194
Judgment of The Honourable Justice Hinton
15 November 2019
PROCEDURE - COSTS - APPEALS AS TO COSTS
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - SECURITY FOR COSTS
Application for permission to appeal, and, if granted, an appeal against costs orders made by a Master of the Supreme Court.
By interlocutory application, the first and fourth defendants sought an order for security for costs against the plaintiffs, and orders striking out or staying certain paragraphs of the plaintiffs’ Statement of Claim. The first defendant also took issue with the relief sought in particular paragraphs of the Summons issued at the behest of the plaintiffs.
On 23 December 2016, a Master of this Court delivered reasons disposing of the interlocutory application. The first defendant failed on his application for security of costs and on his application to strike out particular paragraphs of the Summons. His application to strike out certain paragraphs of the Statement of Claim was dealt with on the basis that further particulars be provided. The fourth defendant failed on its application for security for costs and did not pursue its application that certain paragraphs of the Statement of Claim be stayed.
Consequent upon the Master disposing of the interlocutory application, he made orders for costs on 19 May 2017. In effect, the Master ordered that the first and fourth defendants pay 50% of the costs of the plaintiffs with respect to issues pursued by those defendants on the interlocutory application.
The first and fourth defendants now seek permission to appeal the Master’s orders of 19 May 2017 on nine grounds. Grounds 1 and 2 are that the Master erred in refusing to reserve the question of the costs of the interlocutory application pending the plaintiffs filing an amended statement of claim containing the further particulars ordered, and erred in failing to give any reasons for refusing to reserve the question of costs. Grounds 3-8 attack the actual costs order made. Ground 9 is that the Master failed to deal with the question of costs of two other interlocutory applications filed by the first and fourth defendants in these proceedings.
Held, refusing permission to appeal on grounds 1-9; the Master did not fall into error in exercising his discretion as to costs.
Supreme Court Act 1935 (SA) ss 40, 50; Supreme Court Civil Rules 2006 (SA) rr 73, 135, 280, 288, referred to.

CLARK & ORS v LESTER & ORS [NO 2]
[2019] SASC 194
Application
HINTON J:
Introduction

This is an application for permission to appeal and, if granted, an appeal against costs orders made by a Master of this Court. The orders were made consequent upon the Master disposing of an interlocutory application in which, amongst other things, the appellants unsuccessfully sought security for costs. I would dismiss the appeal. My reasons follow.
Background
Mr Clark, the first plaintiff, and Mr Lester, the first defendant, agreed to enter the olive oil production business. Mr Clark was to provide the knowledge necessary to the cultivation of olives and the commercial production of olive oil, whilst Mr Lester was to finance the operation. In this regard paragraph 23 of the first Statement of Claim provided:[1]
23.In about 12 November 2012, Mr Clark and Mr Lester orally agreed to go into the olive grove and oil production business together on the following terms:
23.1. they would acquire olive groves that were out of condition and non productive;
23.2. Mr Lester would provide the finance to acquire the olive groves and plant and equipment and meet running costs;
23.3. Mr Clark would provide the ‘know-how’ and management of the olive groves and production of olive oil;
23.4. they would structure their business through a partnership between corporate entities and trusts controlled by each of them respectively and they would make their agreed contributions through the partnership. (“the Underlying Agreement”)
[1] FDN 13.
Initially, the partnership was to operate in South Australia. The partners were to be companies. To this end Mr Clark caused Bevo Agricultural Investments Pty Ltd (BAI), the second plaintiff, to be incorporated and BAI entered into a partnership (the Lameroo Station Partnership) with Lameroo Station (Qld) Pty Ltd (LSPL), the second defendant, a company incorporated by Mr Lester. BAI was also the trustee of the Bevo Agricultural Trust and Mr Clark a beneficiary of the trust.
Subsequently, Mr Clark and Mr Lester agreed to expand the operation in Queensland. In that State the partnership was conducted between Bevo Agricultural Investments (Qld) Pty Ltd (BAIQ) and Pinnaroo Station Pty Ltd, the third and fourth plaintiffs, both incorporated by Mr Clark, and Lameroo Station (Qld) Pty Ltd (LS Qld) and MacLachlan-Lester Pastoral Group Pty Ltd (MLPG), the second and third defendants, incorporated by Mr Lester (the Queensland Partnership). BAIQ was also the trustee of the Bevo Agricultural No 2 Trust and Mr Clark a beneficiary of the trust.
Each of the partnerships acquired land with established olive groves, in the case of the Lameroo Station Partnership, in South Australia, and in the case of the Queensland Partnership, in Queensland. The Queensland Partnership granted a licence to the Lameroo Station Partnership to operate the olive groves located in Queensland.
