Florida Kitchens Pty Ltd v Number One Cutting (T/S Number One Marble and Granite)

[2019] NSWSC 1568

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:	Florida Kitchens Pty Ltd v Number One Cutting (T/S Number One Marble and Granite) [2019] NSWSC 1568
Hearing dates:	5 November 2019
Date of orders:	15 November 2019
Decision date:	15 November 2019
Jurisdiction:	Common Law
Before:	N Adams J
Decision:	(1) The notice of motion is dismissed. (2) The stay of Harrison AsJ’s orders of 20 May 2019 is lifted. (3) The question of costs is reserved. (4) The relevant time from which time commences for security to be lodged is 15 November 2019.
Catchwords:	APPEAL – security for costs – appeal from NCAT to Supreme Court – 106 grounds of appeal – decision of an Associate Justice – 30 grounds of appeal – whether appeal or judicial review – whether error of law – House v The King error
Legislation Cited:	Supreme Court Act 1970 (NSW), s 75A(5) Corporations Act 2001 (Cth), s 1335 Home Building Act 1989 (NSW), s 48K Civil and Administrative Tribunal Act 2013 (NSW), s 83 Uniform Civil Procedure Rules 2005 (NSW), r 42.21, 42.21(d), r 49.2, r 59, r 59.11
Cases Cited:	Florida Kitchens Pty Ltd v Number One Marble and Granite [2019] NSWSC 574 KP Cable Investments Pty Ltd v Meltglow Pty Ltd (1995) 56 FCR 189; [1995] FCA 76 Warren v Coombes (1979) 142 CLR 531; [1979] HCA 9 Lesvos Pty Ltd v Penrith Whitewater Stadium Ltd (2006) 58 ACSR 481; [2006] NSWSC 823 Fitzpatrick v Waterstreet (1995) 18 ACSR 694 House v The King (1936) 55 CLR 499; [1936] HCA 40 Markarian v The Queen (2005) 228 CLR 357; [2005] HCA 25
Category:	Principal judgment
Parties:	Florida Kitchens Pty Ltd (Plaintiff)  Number one Cutting Services Pty Ltd (ABN 36 064 095 227) t/as Number One Marble and Granite (Defendant)
Representation:	Counsel: S Milanovic (Plaintiff) S Bell (Defendant)   Solicitors: Cadmus Lawyers (Plaintiff) SR Law (Defendant)
File Number(s):	2018/00391926
Publication restriction:	Nil
Decision under appeal	Court or tribunal: Supreme Court Jurisdiction: Common Law - Administrative Law Citation: Florida Kitchens Pty Ltd v Number One Marble and Granite [2019] NSWSC 574 Date of Decision: 20 May 2019 Before: Harrison AsJ File Number(s): 2018/391926

Judgment

1. By notice of motion filed on 17 June 2019 the plaintiff, Florida Kitchens Pty Ltd (“Florida Kitchens”), appeals from the decision of Harrison AsJ of 20 May 2019 ordering that it provide security for costs to the defendant, Number One Cutting T/S Number One Marble and Granite (“Number One Cutting”). Florida Kitchens has appealed to this court against a decision of the Appeal Panel of the New South Wales Civil and Administrative Tribunal (“NCAT”): Florida Kitchens Pty Ltd v Number One Marble and Granite [2019] NSWSC 574. Number One Cutting seeks an order for security for costs in relation to that appeal.

Background

2. In 2016, Number One Cutting manufactured and installed Caesarstone bench tops and splashbacks at three separate building sites for Florida Kitchens. Florida Kitchens refused to pay the three invoices rendered in a total amount of $20,130 as they denied there was any contract. The three tax invoices were issued for jobs in Bondi, Vaucluse and Allawah for amounts of $14,190, $2,090 and $3,850, respectively. By a statement of claim filed on 1 June 2016, Number One Cutting commenced proceedings against Florida Kitchens in the Local Court seeking payment of the $20,130 said to be owed to it.

3. Florida Kitchens sought that the Local Court proceedings be transferred to NCAT pursuant to s 48K of the Home Building Act 1989 (NSW). Before the proceedings were transferred, the pleadings had closed and on 27 July 2016 Number One had been ordered to pay Florida Kitchen’s costs “thrown away” by an amendment to its statement of claim.

4. On 8 March 2017, Florida Kitchens’ lawyers sent a “Tax Invoice” to Number One Cutting with a reference “Re: Florida Kitchens Pty Ltd –ats- Number One Cutting Services Pty Ltd t/as Number One Marble and Granite – Proceedings No. 2016/00168715”. It was then headed “Memorandum of Costs and Disbursements” and described as “To our Professional costs of and incidental to the aforesaid matter and pursuant to the Court Costs order made on 27 July 2016 in favour of the Defendant Florida Kitchens Pty Ltd”.  The “Tax Invoice” listed 106 items commencing from 10 June 2016 to 14 September 2016 totalling $29,527.50 inclusive of counsel fees of $10,862 and GST in the amount of $1,665. This amount is said by Florida Kitchens to be the amount “thrown away” by the amendment to the statement of claim in the Local Court.

5. On 5 December 2017, NCAT Senior Member G Meadows found in favour of Number One Cutting. Florida Kitchens was ordered to pay $20,130 to Number One Cutting and costs.

6. On 29 December 2017, Florida Kitchens paid the amount of $20,130 to Number One Cutting.  An issue has arisen as to whether that payment was made by a third party. The invoice describes the payer as “Florida FK Business Trans Acct”.

7. On 12 June 2018, NCAT Senior Member G Meadows ordered that Florida Kitchens pay Number One Cutting’s costs on an indemnity basis.

8. Shortly thereafter, on 13 August 2018, Florida Kitchens’ solicitor emailed Number One Cutting’s solicitor attempting to “settle” the proceedings. Number One Cutting responded on 22 August 2018 by making a counter-offer. Florida Kitchens’ solicitor responded on 28 August 2018 making another counter-offer to “settle” the matter. On 30 August 2018, Number One Cutting’s solicitor advised that Florida Kitchens’ offer was rejected and put the same counter-offer again.

