Essential Beauty Franchising (WA) Pty Ltd v Pilton Holdings Pty Ltd (No 3) - [2014] SASC 148

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
ESSENTIAL BEAUTY FRANCHISING (WA) PTY LTD & ORS v PILTON HOLDINGS PTY LTD & ORS (No 3)
[2014] SASC 148
Reasons for Decision of The Honourable Justice Nicholson
7 October 2014
PROCEDURE - JUDGMENTS AND ORDERS - ENFORCEMENT OF JUDGMENTS AND ORDERS
APPEAL AND NEW TRIAL - APPEAL - PRACTICE AND PROCEDURE - SOUTH AUSTRALIA - SECURITY FOR COSTS
APPEAL AND NEW TRIAL - APPEAL - PRACTICE AND PROCEDURE
The appellants have appealed against a judgment of this Court pursuant to which they were ordered, inter alia, to pay the first respondent the sum of $279,808.41. The appellants have applied for a stay pending the outcome of the appeal. The respondents have applied for an order that the appellants provide security for the respondents’ costs of the appeal in the sum of $45,000. The respondents, by a further application, have also sought an order that the appeal be dismissed, or in the alternative, that the appellants provide further and better particulars as to the grounds of the appeal.
Held:
1. The appellants' application for a stay of execution allowed.
2. The respondents' application for security for costs of the appeal allowed.
3. The respondents’ application for the appeal to be dismissed or in lieu thereof for further and better particulars of the grounds of appeal to be provided dismissed.
Corporations Act 2001 (Cth) s1335; Enforcement of Judgments Act 1991 (SA) s17; Supreme Court Civil Rules 2006 r282, r295, r300, referred to.
Essential Beauty Franchising (WA) Pty Ltd and Ors v Pilton Holdings Pty Ltd and Ors [2014] SASC 84; Hackney Tavern Nominees Pty Ltd v McLeod (1983) 33 SASR 590; Advanced Building Systems Pty Ltd v Ramset Fasteners (Aust) Pty Ltd (1997) 71 ALJR 814; Landmark Operations Ltd v J Tiver Nominees Pty Ltd [2009] SASC 14; Powerflex Services Pty Ltd v Data Access Corporation (1996) 67 FCR 65; Duke Group Ltd v Pilmer unreported Supreme Court of South Australia, Mulligan J, 16 June 1998; Technilock (Aust) Pty Ltd & Ors v Mondami Pty Ltd & Anor [1999] SASC 94; Essential Beauty Franchising (WA) Pty Ltd and Ors v Pilton Holdings Pty Ltd and Ors [2014] SASC 141; Kalifair Pty Ltd v Digi-tech (Aust) Ltd (2002) 55 NSWLR 737; Constantinidis & Anor v Landcorp (NSW) Pty Ltd (in liq) & Ors [2011] NSWSC 743; Masri Apartments Pty Ltd (in liq) v Perpetual Nominees Ltd [2004] NSWCA 255; Binetter v Federal Commissioner of Taxation (No 2) [2011] FCA 1214; Bartley & Anor v Myers & Ors [2001] SASC 212; Ryan v Urban Construct (SA) (No 2) (2012) 114 SASR 410; Young v Annis-Brown t/as Lincoln Smith & Co & Anor (No 3) [2011] NSWSC 1267; Sewell v Zelden (No 3) [2010] NSWSC 1361; Batterham v Makeig [2009] NSWCA 295; Dagenhan Nominees Pty Ltd v Shanks (2011) 110 SASR 577, [2011] SASC 163; Morgan v WorkCover Corporation [2012] SASC 190; Sands v State of South Australia [2013] SASC 105; Ramstrom v Baldino [2014] SASC 29; M, PJ v W, JW [2014] SASC 87; Diakos v Mason [2010] SASC 108; Khneiger & Anor v Cookson [2013] SASC 12; Lauro v The Marble House of Australia & Ors [2013] SASC 17; Viscariello v Livesey & Anor [2013] SASC 198; Wride v Werner [2004] SASC 211; Foxgold Pty Ltd v Paterson [2005] SASC 376, considered.