Difficulties in the partnership relationships arose in 2014. Mr Lester ceased financing the operation with the consequence that the olive groves could not be tendered and finance could not be paid. On 22 October 2014 LSPL executed a notice of termination in relation to the Lameroo Station Partnership. On the same date, LS Qld and MLPG did the same in relation to the Queensland Partnership.
In December 2014 actions were commenced in this Court to wind up both the Lameroo Station Partnership and the Queensland Partnership. In January 2015, receivers were appointed to the assets and undertakings of each of the partnerships.
In March 2015 Mr Clark, BAI, BAIQ and Pinnaroo Station Pty Ltd instituted these proceedings against Mr Lester, LS Qld, MLPG and others. Pausing here; two things may be noted immediately. First, LSPL was not included as a party to the proceedings. Second, the partnerships having been placed in receivership, BAI, BAIQ and Pinnaroo Station Pty Ltd could not proceed with the actions without first obtaining the consent of the receiver.
The first Statement of Claim filed in this Court stated that Mr Clark sought damages from Mr Lester for breaching the underlying agreement in that he orchestrated the diminution in value of Mr Clark’s interests in BAI, the Bevo Agricultural Trust, BAIQ and the Bevo Agricultural No 2 Trust. Mr Clark also claimed damages for the loss of the opportunity to receive a profit distribution from Lester & Clark Pty Ltd, a corporation in which he held 50% of the shares but which was run by Mr Lester to the exclusion of Mr Clark.
In the same Statement of Claim BAI sought damages on behalf of the Lameroo Station Partnership from Mr Lester and Parkfast SA Pty Ltd (Parkfast) for their participation in breaches by the Lameroo Station Partnership of certain partnership duties. Parkfast is the fourth defendant. Mr Lester is the sole director and shareholder of Parkfast. Further, BAIQ and Pinnaroo Station Pty Ltd sought damages on behalf of the Queensland Partnership from LS Qld and MLPG for breaches of their duties as partners, and against Mr Lester and Parkfast for their participation in LS Qld’s and MLPG’s breaches.
By interlocutory application dated 18 June 2015 (FDN 17), Mr Lester and Parkfast both sought an order for security for costs against the plaintiffs, jointly and severally, and an order that the proceedings be stayed until such time as such security as may be ordered was provided. In addition, Mr Lester and Parkfast sought orders striking out or staying certain paragraphs of the claims contained in the first Statement of Claim and in the Summons on bases including that:
i.the claims involving breaches of duty by a partner had to be made by way of the taking of partnership accounts;
ii.the claims relating to the Lameroo Station Partnership were defective in that all partners to the claim had not been joined as parties;
iii.none of BAI, BAIQ and Pinnaroo Station Pty Ltd could commence the actions without first obtaining a direction from the Court under rule 73(3) SCCR.
iv.BAI, BAIQ and Pinnaroo Station Pty Ltd had no right to commence the proceedings because any claim they had arising out of the partnerships were vested in the receiver;
v.the claims for damages for the diminution in the capital value of Mr Clark’s interests in BAI, BAIQ and Pinnaroo Station Pty Ltd and for the diminution of his interests in the trusts were “reflective loss claims” in that Mr Clark’s losses were a reflection of the losses of the corporate plaintiffs or the trust. Such claims could be pursued by the corporate plaintiffs or the trustee only.
The interlocutory application was heard on 29 October 2015 and 27 June 2016 by a Master of this Court. On 23 December 2016 the Master delivered reasons disposing of the application.
It is important to understand that between the time the application was filed and the delivery of judgment the plaintiffs obtained the consent of the liquidator of LSPL to proceed against LSPL and to join LSPL as a party, in addition to obtaining the consent of the receiver to pursue the Lameroo Station Partnership claims and the Queensland Partnership claims. Further, on 7 September 2016 the Master made orders which had the effect of releasing the Lameroo Station Partnership claims and the Queensland Partnership claims from the receiverships.
To understand the Master’s reasoning and the arguments on appeal it is necessary to set out paragraphs 85, 87.4-87.10, 103, 104, 105 and 107 of the first Statement of Claim. Those paragraphs provided:
85.The said breach of the Underlying Agreement As Varied has caused Mr Clark loss and damage and Mr Lester is liable to pay damages.
Particulars
85.1. The diminished capital value of Mr Clark’s interest in BAI and Bevo Agricultural Trust by reason of the diminished value of the olive groves of the Lameroo Station Partnership.
85.2. The diminished capital value of Mr Clark’s interest in BAI and Bevo Agricultural Trust by reason of the loss of future profit share from the Lameroo Station Partnership.