9. On 31 August 2018, six emails were exchanged between the solicitors of the Florida Kitchens and Number One Cutting concerning a possible settlement of the matter:  At 11:14am, Florida Kitchens’ solicitor advised that the counter-offer was rejected and put another counter-offer; at 11:21am Number One Cutting’s solicitor advised that the instructions would be sought and requested that Florida Kitchens execute and provide the Deed with a changed date of payment so that there would be no delay should Number One Cutting agree; at 11:43am Florida Kitchens’ solicitor responded that an amended Deed would be sent for executing and exchanging once Number One Cutting’s instructions are confirmed; at 11:48am, Number One Cutting’s solicitor responded that a copy of Florida Kitchens’ executed Deed should be sent to them in order to be signed by Number One Cutting should the offer be accepted. In his response at 12:35pm, Florida Kitchens’ solicitor advised that his client would only be prepared to change the payment date if confirmation from Number One Cutting was received by close of business that day at which time the amended Deed would be provided.  His response also included that they “do not intend to spend any more time on this issue or engage into any further correspondence apart from having to deal with confirmation as to whether the offer is accepted or not”.

10. At 2:26pm Number One Cutting’s solicitor responded rejecting Florida Kitchens’ offer and making a counter-offer. The counter-offer was open until 5 pm that day. There was no response to that email from Florida Kitchens’ solicitor.

11. Following this correspondence, Florida Kitchens appealed to the Appeal Panel of NCAT on 10 July 2018.

12. On 27 November 2018, the Appeal Panel refused leave to appeal and the appeal against both the Tribunal Member’s decision and the costs award was dismissed. No costs order was made in relation to that Appeal.

The Appeal to this Court from NCAT

13. On 20 December 2018, Florida Kitchens filed a summons in this court seeking leave to appeal the decision of the Appeal Panel under s 83 of the Civil and Administrative Tribunal Act 2013 (NSW). Such an appeal is confined to a “question of law”. The summons contends that the Appeal Panel erred in law in not finding that the Tribunal Member erred in law and/or in the exercise of his discretion.

14. The summons is described as an “Appeal from NCAT”. The first paragraph then reads:

“The Plaintiff appeals from part of the decision below in relation to Orders No. 1, 2 and 3 dated 27 November 2018, and relating to the New South Wales Civil and Administrative Tribunal Appeal Panel’s refusal of the extension of time if found to be required, the refusal for leave to appeal and the dismissal of the appeal below.”

15. The Summons sets out 70 grounds of appeal, the first of which has 36 sub-grounds, totalling 106 grounds of appeal. They are as follows:

“1. The Appeal Panel erred in law in not finding that the Tribunal Member G Meadows erred in law and/or in the exercise of his discretion in that he:

i. Failed to give sufficient or proper reasons for the decisions made on 5 December 2017 and 12 June 2018.

ii. Denied the Plaintiff in these proceedings procedural fairness and natural justice.

iii. Failed to set out, consider and apply the relevant legislations.

iv. Failed to consider and deal with the Plaintiffs Defence in the NCAT's proceedings at first instance, in particular in relation to the breaches by the Defendant in these proceedings of the Home Building Act 1989.

v. Erred in failing to consider and apply sections 4, 7, 10, 92 and 94 of the Home Building Act 1989.

vi. Failed to consider the substantial impact on the relief claimed, as a result of the Defendant's breaches of the Home Building Act 1989.

vii. Failed to find that the Defendant has breached the Home Building Act 1989, and as a result of such substantial breaches, the Defendant in these proceedings was not entitled to the relief claimed in its Statement of Claim before NCAT.

viii. Showed apprehended bias.

ix. Failed to deal with the NCAT proceedings at first instance in an impartial and transparent manner, and inappropriately interfered in the cross examination of the Defendant's witness, and refused to disqualify himself.

x. Failed to take into account the evidence of the Plaintiff and/or failed to place any weight on the evidence of the Plaintiff.

xi. Made the decision and the Orders, against the weight of the evidence before him.

xii. Failed to take into account the evidence of the Plaintiff in circumstances, where he had indicated that he read the evidence of the Plaintiff.

xiii. Made adverse observations and adverse findings without proper foundations/substantiation.

xiv. Took into consideration irrelevant and/or unrelated matters.

xv. Considered and dealt with extraneous issues not related to the Application before him.

xvi. Engaged in speculation, not supported by any evidence before him.

xvii. Reached factual conclusions that are unsupported by evidence.

xviii. Made inconsistent and contradictory findings and statements.

xix. Failed to find or have regard or sufficient regard to the fact that the only documents in the possession of the Defendant, and documents produced on Summons made clear reference to a separate contracting entity other than the Plaintiff.

xx. Failed to take into account the submissions of the Plaintiff on 11 August 2017 and again on 12 June 2018.

xxi. Erred in making a determination on 11 August 2017, in the absence of providing adequate and proper reasons.

xxii. Erred in finding that "The Plaintiff's defence to that claim was limited to the single issue that the Defendant did not contract with the Plaintiff but with another associated company which, by the time these proceedings were commenced, had gone into liquidation".

xxiii. Erred in finding that the ''The Plaintiff did not call any evidence in relation to that defence and nor was any explanation of such failure to call evidence provided".

xxiv. Erred in finding that there "was no merit, in the sense that there was no tenable basis in fact or law, in the Plaintiff's defence".

xxv. Erred in finding that the Plaintiff failed to offer any evidence in support of its defence.

xxvi. Erred in finding that there were special circumstances warranting an award of costs pursuant to s. 60 (3) (c) and (e) of the Civil and Administrative Tribunal Act 2013.

xxvii. Erred in finding that the Offer of Compromise served in the Local Court proceedings was significantly advantageous to the Plaintiff compared to the eventual determination made by him.

xxviii. Erred in finding that it was not reasonable for the Plaintiff not to accept the offer of compromise.