ESSENTIAL BEAUTY FRANCHISING (WA) PTY LTD & ORS v PILTON HOLDINGS PTY LTD & ORS (No 3)
[2014] SASC 148
Civil
NICHOLSON J.
Introduction

On 30 June 2014 following a lengthy trial, a Judge of this Court delivered judgment in favour of the respondents and dismissed the first appellant’s counterclaim.[1] The Judge held, inter alia, that the first respondent (as Master Franchisor) was entitled to terminate the Master Franchise Agreement to which it and the first appellant (as Master Franchisee) were parties. It was also held that the first respondent was entitled to judgment in the amount of $272,494.68 (inclusive of interest) as against both the first appellant and the second appellant (as guarantor of the first appellant’s obligations under the Master Franchise Agreement). However, the Judge went on to find that had he found the first respondent to have wrongfully terminated the Master Franchise Agreement, its actions would have amounted to a wrongful repudiation and, in this event, the first appellant’s counterclaim for damages was to be assessed at something in excess of $2M.
[1] Essential Beauty Franchising (WA) Pty Ltd and Ors v Pilton Holdings Pty Ltd and Ors [2014] SASC 84 (Blue J).
By notice of appeal filed 21 July 2014, the appellants’ have appealed against the judgment but only on a quite limited basis. The two grounds of appeal primarily relate to the proper construction of a particular provision of the Master Franchise Agreement. In addition, a relatively limited review of the Judge’s factual findings, relevant to the construction issue or issues, also would need to be undertaken. The parties are in dispute as to whether or not the appellants’ grounds of appeal have been sufficiently particularised. Nevertheless, having reviewed relevant aspects of the judgment, I am satisfied that the appeal, if and when heard, should be relatively confined and should occupy no more than half a day.
I have recently heard argument (in two parts) on three applications. By interlocutory application filed 13 August 2014, the appellants have sought, as against the first respondent, a stay of execution of its money judgment pending the outcome of the appeal. The first respondent[2] opposes the granting of a stay of execution and by interlocutory application, filed 20 August 2014, all respondents have sought an order for security of their costs of the appeal, together with various consequential orders including an order that the appeal be stayed until such security is provided and an order that, in the event that the appellants were to fail to comply with any order for security, the appeal be dismissed. By a second interlocutory application, filed 23 September 2014, the respondents have sought an order that the appellants’ appeal be dismissed on the basis that the appellants have failed to have the appeal set down within two months of the commencement of the appeal in accordance with Practice Direction 6.19 or, in the alternative, an order that the appellants’ provide further particulars of their grounds of appeal. At the hearing of this latter application, the respondents did not press for an order for dismissal but did press the application for particulars.
[2] There are two other respondents to the appeal but it would appear that they were only interested in certain aspects of the first appellant’s counterclaim at trial which, according to my present understanding, are not being pursued at the appeal.
During the hearings, the parties read and relied upon a number of affidavits with respect to each of the applications: on the part of the appellants, the fifth, sixth and seventh affidavits of Brenton Grant sworn 12 August 2014, 29 August 2014 and 30 September 2014 respectively; the fifth affidavit of Angus Forrest (second appellant) sworn 12 August 2014 and the affidavit of Hugh Martin (a liquidator) sworn 15 August 2014 and, on the part of the respondents, the third and fourth affidavits of its solicitor Joshua Luke Richards, sworn 20 August 2014 and 23 September 2014.
The application for a stay of execution
The appellants have brought their application pursuant to r300 of the Supreme Court Civil Rules 2006 which provides, inter alia, that the Court may order a stay of execution of a judgment for “any proper reason”.[3]
[3] There are two other potential bases for such an application, s17 of the Enforcement of Judgments Act 1991 (SA) and the inherent jurisdiction of the Court to govern and control its own processes. The applicable principles are not materially different.