85.3. In the event that Lester Clark PL is found to be liable to Parkfast SA for water licence fees, loss of the opportunity to have a profit distribution from Lester Clark PL by reason of that company being obliged to pay water licence fees to Parkfast SA.
85.4. The diminished capital value of Mr Clark’s interest in BAI Qld and Bevo Agricultural Trust No 2, and Pinnaroo Station and the Pinnaroo Station Trust by reason of the diminished value of the olive groves of the Queensland Partnership.
85.5. The diminished capital value of Mr Clark’s interest in BAI Qld and Bevo Agricultural Trust No 2, and Pinnaroo Station and the Pinnaroo Station Trust by reason of the loss of future profit share from the Queensland Partnership.
...
87.Subject to direction by the court under SCR 73(3), BAI claims on behalf of the Lameroo Station Partnership:
…
87.4. By reason of the matters alleged at paragraphs 61, the purported liability of the Lameroo Station Partnership to Parkfast SA has been recorded in breach of fiduciary duty and is voidable.
87.5. A declaration that the contribution of funds by Parkfast SA to the Lameroo Station Partnership is in the nature of partner’s contribution by LSPL.
87.6. An account to determine the true amount of contribution of funds by Parkfast SA on behalf of LSPL.
87.7. A declaration that the Lameroo Station Partnership is not liable to pay interest to Parkfast SA in the amount claimed by Parkfast or at all.
87.8. A declaration that the Lameroo Station Partnership is not liable to Parkfast SA upon a purported plant and equipment lease for a … [sic]
87.9. A declaration that the funds contributed by Parkfast SA and applied to pay for water under the Queensland Water Agreement were funds contributed to the Lameroo Station Partnership.
87.10. A declaration that Parkfast SA is not a secured creditor of LSPL or BAI.
…
103.Damages at common law against Mr Lester.
104.An order pursuant to s233 of the Corporations Act that Mr Clark purchase the shares in Lester Clark PL at a price which reflects their true value less the value of benefits Mr Lester and entities associated with him have already had out of the company and less the value of any liability Lester Clark PL is found to have to Parkfast SA.
105.Interest.
…
107.Declarations as set out in paragraph 87.
Mr Lester sought orders striking out paragraphs 85, 103, 104 and 105 of the first Statement of Claim on the basis that they were reflective loss claims. The Master determined:
92The question is whether the same principles about shareholders loss apply to a loss of a party that is a beneficiary of a trust. The first plaintiff created the corporate entities to act as trustees of trusts. It was the trusts that held the interests in the two partnerships. The question ultimately is whether a beneficiary of a trust is in any different position to a shareholder in a company. If a trust has suffered a loss by a breach of duty owed to it, ordinarily it would be expected that the trustee would bring a suit to recover that loss. I am inclined to the view that the legal position is that Clark may not seek to recover a loss suffered by the trust. He would be entitled to pursue any loss suffered by him personally. The plaintiffs should provide further particulars of the loss suffered by Clark that is pleaded in paragraphs 85.1 and 85.2.
93The pleading in 85.3, which is to the effect that if Lester Clark Pty Ltd is found to be liable to Parkfast SA for water licence fees, a loss has been suffered. The complaint is there are no pleaded facts to support the proposition. I agree that further particulars are required. I would order that the plaintiffs provide further particulars of 85.3. Until proper particulars are provided in respect of 85.3, it is not possible to deal with paragraph 104, which is a claim for relief arising from the allegation in 85.3. Consistent with my view of paragraphs 85.1 and 85.2, further particulars of loss are to be provided in respect of paragraphs 85.4 and 85.5.
Separately, Parkfast contended that paragraphs 87.4-87.10 of the first Statement of Claim should be stayed because LSPL was not a party, because no order had been obtained under rule 73(3) of the Supreme Court Civil Rules 2006 (SA) (SCCR) authorising the plaintiffs to proceed as representatives of all interested persons, and because the receiver’s consent to the proceedings had not been obtained. As indicated, this aspect of Parkfast’s application fell away.
Mr Lester also took issue with the relief stated as sought in paragraphs 1-7 of the Summons issued at the behest of Mr Clark and the other plaintiffs. The plaintiffs consented to paragraph 2 of the Summons being struck out. As for the remainder the Master considered that the first Statement of Claim superseded the endorsements in the Summons. Further, because there was to be a fresh statement of claim the Master considered the application premature. He said:
22… This matter will proceed to trial on the current, or more likely amended, statement of claim. Amendments are anticipated, particularly once the parties have made disclosure. It is clear that the statement of claim will be the document that defines the issue between the parties at trial, not the Summons. At trial any matters in the Summons that have not been pleaded will be regarded as abandoned. For that reason, I think it is premature to deal with any issues in respect of the Summons until we have the final statement of claim. There is no prejudice occasioned to the defendants by doing so.