xxix. Erred in ordering that the Plaintiff pay the Defendant's costs, and on an indemnity basis too.

xxx. Erred in finding that the Defendant was a subcontractor of the Plaintiff.

xxxi. Erred in finding that the Defendant "had no direct relationship with Centre, although it was working off Centre plans".

xxxii. Failed to set out correctly, what was submitted to him in relation to the previous complaints lodged against him and the party which lodged them and received correspondence from NCAT.

xxxiii. Erred in finding "that the Plaintiff's case was limited entirely to attempting to prove the wrong party had been sued, apart from the cross-examination of Mr. Heyman ".

xxxiv. Erred in finding that the director of the Plaintiff had to give evidence, in circumstances, where the Defence has clearly set out the Plaintiffs position, where the Defendant had to prove its case in the light of the substantial breaches of the Home Building Act 1989, committed by the Defendant, and the Defendant's replies to particulars, provided to the Plaintiff, prior to the Plaintiff filing its Amended Defence.

xxxv. Erred in speculating in the absence of evidence, about the name's change of the Company which the Defendant contracted with, and the plans in the Defendant's possession which it quoted on.

xxxvi. Erred in speculating about the documents produced on summons issued by the Defendant, in the absence of the party producing the documents being called by the Defendant to give evidence.

2. The Appeal Panel erred in law in finding that the decision of 5 December 2017 was a final and enforceable decision.

3. The Appeal Panel erred in law in finding that the liability decision was filed out of time, notwithstanding the Tribunal Member's decision at first instance, in which he indicated that he published his decision and reasons in the substantive proceedings in December 2017, and the decision of June 2018, is based and should be read in conjunction with, the earlier decision and reasons.

4. The Appeal Panel erred in law in finding that the suggestion that "Florida Kitchens was awaiting the outcome of No 1 's costs application cannot explain the failure of Florida Kitchens to lodge its appeal", in circumstances where the issue of costs was raised by the Defendant in this appeal on the NCAT proceedings hearing date on 11 August 2017, as being a remaining issue to be determined in the NCAT proceedings at first instance.

5. The Appeal Panel erred in law in finding that "the explanation of the reason for the delay is not convincing".

6. The Appeal Panel erred in law in finding and concluding that "the outcome of the proceedings would not change if an extension of time were granted", notwithstanding amongst other things the failure of the Tribunal Member at first instance, in dealing with the Statutory Defences raised by the Plaintiff, and the Tribunal Member's failure to apply the legislative sanctions, arising out of such breaches.

7. The Appeal Panel erred in law in finding that Ground 20 does not identify what submissions were not taken into account, in circumstances where Ground 20 refers to the submissions made on 11 August 2017 and 4 June 2018, and expressly repeats them.

8. The Appeal Panel erred in law in finding that Ground 20, adds nothing to the other grounds of the Appeal, notwithstanding Grounds 7, 22, 24, 26, 27, 28, 29, 30, 31, 32, 34, 35 and 37, which deal with the submissions and repeat them.

9. The Appeal Panel erred in law in finding that the Tribunal Member did not find that the directors of the Appellant had to give evidence.

10. The Appeal Panel erred in law in not finding that the Grouped A to E Grounds and F and G Grounds as referred to them in their judgment of 27 November 2018, were established and therefore constituted an error of law made by the Tribunal Member at the first instance.

11. The Appeal Panel erred in law in finding that the Plaintiff had asserted that the Defendant entered into contracts with Florida Kitchen Centre Pty Ltd.

12. The Appeal Panel erred in law in finding and upholding the Tribunal Member's erroneous finding and conclusion at first instance, that the documents produced by Combuild relate to all the work done, as Combuild's documents do not relate to the Vaucluse and Allawah jobs, nor evidence by the Defendant in these proceedings was adduced at the NCAT hearing in relation to the billing and payment for the Vaucluse and Allawah jobs.

13. The Appeal Panel erred in law in not finding that the Tribunal Member at first instance has engaged in mere speculation in the absence of evidence before him, in relation to the plans from Florida Kitchen Centre and which the Defendant has quoted on.

14. The Appeal Panel erred in law in finding that the written submissions by the Plaintiff only identified two particular respects in which the Plaintiff submitted the reasons were insufficient.

15. The Appeal Panel erred in law in finding that "the Member did assess the amount due to No. 1 on the basis of a quantum meruit".

16. The Appeal Panel erred in law in finding and speculating that the Statutory Defences were considered by the Tribunal Member where they stated that "this suggests that the Member considered that, to the extent that the defences had merit, they did not ultimately affect the results of the decision", notwithstanding that the Tribunal Member had expressly stated that the Plaintiffs "case was limited entirely to attempting to prove the wrong party had been sued, apart from the cross examination of Mr. Heyman".

17. The Appeal Panel erred in law in their finding stating "although we consider that the Member's reasoning in this regard is not clearly expressed, for reasons we will address in considering the grounds of appeal in Group D, we consider that the Member's conclusion was correct and that even if the appeal were to succeed on this ground, the dispute would ultimately be resolved in the same way. In those circumstances it would be inappropriate to grant an extension of time to lodge the appeal by reason of this ground alone ".

18. The Appeal Panel erred in law in finding that the Plaintiff did not identify in its written submissions or in oral argument whether any oral reasons given at the hearing differed in substance from the written reasons delivered on 12 June 2018, as it was necessary for the Tribunal Member to provide adequate reasons to discharge his obligation "to enable the parties to identify the basis of the Member's decision and the extent to which their arguments had been understood and accepted, and it is further necessary that the Member " 'enter into' the issues canvassed and explain why one case is preferred over another", something which the Tribunal Member has clearly failed to address in particular in not dealing with the Plaintiffs submissions of 4 June 2018.

19. The Appeal Panel erred in law in finding that "the written reasons set out the Member's findings on material questions of fact, his understanding of the relevant law and his reasoning process ".