The filing of a notice of appeal does not, of itself, operate to stay execution of the judgment subject to the appeal.[4] Ordinarily, a judgment creditor is entitled to the benefit of a judgment properly obtained even in the face of a pending appeal.[5]
The norm is no stay. If there is to be a stay, cause must be shown. The onus is on the person seeking a stay and the onus is not lightly discharged. ... It is, of course, a judicial discretion and not to be fettered by adjectives such as “special” or “exceptional”. It is necessary to show appropriate reasons for a stay and to show that the appeal machinery has not been used as an instrument of oppression or merely as a delaying tactic.
A stay will be warranted when the justice of the case so requires. Ordinarily, a court will balance the interests of the parties and have regard, ultimately, to the balance of convenience.[6]
[4]    Supreme Court Civil Rules 2006 r300(1).
[5]    Hackney Tavern Nominees Pty Ltd v McLeod (1983) 33 SASR 590 at 594-595 (White J) (citations omitted) and see Advanced Building Systems Pty Ltd v Ramset Fasteners (Aust) Pty Ltd (1997) 71 ALJR 814, text at fn 4.
[6]    See generally, Landmark Operations Ltd v J Tiver Nominees Pty Ltd [2009] SASC 14; Powerflex Services Pty Ltd v Data Access Corporation (1996) 67 FCR 65; Duke Group Ltd v Pilmer (unreported Supreme Court of South Australia, Mulligan J, 16 June 1998); Technilock (Aust) Pty Ltd & Ors v Mondami Pty Ltd & Anor [1999] SASC 94 and Bartley & Anor v Myers & Ors [2001] SASC 212.
Conventionally, an applicant for a stay will need to show that the appeal raises serious issues for determination and that there is a real risk that the applicant will suffer prejudice or damage of some significance if a stay were not to be granted and that any such prejudice or damage could not be redressed by a successful appeal.[7]
[7] See generally, Ryan v Urban Construct (SA) (No 2) (2012) 114 SASR 410 at [16]-[18] (Nicholson J) and Kalifair Pty Ltd v Digi-tech (Aust) Ltd (2002) 55 NSWLR 737, particularly at [17].
When determining an application for a stay it is not necessary for a court to examine the merits of the appeal in any detail. However, a court should be satisfied that an appellant has an arguable case on appeal and that it is not using the appeal simply as a means to delay payment of the judgment debt.[8]
[8] Landmark Operations Ltd v J Tiver Nominees Pty Ltd & Ors [2009] SASC 14.
In this case, both appellants are now exposed to a judgment debt in the amount of $272,494.68 with interest continuing to run, together with an adverse costs order, substantially on a solicitor client basis, where the trial ran for in the order of 18 days.[9] However, in the event that the appeal were to be allowed the first appellant stands to succeed with its counterclaim for damages in the amount of, as now assessed, something in excess of $2M. There is no direct evidence that the appeal process is being used as an instrument of oppression or as a delaying tactic and, in the circumstances, particularly given the amount the first appellant stands to gain if the appeal were to succeed, I am not prepared to infer this.
[9] Essential Beauty Franchising (WA) Pty Ltd and Ors v Pilton Holdings Pty Ltd and Ors [2014] SASC 141 (23 September 2014).
The respondents submit that the appeal has no or minimal prospects of success. Central to the two grounds of appeal are questions of the proper construction of a particular provision of the Master Franchise Agreement. The provision in question is ambiguously worded. This has given rise to competing constructions. The Judge dealt with the construction issues at quite some length and has provided detailed reasons for finding in the first respondent’s favour. As is evident from the analysis undertaken by the Judge, the questions of construction are not straightforward. They are to be answered in the context of a consideration of a lengthy and complex commercial agreement as a whole and a consideration of certain relevant extrinsic circumstances. I have reviewed the parties’ submissions on the construction issues, including the appellants’ written submissions at trial, and the Judge’s reasons. Whilst the appellants face a high hurdle in persuading an appeal court that the Judge erred in his approach, I am not satisfied that the grounds of appeal are without merit.