As for Parkfast’s and Mr Lester’s applications for security for costs the Master noted that it was accepted that the plaintiffs’ capacity to satisfy an order for costs was minimal. He then said:
96… the matters which I regard as most relevant are, first, the nature and circumstances of the original agreement. That is, the Clark interests have never been strong financially. It was never the intention that they would be in a position to make financial contributions towards the partnership and its business. What they brought to the table was expertise. Lester was prepared to go into business with Clark and his interests on that basis. In my view, that makes it inappropriate for Lester to now seek to require Clark and his companies to put forward security for costs.
97The second issue relates to the nature of the litigation. This is partnership litigation. There will need, in the final analysis, to be the taking of final accounts. Lester and Clark arguably, or at least their entities, are in a fiduciary relationship. There are allegations of wrongdoing and a deliberate scheme to undermine the partnerships by the Lester interests. It is not known at the moment whether those allegations have merit or not. However, they are allegations of a type that should be investigated and that is also, in my view, an important consideration.
98The third issue is the well-known matter that, where the impecuniosity of a party has been contributed to by the conduct of the defendant, that is a significant factor. The financial wellbeing of the plaintiffs is, and was, closely linked to the success of the business of the partnerships. It is said that Lester unilaterally and for his own purposes ceased funding the establishment of the partnership businesses. That caused the partnerships to fail. It can properly be alleged by the plaintiffs that their current poor financial position is caused by, or has been substantially contributed to by the defendants.
The Master concluded that the justice of the situation rendered it appropriate to dismiss the applications for security for costs.
Pausing here; Parkfast did not pursue its application that paragraphs 87.4-87.10 of the first Statement of Claim be struck out and failed on its application for security for costs. Mr Lester failed on his application for security for costs and failed on his application to strike out paragraphs 1 and 3-7 of the Summons. Mr Lester’s application to strike out paragraphs 85, 103, 104 and 105 of the first Statement of Claim was dealt with on the basis that further particulars were ordered.
Before the Master, counsel for Mr Lester and Parkfast submitted that the appropriate costs order to make on FDN 17 was that costs be reserved and the application be adjourned for further consideration upon a second statement of claim being filed.[2] The Master reserved the question of costs on FDN 17.
[2] Transcript, 22 March 2017 at p 20.
On 19 May 2017 the Master made costs orders consequent upon disposing of FDN 17. In reasons accompanying his orders the Master said:
8The plaintiffs say that the application FDN17, insofar as it dealt with the orders sought by the first and fourth defendants, substantially failed and they should have the costs of and incidental to the application. They also say that the costs should be able to be adjudicated and paid forthwith.
9The first and fourth defendants say that their application was reasonably made and succeeded to some extent in that the plaintiffs were ordered to provide further particulars of paragraph 85. They also say that their other arguments which the Court did not need to deal with, because of the matters that occurred subsequent to the hearing, were reasonably made. They seek an order that costs be reserved.
…
11The fourth defendant failed completely on the application, because all it sought was security for costs. The position with the first defendant is less clear. He was pursuing arguments which subsequent events made untenable. He also obtained an order in respect of paragraph 85 of the Statement of Claim. He had, to that extent, a partial success in respect of his application.
12The justice of the situation is met by requiring the first and fourth defendants to pay 50% of the costs of the plaintiffs in respect of the issues pursued by those defendants on application FDN17.

The effect of the Master’s order as set out in paragraph 12 of his reasons quoted above was that Parkfast and Mr Lester were liable to pay 50% of the plaintiffs’ costs of and occasioned by the application for security for costs, and that Mr Lester was liable to pay 50% of the plaintiffs’ costs of and occasioned by his claim to strike out paragraphs 1 and 3-7 of the Summons and 50% of the plaintiffs’ costs of and occasioned by his application to strike out the reflective damages claim. Implicitly, the parties were to bear their own costs of and occasioned by Parkfast’s application to stay paragraphs 87.4-87.10 of the first Statement of Claim.
The appeal
Under s 50(1)(b) of the Supreme Court Act 1935 (SA) (SCA) an appeal lies against a judgment of the Court constituted of a master. Judgment is defined in s 50(6) SCA as including an order or direction and a decision not to make an order or direction. Under rule 280(1) SCCR and s 50(2) SCA an appeal from the judgment of a master on an interlocutory application lies to a single judge.