20. The Appeal Panel erred in law in concluding that there was no error of law, through the provision of inadequate reasons in respect of the Costs decision of 12 June 2018.

21. The Appeal Panel erred in law in finding that "the line of cross examination amounted to a claim that Mr. Hoang and his solicitor had deliberately lodged a fraudulent claim ".

22. The Appeal Panel erred in law in misconstruing the line of cross examination of Mr. Hoang and further erred in accepting the conclusion of the Tribunal Member in relation to it.

23. The Appeal Panel erred in law in finding that the "Member's intervention was appropriate and unobjectionable ".

24. The Appeal Panel erred in law in finding that "Florida Kitchens was not denied procedural fairness ".

25. The Appeal Panel erred in law in finding that the comments by the Tribunal Member at first instance, "were entirely unexceptionable and were no more than appropriate reminders to the parties that the matter was required to conclude by 4.15 pm on the day of the hearing".

26. The Appeal Panel erred in law in finding that they were "unable to conclude that Mr. Milanovic was denied the opportunity to ask Mr. Hoang any relevant questions he may have considered appropriate ".

27. The Appeal Panel erred in law in their finding that they "consider that this intervention (in the cross examination) was justified and appropriate and that they do not consider it demonstrated bias either actual or apprehended".

28. The Appeal Panel erred in law in finding that they "do not consider that the matters raised by Florida Kitchens demonstrate bias".

29. The Appeal Panel erred in law in finding that "there was no basis upon which it could be suggested the Member held an actual bias against Florida Kitchens ".

30. The Appeal Panel erred in law in finding that "a fair-minded and reasonably well-informed observer would not conclude, on the basis of the matters raised by Florida Kitchens, taken separately or together, that the Member would not approach the consideration of the issues in the proceedings with an open mind. These grounds of appeal could not succeed".

31. The Appeal Panel erred in law in finding that the Tribunal Member's reasons for the decision did not sufficiently address the Defences of the Home Building Act 1989, as these Defences were not addressed or dealt with by the Tribunal Member at all.

32. The Appeal Panel erred in law in finding that "the Member's decision was clearly correct".

33. The Appeal Panel erred in law in finding that it was apparent "that the Member addressed the statutory defences by considering the outcome of No 1 's application on the assumption that the statutory defences were upheld", as there was no evidence from the proceedings and the reasons, that the Tribunal Member had addressed the Home Building Act 1989 Defences, and in fact the Tribunal Member's position was that the Plaintiffs Defence was only limited to the non contracting party.

34. The Appeal Panel erred in law in finding that "the Member assessed the amount payable to No 1 on the basis of a quantum meruit", as the Tribunal Member did not undertake a quantum meruit assessment

35. The Appeal Panel erred in law in finding that the so called Tribunal Member's approach was "consistent with a finding that the statutory defences were made out".

36, The Appeal Panel erred in law in speculating and making assumptions that the statutory defences were dealt with by the Tribunal Member.

37. The Appeal Panel erred in law in misdirecting itself as to the applicability of quantum meruit, and in disregarding the "just and equitable" test, as per S94 (1)(A) of the Home Building Act 1989.

38. The Appeal Panel erred in law in concluding that the essential elements of a quantum meruit claims were manifestly apparent in this case, although the Tribunal Member did not address the requirements of free acceptance and benefits.

39. The Appeal Panel erred in law in concluding that "Once the Member found that No 1 had contracted with Florida Kitchens, it followed that Florida Kitchens had requested the work which No 1 had performed and that it had received the benefit of it", in circumstances where the contracting party matter was a highly contentious issue.

40. The Appeal Panel erred in law in concluding that the benefit was received by the Plaintiff, in circumstances where there was no evidence of the receipt of payments towards the Vaucluse and Allawah jobs.

41. The Appeal Panel erred in law in finding that the "the Member assessed the fair and reasonable value of the work by reference to the agreed price", as the Tribunal Member has failed to provide reasons of any assessment process that he undertook.

42. The Appeal Panel erred in law in finding that "the Member was entitled to rely upon the contract price as establishing the fair value of the work", as the Tribunal Member has only relied on tax invoices, and in circumstances where the Tribunal Member has initially found that there was one contract in his judgment of 5 December 2017 and subsequently found that there were 3 separate contracts in his judgment of 12 June 2018, and which would bring two of the three contracts outside the jurisdiction of NCAT, if the latter contradictory position is to be adopted, resulting in a jurisdictional error.

43. The Appeal Panel erred in law in concluding that s 94 of the Home Building Act 1989, did not apply.

44. The Appeal Panel erred in law in finding that s 92 (4) of the Home Building Act 1989, was not applicable in the case.

45. The Appeal Panel erred in law in finding that "there were three independent contracts for the performance of three different jobs".

46. The Appeal Panel erred in law in finding that there were multiple contracts, and each contract was for less than $ 20,000.00, and therefore no requirement to obtain Home Warranty Insurance.

47. The Appeal Panel erred in law in finding that "that the Member reached the correct result on the evidence and that, even if "they" were to extend time to permit Florida Kitchens to appeal on this ground, the outcome of the proceedings would ultimately remain unaltered".

48. The Appeal Panel erred in law in finding that there would be an exemption from insurance for a holder of a contractor licence, as regulation 58 of the Home Building Regulation does not apply, nor the Defendant is a holder of a contractor licence.

49. The Appeal Panel erred in law in finding that the speculations and findings without evidence made by the Tribunal Member, were not central nor essential to any of the conclusions reached by the Tribunal Member, and further erred in finding that none has sufficient merit to justify the grant of an extension of time.

50. The Appeal Panel erred in law in finding that certain matters objected to, were matters reflected from reasonable inferences from the evidence, as there was no evidence to justify any of the findings or inferences to support such findings.

51. The Appeal Panel erred in law in finding that none of the grounds 16,17, 30, 31, 35 and 36, raise questions of law, and further erred in finding that none would warrant a grant of leave to appeal.