It is feasible that I might explore these issues at greater depth and form my own concluded view as to whether or not the Judge’s construction of the contract and application to the facts, as found, was correct. However, I do not think this would be of particular assistance to the present application. Ordinarily, an appellant is entitled to have a bench of three judges review a trial judgment on appeal. The construction of contractual provisions in the context of complex commercial arrangements is an area where reasonable judicial minds can differ. Even if I were to come to the same view as the Judge, I would not conclude that the appeal would be so lacking in merit as to militate against granting a stay.
The appellants maintain that without a stay the appeal would be rendered nugatory. A bankruptcy notice was served on the second appellant on 11 August 2014 and a creditor’s statutory demand was served on the first respondent on 12 August 2014. As I understand the position, either by agreement or consent order, the time within which the second respondent and the first respondent, respectively, are required to comply with those processes has been extended to 13 October and 25 October 2014 respectively. However, in the absence of a stay of execution, the likelihood of obtaining further indulgences is remote. I have proceeded on the assumption that, in the absence of a stay, a sequestration order against the estate of the second appellant most likely will be made and an order for winding up of the first appellant most likely will be made. In these circumstances, the second appellant in his own capacity and as the controlling mind of the first appellant, will lose control of the appeal.
The affidavit evidence relied on by the appellants is sufficient to demonstrate, on a balance of probabilities, that neither the first nor the second appellant has the capacity to pay the judgment debt. I do not understand the respondents to contest this position. The appellants’ financial position worsened once the very substantial adverse costs order was delivered by the Judge after the argument with respect to the stay application was heard.[10] The first respondent relies, at least as a basis for its security for costs application, on the asserted impecuniosity of the appellants. I accept the submissions of the appellants to the effect that, if the first appellant were to be wound up and the second appellant to enter bankruptcy, there would be a very real prospect that any liquidator or trustee in bankruptcy, respectively, would not proceed with the appeal. The first respondent, as judgment creditor, would have a say in this decision and is unlikely (to say the least) to support, or fund the liquidator/trustee to pursue, the appeal. In Kalifair Pty Ltd v Digi-tech (Aust) Ltd[11] the New South Wales Court of Appeal said this:
In the present cases if stays are refused the judgment creditor would be free to serve statutory demands and proceed to winding-up. The prosecution of the appeals would then be stayed automatically and the stays would continue unless and until the liquidator elected to prosecute the appeals. The directors would lose control of the litigation and the creditors, including the judgment creditor, would have a say in any decision to proceed.
The directors would thus suffer delay and difficulty and incur additional expense in securing a decision from the liquidator to proceed with the appeals.
Three of the four appellants have no assets and in these cases the real purpose of any winding-up proceedings can only be to stop the appeals. However the remaining company, McLean, has assets of $1.7 million and its appeal raises different considerations which will be dealt with later in these reasons.
The judgment creditor and its solicitors evidently believe that the winding-up of the three appellants would be to their advantage. The Court should therefore infer that there is a real risk that the making of winding-up orders would prevent the prosecution of these appeals.
Where the appellants have no assets the judgment creditor, as it has conceded, will not suffer any relevant prejudice if a stay is granted. The loss of its right to proceed to winding-up to prevent the appeals being heard on their merits does not constitute relevant prejudice for present purposes. The appellants may be required to give security for the judgment creditor’s costs of these appeals, but the judgment creditor will not otherwise be financially prejudiced if the appeals proceed and fail on their merits.
On the other hand the appellants would suffer irremediable prejudice if they were unable to prosecute appeals which might have succeeded. The prejudice would include not only the loss of the chance of having the adverse judgments set aside, but also the loss of the chance of obtaining money judgments against one or other of the respondents. These losses would be irrecoverable as the appeals are their only avenue of legal redress.
[10] Essential Beauty Franchising (WA) Pty Ltd and Ors v Pilton Holdings Pty Ltd and Anor [2014] SASC 141 (23 September 2014).
[11] (2002) 55 NSWLR 737 at [21]-[26].