In the present case the Notice of Appeal purports to complain of two of three orders made by the Master; first the order actually made; that the first and fourth defendants pay 50% of the costs of the plaintiffs in respect of the issues pursued by those defendants on application FDN 17. Second, an implicit order refusing to adjourn paragraphs 1-4 and 8 of FDN 17 — that is, refusing to adjourn Mr Lester’s application for security for costs and his application that the reflective loss claims be struck out — pending the first plaintiff filing an amended statement of claim containing the further particulars ordered. Third, an implicit order refusing to adjourn the question of the costs of FDN 17 pending the first plaintiff filing an amended statement of claim.
The second and third orders amount to decisions not to make an order or direction within the meaning of s 50(6) SCA — the Master decided not to adjourn FDN 17 for further consideration upon the filing of a fresh statement of claim and decided not to reserve the question of costs.
The first ground of appeal complains that the Master erred in not reserving the question of costs pending the filing of a fresh statement of claim containing the further particulars ordered. To succeed on this ground the appellant must show that it was not open to the Master to proceed as he did for that the decision was in some way infected by error.
The argument advanced in support of this ground was neatly summarised in counsel’s outline of submissions as follows:
… having ordered particulars, the Master should have adjourned FDN17 to see whether the particulars provided would answer Lester’s objections. He refused to do so, with the result that he never ruled on Lester’s objections and thereby abnegated his fundamental judicial function.
The refusal to reserve the question of costs was secondary to the primary complaint, namely, that the Master did not determine whether to strike out the reflective loss claims. The argument proceeded on the premise that the latter would be revisited if the amended Statement of Claim remained inadequate with the consequence that the question of costs would need to be revisited, hence costs should have been reserved.
In disposing of interlocutory applications the rules of court give masters and judges considerable decisional freedom in order that they may address the needs of the parties in the course of procedural steps taken to ready a matter for hearing and in pursuing the efficient and effective disposal of court business. With respect to paragraph 7 of the interlocutory application the Master may be taken to have acted pursuant to rule 135(1) SCCR. Rule 135(1) permits the Court, on an interlocutory application, to make orders and give directions relating to the subject matter of the application irrespective of whether the applicant has in their application asked for orders and directions of the kind made. Thus, under the rule it was within the Master’s power to take the different course reflected in his orders and directions to that which Mr Lester sought in paragraph 7 of FDN 17.
It is implicit in rule 135 that where the Court makes orders or gives directions on an interlocutory application different to those sought in the application, it deals with the application no less. There is no abnegation of the judicial function. The Master was duty bound to deal with the application, but he was under no duty to limit himself in the relief provided to that stated in the application and was free to order alternate relief addressing the issue raised subject, of course, to giving the parties the opportunity to be heard on the course proposed. If this is right, the Master disposed of paragraph 7 of the application.
Why should paragraph 7 of the application have remained live? Mr Lester’s answer is that he expected that the second Statement of Claim would be no more adequate than the first. Clearly, the Master considered that with the benefit of advice and further consideration Mr Clark and the corporate plaintiffs might be able to recast their statement of claim to overcome the difficulties alluded to by Mr Lester. Whether or not that is right, I cannot see that it was erroneous for the Master to refuse to reserve the question of costs pending the filing of a fresh statement of claim. It seems to me that the Master was entitled to assume that counsel for the plaintiffs would take on board the arguments advanced on behalf of Mr Lester and respond accordingly, either recasting the claims and providing appropriate particulars, abandoning the claims or re-pleading and running the risk of a second strike out application and costs applications possibly on a solicitor/client or indemnity basis.
Strike out applications and applications for summary judgment, like applications for security for costs, involve discrete questions extricable from the wider action, lending themselves to being disposed of finally, including by the making of related costs orders. Doing so is efficient and generally not prejudicial. Further, the sobering effect of the costs orders made on such applications and the conduct of the proceedings should not be overlooked.
In my view the Master was entitled to proceed as he did. I would refuse permission to appeal on the first ground.
The second ground of appeal contends that the Master erred in failing to provide reasons for refusing to reserve the question of costs. The centrality of reasons to the judicial function has been the subject of much judicial excursus. I do not intend to add to it. Reasons are not required for rulings on interlocutory applications unless the ruling is important.[3] The same may be said of costs applications made on interlocutory applications. What is important will depend upon the nature of the jurisdiction, the nature of the matter, the nature of the particular application and the dispositive orders made.
[3] Wainohu v New South Wales (2011) 243 CLR 181 at [54], [56] (French CJ and Kiefel J).