52. The Appeal Panel erred in law in not finding that the inconsistent findings by the Tribunal Member were relevant to the Tribunal Member's ultimate findings, and such would have warranted the grant of an extension of time to appeal, in circumstances where the contracting party was a highly contentious issue, as well as the amount of the contract, and the relevant statutory application and sanctions.

53. The Appeal Panel erred in law in their interpretation of paragraph 29 of the Tribunal Member's judgment dated 5 December 2017, as the Tribunal Member made clear reference to contracting on 25 February 2016 and not on any other dates.

54. The Appeal Panel erred in law in finding that "the Member's statement, correct or otherwise, that Mr Andre Elias was related to Mr George Elias added nothing to the strength of the inference ", as the Tribunal Member has found in paragraph 57 of his judgment dated 5 December 2017, that "on the basis that Mr George Elias is related to Mr Andre Elias and Mr Joseph Elias I find it is significant that no evidence was provided from either of those parties".

55. The Appeal Panel erred in law in finding that "the weight of evidence clearly favoured No 1 's case and nothing in Florida Kitchens' submissions concerning Grounds 10 to 13, 19 or 32 provides any reason to doubt the Member's conclusions".

56. The Appeal Panel erred in law in finding that "that the Member was not required to give any weight to Mr Ferrante 's evidence ".

57. The Appeal Panel erred in law in finding that "none of the matters raised by Grounds 10 to 13, 19 or 32 could succeed or would justify the grant of an extension of time ".

58. The Appeal Panel erred in law in finding that "the conclusion that Florida Kitchens' defence had no tenable basis in law and was lacking in substance was a conclusion that the Member was entitled to come to in the light of that evidence and we find no error of principle in his approach ".

59. The Appeal Panel erred in law in finding that the Defence had no tenable basis and was lacking in substance, in particular where the Tribunal Member did not deal amongst other things with the Statutory Defences pleaded in the Plaintiffs Amended Defence.

60. The Appeal Panel erred in law in concluding that the Tribunal Member was justified in giving significant weight to the director of the Plaintiff not giving evidence, in circumstances where the Defendant had substantially breached the Home Building Act 1989, as pleaded in the Amended Defence and where such breaches were not dealt with or considered by the Tribunal Member, nor the implications and sanctions arising from such substantial breaches.

61. The Appeal Panel erred in law in not finding that the Tribunal Member's failure to deal with the Statutory Defences was a substantial error in law and a miscarriage of justice, and not a mere misstatement a referred to by the

Appeal Panel.

62. The Appeal Panel erred in law in finding that no errors pursuant to the House v the King, have been demonstrated by the Plaintiff.

63. The Appeal Panel erred in law in not finding that the Tribunal Member has misdirected himself as to the Application of s 60 of the Civil and Administrative Tribunal Act 2013.

64. The Appeal Panel erred in law in finding that the conclusions regarding the offer of comprise reached by the Tribunal Member, "were sufficient to warrant an order for costs to be assessed on the indemnity basis and "they" find no error of principle in the Member's conclusion that it was appropriate to make such an order".

65. The Appeal Panel erred in law in finding that an offer of compromise continued to be effective after the proceedings were transferred to the Tribunal.

66. The Appeal Panel erred in law in failing to distinguish the different costs regime and approach adopted by NCAT, where Costs in the NCAT's jurisdiction, "do not presumptively 'follow the event', as they do in court proceedings".

67. The Appeal Panel erred in law in finding that no error of law was made in the costs decision.

68. The Appeal Panel erred in law in finding that the costs decision was fair and equitable and not against the weight of evidence,

69. The Appeal Panel erred in law in finding that the Plaintiffs appeal against the orders made on 12 June 2018 must fail.

70. The Appeal Panel erred in law in refusing the Plaintiffs application for an extension of time to lodge an appeal against the decision of 5 December 2017 (and not 5 February 2017), and further erred in refusing the leave to appeal and in dismissing the Plaintiffs appeal.”

Correspondence after summons filed

16. On 27 December 2018, Number One Cutting’s solicitor wrote to Florida Kitchens’ solicitor and noted that their client was likely (in their estimation) to incur costs of over $60,000 in defending the appeal. He requested a profit and loss report and balance sheet for the 2017 and 2018 financial years. He also requested bank statements for the period 1 July 2018 to 20 February 2019. The request was made so that Number One Cutting could be satisfied that Florida Kitchens would be able to comply with any adverse costs order that might be made in the proceedings.

17. Florida Kitchens’ solicitor advised he would be on leave until 21 January 2019. Number One Cutting’s solicitor sent an email on 22 January 2019 seeing an urgent response to his email of 27 December 2018. Further emails were exchanged between 22 January and 12 February 2019.

18. On 5 February 2019, Florida Kitchens’ solicitor emailed Number One Cutting’s solicitor and stated that he could not see how Number One Cutting could be concerned about his client’s ability to meet costs because: the appeal has “merits and prospects of success”, their attempt to resolve the matter was unreasonably rejected, their client had no issues in paying $20,130 under protest and Number One Cutting had not paid the tax invoice sent in March 2017.

19. On 7 February 2019, Number One Cutting’s solicitor, having noted that the documents sought were not produced, wrote to advise that in the absence of provision for adequate security they could not be satisfied that any costs order would be able to be satisfied and that a motion would be filed seeking costs on an indemnity basis on the basis of refusal.

20. On 12 February 2019, Florida Kitchens’ solicitor further responded that their client was not under a legal obligation to deal with unreasonable or unjustified requests.

21. Following these email exchanges, on 20 February 2019, Number One Cutting issued a subpoena to produce on Florida Kitchens (with subpoena notice and declaration) seeking production of profit and loss reports and balance sheets for the 2017 and 2018 financial years and bank statements for the period 1 July 2018 to 20 February 2019.

22. On 20 February 2019, Number One Cutting also made an application under r 42.21 of the Uniform Civil Procedure Rules (“UCPR”) for security for costs. In support of this motion, an affidavit of David Simons sworn 20 February 2019 was relied upon. Mr Simons is Number One Cuttings’ solicitor. Mr Simons stated that he had not found evidence that Florida Kitchens had any assets or was trading profitably and that he had reason to believe that Florida Kitchens would not be able to pay Number One Cutting’s costs of defending the proceedings.