The reasoning and approach in Kalifair has been applied to the facts in other cases.[12]
[12] For example, Constantinidis v Landcorp (NSW) Pty Ltd (in liq) [2011] NSWSC 743 at [36]; Masri Apartments Pty Ltd (in liq) v Perpetual Nominees Ltd [2004] NSWCA 255 at [24]; Binetter v Federal Commissioner of Taxation (No 2) [2011] FCA 1214 at [10]; Young v Annis-Brown t/as Lincoln Smith & Co & Anor (No 3) [2011] NSWSC 1267 at [4]; Sewell v Zelden (No 3) [2010] NSWSC 1361 at [9] and Batterham v Makeig [2009] NSWCA 295 at [10].
The respondents submit that the appellants have not fully disclosed the financial circumstances of other companies and family trusts in which ultimately the second appellant and his wife each have a beneficial interest. I refer, in particular, to the respondents’ outline of submissions in opposition to the appellants’ application for a stay at [14]-[21] and to its outline of submissions in support of its application for security for costs at [31]-[82]. The respondents’ submission in this respect has considerable merit. I accept that the appellants’ have provided quite limited information as to the current financial position of other entities in which the second respondent has a beneficial interest and of family members, such as his wife, to whom he might turn for assistance. As a consequence, I take a guarded view as to whether or not the appellants would have the capacity to meet the judgment debt should it be enforced.
As against this, the respondents concede, indeed argue for the purposes of the security for costs application, that it cannot be seriously in dispute that both appellants are impecunious and that there is reason to believe that neither of them will be in a position to pay the costs of the respondents on the appeal if it is unsuccessful. It is one thing to argue, in effect, that notwithstanding apparent impecuniosity, the Court should not conclude that the appellants are unable to obtain financial assistance from other family members (such as the second appellant’s mother or his wife) in order to meet a security for costs order. But it does not necessarily follow that the appellants would have access to funds to meet the judgment debt. In other words, external finance or family member finance might be available in order to pay a relatively small sum in order to ensure that an appeal with prospects of success can be maintained. However, such finance would, naturally, be more difficult to obtain for the purpose of paying a much larger sum simply in order to discharge a judgment debt.

There is evidence before the Court that the appellants are presently in significant debt to their legal advisers and that a substantial portion of the money borrowed from the second appellant’s mother in order to fund, in part, the litigation, has not yet been repaid.
At the end of the day, where the question of a stay is concerned, whether the failure to grant a stay might render the appeal nugatory is but one factor to consider in the overall balance of convenience exercise. As I have indicated, I accept that the appellants have not been fulsome with respect to their overall financial circumstances. However, I am satisfied that, on the information available, there is a real risk that should a stay not be granted the first appellant will be wound up and the second appellant will enter into bankruptcy. If so, this would render it much more difficult for the appeal to proceed, if it were to proceed at all.
I have already indicated that the appeal in my view is not without merit. There is no reason why it cannot be set down, heard and determined with relative expedition. Should it not proceed, the appellants’ would be deprived of an opportunity to avoid liquidation and bankruptcy respectively but also of a possibility of recovering substantial damages on the first appellant’s own account. As against this, the only prejudice to be suffered by the respondents, on the evidence before the Court, will be a further delay in being able to recover or attempt to recover the judgment debt. If the appellants are truly insolvent then, as was observed in Kalifair, the first respondent’s position will not be significantly prejudiced by a further short delay. If funds are available to meet the judgment debt the prejudice caused to the respondents by the delay can be met with the payment of interest. There is of course the risk that in the intervening delay period the appellants may take steps intended to make it more difficult or perhaps impossible for the first respondent to successfully execute its judgment against assets that may presently be available for that purpose. I have had regard to this possibility. It is a risk that any litigant faces almost from the beginning of litigation, although no doubt the risk is heightened once a judgment debt is obtained.
I take the view that the balance of convenience considerations that I have briefly outlined are such as to support the granting of a stay pending the outcome of the appeal provided that the appeal is prosecuted with diligence.