The relevant application here for the purposes of the second ground of appeal, was that the question of the costs of FDN 17 be reserved. That was not an important application in the scheme of the proceedings. The applications subject of FDN 17 were, as I have said, discrete in the issues they raised and the relief sought in the sense that the outcome was not linked to the success or otherwise of the action as a whole (assuming the action continued in whole or in part), thus lending themselves to the making of costs orders. I do not think this had to be spelt out in reasons. It was obvious and was the unstated premise upon which the plaintiffs applied for their costs.
I appreciate that underpinning the application that the question of costs be reserved was the question of whether the strike out application may need to be revisited. I do not, however, consider that that changes matters. Having regard to the method the Master chose to address the strike out application (by ordering further particulars), I do not think reasons for refusing to further adjourn the application were required. Again, from the Court’s point of view, the plaintiffs were to be given the opportunity to cure the defect to which Mr Lester alerted them. No reason arose to think that any greater superintendence was required. This was not an important interlocutory application, particularly once the Master chose to dispose of it by ordering particulars.
I would refuse permission to appeal on the second ground of appeal.
For convenience I deal next with the ninth ground of appeal. This ground of appeal complains that the Master failed to deal with the question of costs on interlocutory applications FDN 9 and FDN 53. I do not see how this question can be raised on an appeal against costs order made on FDN 17. Further, my understanding is that, as yet, no exercise of original jurisdiction has occurred. I would refuse permission to appeal on ground nine.
The remaining grounds attack the actual costs order made. I commence by stating some general propositions. First, the power to award costs vested in this Court and exercised by the Master is discretionary.[4] The discretion is broad and intentionally so; so that justice between the parties may be done.[5] Secondly, the power being discretionary, the orders made may not be interfered with on appeal unless an error of the type identified in House v The King is shown to have occurred.[6] Thirdly, antecedent to the question of whether error in the House v The King sense has been shown to have occurred is the question of whether permission to appeal should be granted.[7] Fourthly, generally permission to appeal will not be granted unless the appeal raises a question of general importance or the court determines that, notwithstanding that no question of general importance arises, the justice of the case warrants intervention.
[4]    Supreme Court Act 1935 (SA), s 40.
[5]    Wood v Adelaide Resource Recovery Pty Ltd (No 2) [2017] SASCFC 38 at [4]-[6] (the Court).
[6] (1936) 55 CLR 499 at 505 (Dixon, Evatt and McTiernan JJ).
[7]    Supreme Court Civil Rules 2006 (SA), r 288(1)(b).
The third and fourth grounds of appeal complain that the Master erred factually in that:
a. he referred in paragraph 11 of his reasons to Parkfast as having only sought an order for security for costs when in fact Parkfast also sought a stay of the claim subject of paragraphs 87.4, 87.6-87.10 and 107 of the first Statement of Claim;
b. he referred in paragraph 5 of his reasons to “[t]he first and fourth defendants” as having failed to have various sub-paragraphs of paragraph 85 of the first Statement of Claim struck out when in fact Parkfast made no such application.
The Master did refer in paragraph 5 of his reasons to Parkfast as having applied to strike out paragraph 85 when it did not do so. In paragraph 11 of his reasons the Master said that “[t]he fourth defendant failed completely on the application, because all it sought was security for costs”. In my view that statement was correct. Despite the content of the interlocutory application, come the hearing of the application, Parkfast did not seek an order staying the proceeding.
The impugned statement contained in paragraph 11 of the Master’s reasons is inconsistent with the impugned and erroneous statement contained in paragraph 5.
There is a danger here of reading the Master’s reasons too finely. I think it evident from the reasons read as a whole that the Master determined that Mr Lester and Parkfast, the first and fourth defendants respectively, should not have to pay the entirety of the plaintiffs’ costs of the application for security for costs because Mr Lester was partially successful on his strike out application and because events subsequent to the making of the application rendered the stay application redundant. The Master may be considered to have notionally set off an award of costs in favour of Mr Lester and Parkfast on their strike out and stay applications, against an award of costs in favour of the plaintiffs on the applications for security for costs.
I think paragraph 5 of the Master’s reasons and the reference to Parkfast as having pursued the strike out claims an error that had no consequence, bearing in mind paragraph 11. I would refuse permission to appeal on grounds 3 and 4.
In the fifth and sixth grounds of appeal it is contended that not only was the Master wrong to treat Parkfast as having only applied for an order for security for costs, but he should have treated Parkfast as if it had succeeded on its stay application, and, this being so, was wrong to distinguish the position of Parkfast, on the one hand, from that of Mr Lester, on the other, on the basis that Parkfast had been completely unsuccessful.