23. In a subsequent affidavit on 7 March 2019, Mr Simons deposed that on 20 February 2019 he served the subpoena issued that day on Florida Kitchens by posting it to its registered office. He deposed that he also emailed a copy to Florida Kitchens’ solicitor advising of its service that day.

24. Annexed to a further affidavit of Mr Simons sworn on 26 April 2019 is Florida Kitchens’ response to the subpoena. It consists of production of a note that reads simply:

“NO PROPER SERVICE

NO CONDUCT MONEY

NO DOCUMENTS”

25. Florida Kitchens opposed the application for security for costs on the basis that the appeal was in fact in the nature of judicial review proceedings and security for costs are not generally awarded in such proceedings, apart from in “exceptional circumstances” (UCPR r 59.11). It also argued that there was no basis for the Director of Number One Cutting to have any concerns about payment for costs in this matter.

26. The matter came before Harrison AsJ for hearing on 7 May 2019.

The decision of Harrison AsJ

27. On 20 May 2019, her Honour allowed the application for security for costs. Her Honour considered the threshold question of whether there was reason to believe that Florida Kitchens was unable to meet the costs of Number One Cutting in the event that it was ordered to do so. Her Honour held that this threshold question had been answered in the positive, as Florida Kitchens refused on numerous occasions to provide their financial details to Number One Cutting (namely in the emails of 5 and 12 February 2019 and response to the subpoena of 20 February 2019). Furthermore, in Mr Simons’ affidavit he stated that he “found no evidence that the plaintiff has any assets”.

28. Her Honour then turned to consider the principles outlined in KP Cable Investments Pty Ltd v Meltglow Pty Ltd (1995) 56 FCR 189; [1995] FCA 76 at 197-198. Applying these principles, her Honour considered that the application had been brought promptly and that (having regard to the decisions of the Appeal Panel), the application for leave to appeal by Florida Kitchens had poor prospects of success. She then went on to note that there were no submissions made by Florida Kitchens that its impecuniosity was caused by the conduct of Number One Cutting. Furthermore, in relation to whether the application was oppressive, she concluded that “there is no evidence that the application is oppressive. Neither does the application stifle Florida Kitchens’ right to litigate.” She noted that Florida Kitchens (via an unidentified third party) paid the verdict money and filing fee in this Court and there had been no undertaking provided by Florida Kitchens.

29. In the exercise of her discretion, her Honour subsequently found that the factors that she was required to consider “overwhelmingly” weighed in favoured of an order for security for costs.

30. In relation to the quantum of costs, her Honour relied on the assessment of Number One Cutting’s solicitor and observed that “the sheer number of grounds of appeal will mean that a substantial amount of work will have to be undertaken to deal with the summons”. Florida Kitchens disputed this assessment but failed to offer evidence of a more preferable quantum of costs. Furthermore, her Honour noted that the existing costs order already required Florida Kitchens to pay far more than Number One Cutting because the costs order made by the Tribunal Member was for costs on an indemnity basis. On this basis, she ordered that Florida Kitchens was to lodge $40,000 as security for costs.

31. As stated above, Florida Kitchens now appeals against this decision.

Nature of this Appeal

32. An appeal from an Associate Justice of this Court to a Judge of this Division is provided for in UCPR r 49.2, which provides that:

49.2 Reference and removal of proceedings

An appeal lies to the Supreme Court from any decision of an associate Judge of the Supreme Court, except in any case where an appeal lies to the Court of Appeal.

33. An appeal lies to the Court of Appeal against the decision of an Associate Justice in the matters listed in Part 60, r 17 of the Supreme Court Rules 1970 (NSW) as follows:

17   Cases for appeal

(a)  upon a trial pursuant to Schedule D Part 3 paragraphs 1, 2, 3, 3A, 4 (a), 8, 9, 17, 17A, 24, 25, 26, 27 and 28,

(a1)  in proceedings referred pursuant to Schedule D Part 3 paragraphs 5, 5A and 5B,

(b) in proceedings under the provisions (except sections 13 to 21 inclusive, which relate to guardianship) of the Testator’s Family Maintenance and Guardianship of Infants Act 1916,

(c)  in proceedings under section 14 or section 22 of the Married Persons (Property and Torts) Act 1901,

(d)  in proceedings under the Family Provision Act 1982,

(e)  in proceedings under the Property (Relationships) Act 1984,

(f)  in proceedings on an application for review of taxation of costs,

(g)  in proceedings under section 208L or section 208M or section 208N of the Legal Profession Act 1987,

(h) in proceedings under section 13 of the Married Persons (Equality of Status) Act 1996,

(i)  in proceedings determining a question of costs with respect to a matter that has been otherwise finalised,

(j)  on an application to extend a period of limitation, fixed by or under an enactment, within which original proceedings must be brought, or

(k)  where the decision of the associate Judge is a final decision other than:

(i)  a decision on an application for a summary judgment, or

(ii)  a decision on an application for a summary dismissal of proceedings.

34. There is no reference to any appeal lying from the decision of an Associate Justice to the Court of Appeal in relation to an order that security for payment be lodged. Accordingly, I am satisfied that I have jurisdiction to hear this appeal.

35. Where the decision under appeal follows a hearing, the appeal is by way of rehearing: s 75A(5) Supreme Court Act 1970 (NSW). This is a rehearing on the record, as Gibbs ACJ, Jacobs and Murphy JJ indicated in Warren v Coombes (1979) 142 CLR 531 at 553; [1979] HCA 9. The court has the powers and duties of the court, body or person from whom the appeal is brought, as per s 75A(6):

36. The decision appealed against is a decision by Harrison AsJ to order security for costs. In NSW, the ability to order security for costs in relation to corporations (such as Florida Kitchens) derives from two sources: UCPR r 42.21(d) and s 1335 of the Corporations Act 2001 (Cth). UCPR r 42.21(d) provides:

42.21   Security for costs

(1)  If, in any proceedings, it appears to the court on the application of a defendant:

…

(d)  that there is reason to believe that a plaintiff, being a corporation, will be unable to pay the costs of the defendant if ordered to do so, or

…

37. Section 1335 of the Corporations Act provides:

1335  Costs

(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.