Security for costs
I turn to consider the respondents’ application against both appellants for an order for security for costs. As far as such an order against the first appellant is concerned, the respondents rely on s1335(1) of the Corporations Act 2001 (Cth) which provides:
(1)Where a corporation is plaintiff in any action or other legal proceeding, the court having jurisdiction in the matter may, if it appears by credible testimony that there is reason to believe that the corporation will be unable to pay the costs of the defendant if successful in his, her or its defence, require sufficient security to be given for those costs and stay all proceedings until the security is given.
Notwithstanding that the present proceedings concern an appeal, the first appellant is to be regarded as a “plaintiff” within the meaning of this subsection.[13]
[13] Dagenhan Nominees Pty Ltd v Shanks (2011) 110 SASR 577, [2011] SASC 163 at [17]-[26].
As far as the order for security for costs against the second appellant is concerned, the respondents rely on r295(1)(g) of the Supreme Court Civil Rules 2006. That rule provides:
(1)The Court may exercise any of the following powers in relation to an appeal or an application for permission to appeal:
(g) the Court may, in special circumstances, order that security be given for the costs of an appeal;
As I have indicated, it is accepted by the appellants that they are each impecunious. Not only are they not in a position to meet the judgment debt at this stage but they are unlikely to be able to meet from their own funds any future order to pay the respondents’ costs of the appeal. In their written argument the appellants submitted that any order for security for costs would stultify the appeal. However, during the oral argument, the appellants indicated that if ordered they would be able to obtain from a family member an amount of $20,000 to be paid into Court by way of security for costs. On this basis, whilst I am prepared to accept for the purposes of this application that both appellants are impecunious and that there is a real prospect that any adverse costs order made on the appeal would not be met, I am not satisfied that an order for security for costs, at least in the amount of $20,000, would stultify the appeal. That is not to say that in the absence of this source of funding, I would accept the appellants’ argument as to stultification. In fact, I would be strongly disinclined to accept that an order for security would stultify the appeal in any event.
The threshold test for an order as against the first appellant has been satisfied. However, a question arises as to whether the threshold test for an order as against the second appellant has also been satisfied. An order for security for costs will only be made pursuant to r295(1)(g) where special circumstances are demonstrated. The question of whether impecuniosity, by itself, may amount to special circumstances for these purposes has not been finally determined.[14] In any event, I am satisfied that special circumstances, sufficient to invoke the power to order security against the second appellant, are present in this case.
[14] See, for example, Dagenhan Nominees Pty Ltd v Shanks (2011) 110 SASR 577, [2011] SASC 163 at [54]-[56] (Blue J); Morgan v WorkCover Corporation [2012] SASC 190 at [123] (Vanstone J); Sands v State of South Australia [2013] SASC 105 at [10]-[11] (White J); Ramstrom v Baldino [2014] SASC 29 at [6] (Nicholson J) and M, PJ v W, JW [2014] SASC 87 (Bampton J).
The following considerations have a bearing on either the question of special circumstances or the question of the ultimate discretion whether or not to make an order or both.
(i)Both the first and the second appellant are acknowledged to be impecunious for the purpose of this application.
(ii)The appeal has limited prospects of success.
(iii)The fact that this is an appeal means that the appellants have already had an opportunity to prove their case but have failed to do so. As such, the considerations that ordinarily apply along the lines of not shutting out a plaintiff from bringing forward a cause of action for the first time do not apply with the same force, essentially for the reasons given by Kourakis J (as he then was) in Diakos v Mason.[15]
(iv)The first respondent has already been put to the great expense of a very lengthy trial and has obtained a very substantial costs order in its favour. It is at real risk of not having its costs order at the trial met by the appellants. In these circumstances, it is less than reasonable that it should be exposed to the same risk on an appeal.