For the reasons I have given, I reject the contention that the Master mischaracterised the position by stating that Parkfast failed completely on the application “because all it sought was security for costs”. As for the proposition that he should have treated Parkfast as having succeeded on its stay application, it is to be recalled that at the heart of Parkfast’s stay application was the contention that BAI could not seek the relief pleaded in paragraphs 87.4-87.10 because LSPL was not a party, no order had been made under rule 73(3) and the receiver’s consent had not been obtained. Whilst Parkfast’s application was made redundant upon the matter being regularised, Parkfast contends that the action taken by the plaintiffs to regularise matters amounts to the tacit admission of the strength of Parkfast’s application. At a minimum it was prompted by Parkfast and Parkfast should have its costs of this aspect of the application.
It is relevant here to observe that paragraph 87 of the first Statement of Claim announces that it is pleaded subject to the direction of the Court under rule 73(3) SCCR. I do not stay to consider whether this is an appropriate way of seeking directions under rule 73(3). To my mind, irrespective of whether this was adequate or a discrete application should have been brought, it demonstrated an awareness of the issue on the part of the plaintiffs and an intention to address the issue. It defeats Parkfast’s contention that it prompted the remedial action ultimately taken, at least in part, and that it should be taken to have succeeded on its application.
Stripped to its essentials the argument is really one contending that the Master should have awarded Parkfast a greater proportion of its costs of the stay application so that the notional set off was more favourable. In all the circumstances, I do not think that the notional award, and the order finally made, did not fall within the range of the Master’s decisional freedom. In arriving at that conclusion, I should indicate, I can see no reason why the general rule that costs should follow the event, did not apply to the applications for orders for security for costs. I return to this issue below.
For the reasons I have given, the Master was correct to characterise Parkfast as having failed completely on the application it pursued. He was also correct in the contrast he made between Parkfast’s lack of success and Mr Lester’s partial success. Further, and in any event, the orders made indicate that the Master had regard to the fact that Parkfast was occasioned costs in instituting the application for a stay. As I have said, Parkfast was not ordered to pay the costs of its unsuccessful application for security on the usual basis and clearly the usual order, that costs follow the event, was discounted to take into account such things as events overtaking Parkfast’s application for a stay.
During submissions on the question of costs the Master indicated that he was minded to take a “broad axe” approach to the question of costs. No-one disagreed. The Master expressed concern that the approach may make a taxation difficult. The same applies in relation to an appeal. Nonetheless, it seems to me that the Master synthesised the competing factors and arrived at the orders he made. Grounds 5 and 6 do not raise a question of general importance. I am not persuaded that they otherwise warrant a grant of permission to appeal. In fact, as I have said, I consider the order made one falling within the range of decisional freedom open to the Master.
The seventh ground of appeal complains about the Master’s treatment of submissions made by Mr Lester and Parkfast. The ground of appeal states:
3.7. The learned Master erred in that he misstated Mr Lester’s and Parkfast’s submissions on costs as being that (a) their applications were reasonably made and succeeded “to some extent” in that the respondents were ordered to provide particulars of paragraph 85 and (b) their other arguments, which were overtaken by events (paragraph 9 of the Reasons), when in fact:
3.7.1. Parkfast did not submit that it had succeeded “to some extent” because the respondents were ordered to give particulars paragraphs of 85.1 and 85.3 of the statement of claim. Parkfast did not seek any relief in relation to paragraph 85.
3.7.2.Mr Lester submitted that he should not be treated as having partly failed on his application to strike out paragraphs 85 (or summary judgment on paragraph 85.3) and 104 of the statement of claim because:
(a)These applications remained on foot to be determined in light of the further particulars ordered in paragraphs 92 and 93 of the Reasons of 22 December 2016;
(b)The fifth defendant (“Lester & Clark”) was wound up by order of the Master on 12 September 2016, thus rendering and these applications redundant, or which should have rendered them redundant.
(c)Regardless of the winding up of Lester & Clark, these applications were certain to succeed.
3.7.3.Mr Lester and Parkfast submitted that they should be treated as having succeeded on their applications in relation to paragraphs 87 and 107 – 110 of the statement of claim because FDN17 had the effect of forcing the plaintiffs’ to correct the LSPL and Receivers issues and that this correction was an admission that Mr Lester’s and Parkfast’s objections were good and, therefore, that costs should follow these events in accordance with the general rule.
3.7.4.Mr Lester and Parkfast submitted, in the alternative, that even if they should not be treated as having succeeded on their applications re paragraphs 87 and 107-110 of the statement of claim, they should nevertheless have their costs of these applications because, whatever the merits of their arguments (which the court never had to decide because the plaintiffs’ corrective actions), the plaintiffs’ delay in taking the corrective actions caused Mr Lester and Parkfast to incur unnecessary costs over many months.