(1A)  Subsection (1) does not apply to a corporation that is an Aboriginal and Torres Strait Islander corporation.

(2)  The costs of any proceeding before a court under this Act are to be borne by such party to the proceeding as the court, in its discretion, directs.

38. Although the two powers are not expressed in identical terms, it has been held that they involve a similar discretionary exercise (Lesvos Pty Ltd v Penrith Whitewater Stadium Ltd (2006) 58 ACSR 481; [2006] NSWSC 823). As Cohen J commented in Fitzpatrick v Waterstreet (1995) 18 ACSR 694, 699:

“…The present motion relies upon SCR Pt 53, r 2(1)(e) which gives power to the court to order security for costs where the plaintiff, being a body corporate, will be unable to pay the costs. This is a similar test to that provided for in CL s 1335(1).”

39. Having regard to the language of both UCPR r 42.21 and s 1335 of the Corporations Act as well as the relevant principles, it is clear that a decision to order security for costs is discretionary. Her Honour dealt with the application under UCPR r 42.21. Therefore, Florida Kitchens must establish that Harrison AsJ erred in the exercise of her discretion in one or more ways identified in House v The King (1936) 55 CLR 499 at 505; [1936] HCA 40.

Evidence on this appeal

40. The material before me on this appeal consisted of all of the material that was before Harrison AsJ. This consisted of three lever arch folders.

41. The first folder contained Number One Cutting’s documents including the notice of motion filed on 20 February 2019; the summons seeking leave to appeal; Mr Simons’ affidavits of 20 February 2019; 19 March 2019 and 26 April 2019 and a further notice of motion dated 18 March 2019.

42. The second and third folders contained the documents relied upon by Florida Kitchens. It comprised the affidavit of Florida Kitchens’ solicitor, George Elias, dated 14 March 2019 with approximately 680 pages of exhibits.

Submissions

43. I will address the submissions of the parties below in my consideration.

Consideration

44. In its motion appealing against the decision of Harrison AsJ, Florida Kitchens relies upon 30 separate grounds of appeal. All of these grounds were pressed at the hearing before me, although it was accepted by counsel for Florida Kitchens that there was a degree of repetition in relation to some of them. Accordingly, I will deal with the grounds of appeal collectively where appropriate but otherwise in chronological order.

Previous costs orders

45. Four grounds of appeal related to her Honour’s treatment of the costs orders already made in this ongoing litigation. They were as follows:

“Ground 1: Her Honour erred in failing to list all the orders made by the Appeal Panel of NCAT on 27 November 2018, in particular the orders dismissing the Defendant’s orders in seeking costs against the Plaintiff.

Ground 2: Her Honour erred in finding that there were 3 costs orders made in lieu of 2 costs orders, and such finding was relied upon by Her Honour to erroneously reach an adverse finding against the Plaintiff.

…

Ground 5: Her Honour erred in finding that ‘in the decision of the Tribunal Member dated 5 December 2017 (CB 49), Florida Kitchens was ordered to pay Number One’s Costs’, as there was no evidence to support that finding.

….

Ground 16: Her Honour erred in holding that ‘However, against that, Number One has two costs orders in its favour’. Furthermore, Her Honour’s finding could not reasonably be arrived at upon the evidence, as there was only one costs order in Number One’s favour and not two.”

46. At [6] of her reasons her Honour listed the orders made by the Appeal Panel of NCAT on 27 November 2018. Complaint is made under Ground 1 that her Honour failed to mention that no costs order was made by the Appeal Panel at that time. Her Honour was dealing at that part of the judgment with the “Background” of the matter and I do not consider it of any significance that her Honour did not mention the lack of a costs order in that paragraph.

47. Her Honour went on at [7] of the judgment to note that there were three costs orders made, one in favour of Florida Kitchens and two in favour of Number One Cutting:

“7. To date there have been three costs orders made, one in favour of Florida Kitchens and two in favour of Number One. They are:

(1) On the decision of the Local Court dated 27 July 2016, leave was granted for Number One to file an amended statement of claim. Number One was ordered to pay Florida Kitchens’ costs thrown away by the amendment as agreed or assessed. Mr George Elias of Cadmus Lawyers, solicitor acting for Florida Kitchens, sent an invoice to Number One in relation to those costs for the total sum of $29,527.50. Number One submitted that the claim is outrageous. The difficulty with this invoice is that it contains costs that do not relate to the costs thrown away by the amendments to the statement of claim. In any event, if Number One does not reach an agreement with Florida Kitchens, Florida Kitchens will be required to have its costs assessed.

(2) In the decision of the Tribunal Member dated 5 December 2017 (CB 49), Florida Kitchens was ordered to pay Number One’s costs.

(3) In the decision of the Tribunal Member dated 12 June 2018, Florida Kitchens was ordered to pay the costs of Number One on an indemnity basis.”

48. It was common ground that although three costs orders have in fact been made in this matter, the third one is a variation of the second. Those three orders are:

1. On 27 July 2016 a Magistrate ordered that Number One pay Florida Kitchens’ costs thrown away by an amendment to the statement of claim;

2. On 5 December 2017 NCAT Senior Member G Meadows member ordered that Florida Kitchens pay Number One’s costs of the hearing; and

3. On 12 June 2018, the NCAT Senior Member G Meadows ordered that Florida Kitchens pay Number One’s costs on an indemnity basis.