(v)The jurisdiction to order security for costs as against the first (company) appellant has been made out. In these circumstances, the benefit to the respondents of any security ordered against the first appellant would be undermined if security was not also ordered against the second appellant. In a practical sense it may well be that if any security ordered against the first appellant were not to be paid and its appeal stayed, this would not necessarily prevent the second appellant (in its capacity as guarantor) from proceeding with his appeal. In these circumstances, it is arguable that the second appellant could still conduct not just the appeal against the money judgment ordered as against the first appellant and with respect to which the second appellant is liable as guarantor, but also the first appellant’s counterclaim on the basis that the second appellant might seek to rely upon that by way of set off for any liability as guarantor that he might retain.
(vi)In the absence of an order for security, there would be a very real risk that an adverse costs order made against the appellants, should the appeal be unsuccessful, will not be met even though the appellants have an admitted capacity to provide security at least on a limited basis. The appellants are now able, it would seem, to obtain loan funds from a family member in order to meet a security for costs order so as to permit the appeal to proceed. However, it does not follow that this same source would provide the funds to permit an adverse costs order to be met following an unsuccessful appeal. Now is the time to strike if the first respondent is to have any protection.
[15] [2010] SASC 108 at [10].
I am satisfied that (i), (ii), (iv) and (v) in the circumstances of this case constitute special circumstances such that the discretion to order security against the second appellant is enlivened. I have already found that the discretion as against the first appellant is enlivened. For the reasons summarised in (i) to (vi) above, I am also satisfied that the discretion in each case ought to be exercised. I propose to make an order for security for costs.
Both parties have, by affidavit evidence, attempted to persuade the Court as to the likely costs of the appeal. The respondents have estimated their costs of the hearing of the appeal as lying between $12,800 and $25,600 based on a hearing time of one or two days and allowing for senior counsel, junior counsel and instructing solicitor. The respondents’ estimate for the preparation of the appeal ranges between $53,400 and $66,200. This is based on allowing for the services of senior counsel for three or four days, junior counsel for five or six days and instructing solicitor for five or six days. Ultimately, the first respondent seeks an order for a heavily discounted amount for security of $45,000.
The appellants submit that an appropriate amount, should security for costs be ordered, would be something between $18,000 and $23,000.
The appeal is relatively confined and, essentially, will rehearse the arguments put at trial on the construction issues. The appeal should last half a day and the necessary preparation should require significantly less time than that proposed by the respondents. The respondents are presently represented by senior counsel, by recently elevated senior counsel as junior counsel and a solicitor. It is not unreasonable to think that one counsel and one solicitor should be able to manage the appeal. The Court’s attention has been drawn to a number of recent Supreme Court decisions where security for costs on appeal has been ordered.[16] Each case will need to be decided on its own facts. However, I observe that where amounts in excess of $25,000 have been ordered the prospective appeals have been significantly longer and more complex in anticipation than the present. The authorities that have been drawn to the Court’s attention are not in any way determinative. Nevertheless, I am satisfied that an order for security for costs in this matter in the amount of $20,000 (in total as against both appellants) would be appropriate.
[16] Dagenhan Nominees Pty Ltd v Shanks (2011) 110 SASR 577 ($19,000); Khneiger & Anor v Cookson [2013] SASC 12 ($20,000); Lauro v The Marble House of Australia & Ors [2013] SASC 17 ($25,000); Sands v The State of South Australia [2013] SASC 105 ($60,000); Viscariello v Livesey & Anor [2013] SASC 198 ($40,000); Ramstrom v Baldino [2014] SASC 29 ($25,000) and M, PJ v W, JW [2014] SASC 87 ($25,000).
Application for particulars
I turn to consider the respondents’ application for further particulars. During the hearing of the stay application, on 17 September 2014, the respondents complained about lack of or insufficient particulars in the notice of appeal. During an exchange with the bench, counsel for the appellants elaborated on the grounds of appeal and provided, in an informal way, further particulars as to the proposed challenges to the Judge’s reasoning.[17] In addition, counsel indicated that orders 3 and 4 as sought in the notice of appeal were not being pursued.
[17] See the transcript for 17 September 2014 at T12-T16.