3.7.5.Mr Lester submitted that he should not be treated as having failed on his application to strike out paragraphs 2 – 7 of the Summons because:
(a)The plaintiffs consented to the strike out of paragraph 2 of the summons.
(b)Although the Master declined to strike out paragraphs 3 – 7 of the summons, he did so on the grounds that the plaintiffs’ true claims were as pleaded in the statement of claim and that they intended to file an amended statement of claim to include the relief claimed in the summons which meant that Mr Lester’s applications were premature (paragraphs 19 – 22 of the Reasons of 22 December 2016).
3.7.6.Mr Lester and Parkfast submitted that their pleading applications consumed most of the preparation and court time on FDN17 compared to the security applications. The Master did not deal with this submission.
3.7.7.Mr Lester and Parkfast submitted that they should have their costs of FDN17 to the extent that they were increased by the eight respondent’s [sic] application, FDN27.
3.7.8.Mr Lester and Parkfast [submitted] that their security applications were reasonably made in circumstances where:
(a)The pleading and procedural defects in the summons and statement of claim were only corrected very late in the piece.
(b)The respondents were admittedly impecunious and the second to fourth respondents were nominal plaintiffs.
(c)The plaintiffs led no cogent evidence (and the Master did not find) in discharge of their onus of proof that an order for security would stultify their claims.
(d)The claims by Clark against Mr Lester in paragraph 85 of the statement of claim were found to be defective and the Court has still not ruled on their legal validity.

The security for costs applications were reasonably made in circumstances where there were pleading and procedural defects, the plaintiffs were admittedly impecunious, the second, third and fourth plaintiffs were nominal plaintiffs, no cogent evidence was led to establish that orders for security for costs would stultify proceedings and the claims subject of paragraphs 85 of the first Statement of Claim were found to be defective.
It seems to me that the real complaint is that having regard to each of the factors enumerated, the order made by the Master is manifestly unjust.
I have read the transcript of the submissions made on the question of the costs of FDN 17 before the Master. Mr Lester succeeded in part on his applications (i.e. particulars were ordered on his application to strike out the reflective loss claims). Mr Lester’s strike out application in relation to paragraphs 85 and 104 did not remain on foot. It was finalised. Mr Lester failed on his application for an order for security for costs. It seems to me that Mr Lester’s application to strike out paragraphs 1 and 3-7 of the Summons could not be said to have enjoyed significant prospects of success having regard to the authorities.
Parkfast also failed on its application for an order for security for costs. Parkfast did not pursue, for the obvious reason, its application for a stay. I have already indicated that Parkfast was entitled to a discount in costs on its application to stay paragraphs 87.4-87.10 of the first Statement of Claim.
It may well be the case that the pleadings applications took greater time to prepare than the security for costs applications. Still I remain unpersuaded that the Master was plainly wrong in the discount he allowed.
FDN 27 was an application for security for costs made by the eighth defendant against the plaintiffs. If FDN 27 resulted in FDN 17 assuming greater complexity and consuming greater time, then it seems to me that the cost impact of FDN 27 will feature in the normal way as part of the costs of FDN 17 and no specific mention or allowance need be made particularly as the costs of FDN 27 are a different matter.
I accept that the security for costs applications were reasonably made, but they were made no doubt on the understanding that there was a risk of an adverse costs order should they fail. The fact that the applications were reasonably made does not cause me to think that the general rule as to costs should not apply.
Standing back and taking into account the factors referred to in submissions, before the Master and on appeal, I cannot say that the order made by the Master was plainly unjust. That I may have approached the matter differently, or made a different order, is not to the point. In relation to this ground of appeal, the Court can only interfere if the outcome was beyond the range of decisional freedom vested in the Master; if the order was plainly unjust. I do not think it was.
I refuse permission to appeal on ground 7.
The eighth ground of appeal complains about the adequacy of the Master’s reasons. The complaint is largely one that the reasons do not record all submissions made and their treatment by the Master and do not record all factors taken into account in arriving at a conclusion.
A primary function performed by reasons is the facilitation of the appellate process. That is the critical issue here. In my view the reasons are adequate. They allow this Court to understand the broad evaluative exercise that the Master undertook in arising at his conclusion. In my view it is unnecessary for reasons to refer to all submissions made. Costs orders often involve the synthesis of many competing factors. The Master’s reasons do not mask the exercise undertaken such that this Court is frustrated.
I would refuse permission to appeal on the eighth ground of appeal.
Orders
Permission to appeal is refused.