On 30 September 2014, a second notice of appeal was filed with proposed orders 3 and 4 deleted. However, no further particularity of the two grounds of appeal was provided. On 19 September 2014, two days after the ventilation of the particulars point during argument but before the filing of the second notice of appeal, the respondents’ instructors forwarded a letter to the appellants’ instructors seeking further particulars of the grounds of appeal.
The respondents’ complain that neither ground 1 nor ground 2 states “in detail” the grounds of the appeal as required by r282(2)(c) of the Supreme Court Civil Rules 2006. It is submitted that the notice of appeal, as presently drawn (in its amended form) does not give sufficient particularity to the respondent and to the Court of the matters which are to be raised on appeal in that, inter alia, it does not state in detail the particular errors made by the trial Judge and how it is that the trial Judge should have proceeded. The respondents complain that they, thereby, have suffered and will continue to suffer prejudice and embarrassment in that they do not know the full extent of the case they will have to meet on appeal.
I have considered the grounds of appeal. I do not accept the respondents’ contentions. Appeal grounds can always be further particularised with more detail. Nevertheless, in my view, the grounds as presently drafted are adequate and do provide fair notice of the appellants’ case. I appreciate that, ordinarily, it is not to the point that some additional detail or particularity may be provided in oral submissions (as has been done) or in an outline of argument.[18] However, a notice of appeal must be considered in its context. As I have earlier indicated, the grounds are relatively limited and are to be considered against a background of the parties having extensively ventilated their positions on the construction points at trial. The Judge’s reasons for finding in favour of the respondents with respect to the issues under appeal are detailed and ordered. As I have said, I am satisfied that the grounds of appeal on their face are sufficient. I am also satisfied that the respondents have sufficient understanding of the case for the reasons I have given. Further, that understanding will be enhanced when the appellants’ outline of argument is provided.
[18] Wride v Werner [2004] SASC 211 at [34] (White J).
The respondents’ application for further particulars of the grounds of appeal is refused.
Conclusion
I have given consideration to the question of whether or not I should make an order along the lines that the appeal should be dismissed and the stay automatically lifted in the event that security is not provided within a 28 day period.[19] I am reluctant to make orders of a self-executing nature unless the case is one that clearly calls for such an approach. I am not satisfied that this case does call for such an approach. I propose to impose a deadline for the payment of security for costs but the respondents will need to come back to court in the event that the deadline is not met.
[19] Cf; Foxgold Pty Ltd v Paterson [2005] SASC 376.
Subject to hearing from counsel as to their form, I propose to make the following orders:
(i)the execution of the judgment entered for Essential Beauty Franchising (WA) Pty Ltd against Pilton Holdings Pty Ltd and Angus Alexander Forrest for the sum of $279,808.41 (inclusive of interest) on 30 June 2014 is stayed until further order;
(ii)the further prosecution of the appeal by either or both appellants is stayed until the appellants procure payment into Court of the one sum of $20,000 to secure the respondents’ costs of the appeal;
(iii)if the appellants fail to procure the payment into Court of $20,000 by way of security for costs within 28 days of today, the respondents will be at liberty, forthwith thereafter, to bring such application for further orders, including orders for the appeal to be dismissed and for the stay of execution to be vacated, as they are so advised;
(iv)the respondents’ application for the appeal to be dismissed or in lieu thereof for further particulars of the grounds of appeal to be provided stands dismissed.
The appellants’ interlocutory application for a stay of execution has been successful, the respondents’ application for security for costs has been successful and the respondents’ application for dismissal of the appeal or further particulars in lieu has failed. Ordinarily, but subject to hearing from counsel, costs with respect to each application would follow the event. However, given the way in which the arguments were conducted and the fact that the affidavit evidence relied on was of a composite nature relevant, in part, to each of the applications, orders in the usual form might present an unnecessary taxing complication. In the circumstances, I am inclined to order that the respondents pay two-thirds of the appellants’ costs with respect to all three applications on a party and party basis.
I will hear the parties as to any matters of form with respect to the proposed orders and on the proposed order as to costs.