49. The complaint made is there is, in reality, only one cost order made in favour of Number One Cutting because the second order varied the first order. It is to be noted that later in her Reasons, her Honour stated the following at [61]:

“61. Counsel for Florida Kitchens does not agree with the Number One’s estimate of costs, as the costs estimated appear amongst other things to be excessive, unreasonable, duplicated and involve works already done in the NCAT Appeal and which Number One sought its costs for, with Number One’s application for the costs of the appeal being refused by the NCAT Appeal Panel. However, it has not put on any evidence as to the amount of the costs it thinks is appropriate. Nor did it make any submissions in relation to the actual form of the orders sought. There are two costs orders outstanding, one in favour of each party. The costs order in favour of Florida Kitchens relates to an amendment to the statement of claim. The costs order in favour of Number One is for the costs before the Tribunal Member. The costs are payable on an indemnity basis. The amount of those costs (once both parties’ bills are assessed) will far outweigh the amount of costs that Number One will be obliged to pay.”

(Emphasis added.)

50. The difficulty with grounds 2, 5 and 16 is that even if there is some ambiguity at [7] as to whether the three costs orders are in effect only two costs orders, any doubt that her Honour was under any misapprehension about this is put to rest by her Honour’s clear statement at [61] that there are only two costs orders outstanding.

51. None of these four grounds disclose House v The King error or any error at all. They are without merit.

The invoice of 8 March 2017

52. A number of separate complaints were made about the significance of the fact that Number One Cutting is yet to pay the “invoice” rendered to it by Florida Kitchens for its costs “thrown away” for the amended Statement of Claim shortly after the proceedings were transferred from the Local Court to NCAT. The five grounds related to this complaint are as follows:

“Ground 3:   Her Honour erred in finding that the invoice issued by the Plaintiff’s solicitors contains costs that do not relate to the costs thrown away by the amendments to the statement of claim. Her Honour’s finding could not reasonably be arrived at by the evidence”.

“Ground 4   Her Honour failed to take into account the submissions made by the Plaintiff, that the Defendant has failed to make an offer, or reject, or reply to assess the invoice of the Plaintiff

…

Ground 6:   Her Honour erred in finding that ‘Florida Kitchens [sic –Number One] is awaiting the finalisation of proceedings before preparing its two bills of costs for assessment’ as there was no evidence to support that finding’.”

…

“Ground 14: There was no evidence, upon which Her Honour could find that ‘If Florida Kitchens had the bill of costs assessed it would be markedly reduced’.

Ground 15: There was no evidence, upon which Her Honour could find that ‘The bill had not been prepared in accordance with the costs order actually made’.

….

Ground 28:   Her Honour erred in finding that the amount of costs order in favour of the Defendant "(once both parties' bills are assessed) will far outweigh the amount of costs that Number One will be obliged to pay", in circumstances where the Defendant's costs order was not itemized by the Defendant, nor the amount is known or has been identified by the Defendant despite the order being made on 12 June 2018, whilst the Plaintiff has issued and itemized its costs and provided them to the Defendant which did not object to them nor applied to have them assessed, and where Her Honour did not assess the costs to be able to reach such finding.”

53. At [38] of her Reasons her Honour observed:`

“38. Florida Kitchens further submitted that it had no difficulty in paying the sum of $ 20,130.00 to Number One under protest and while reserving its rights, and which Florida Kitchens is seeking back as part of its orders on appeal. It attempted to settle the proceedings on a commercial basis, and offered to make payment to Number One on a without prejudice basis, which Number One rejected. It also rendered an invoice to Number One seeking payment of a costs order in its favour in the sum of $29,000. If Florida Kitchens had the bill of costs assessed it would be markedly reduced. The bill had not been prepared in accordance with the costs order actually made. However, against that, Number One has two costs orders in its favour. Its costs of the hearing before the Tribunal Member are to be paid by Florida Kitchens on an indemnity basis.”

54. It was submitted on behalf of Florida Kitchens that it was not open for her Honour to find that its claim for costs thrown away would be reduced when assessed because she was not in a position to fully assess the bill of costs. It was submitted that this was relevant to whether the value of what is owed to Florida Kitchens is greater than any costs order that might be imposed on Number One Cutting.

55. The invoice referred to in this ground is that described above at [4]. Florida Kitchens’ submission in relation to this ground is apparent from the terms of the ground. There are a number of difficulties with it.

56. First, Florida Kitchens rendered it whilst the proceedings are still on foot rather than waiting until after the proceedings have concluded.

57. Second, it is described as a “Taxation Invoice”. As was submitted by counsel for Number One Cutting, the Invoice does not appear to be in accordance with the order made.

58. Third, it is sent on Cadmus Lawyers letterhead to Number One Cuttings’ solicitor. It was not suggested that Cadmus Lawyers has ever undertaken any legal work for Number One Cutting. It was not entitled to issue Number One Cutting with any invoice. Nor is Cadmus Lawyer entitled to charge Number One Cutting any GST.

59. Fourth, the particular cost order pertains to the costs thrown away because of the need to amend a statement of claim in the Local Court. The amount claimed is $29,527.50. I have had regard to the statement of claim and defence filed in the Local Court as well as the amended statement of claim and amended defence. It was submitted on behalf of Number One Cutting that when one compares the amended pleadings with the relevant invoice it is apparent from the invoice that it claims costs well in excess of those relevant to being “thrown away” by the amended pleading,

60. I am satisfied that it was open for her Honour to make the observation that a claim for nearly $30,000 for costs thrown away as the result of an amended pleading in the Local Court was excessive.

61. Nor am I satisfied that any error is disclosed in her Honour’s findings that Number One Cutting is awaiting the finalisation of the proceedings before preparing its bills of cost. This is consistent with standard practice. This also applies to Ground 4, where complaint is made that her Honour failed to have regard to the fact that Number One Cutting has not made an offer, rejected or replied to this invoice whilst the proceedings are still on foot.

62. As for Ground 28, putting to one side the obvious repetition of matters already raised under Grounds 4 and 14, this ground concerns her Honour’s finding that Number One Cutting’s anticipated costs payable on an indemnity basis by Florida Kitchens would exceed those owed by it to Florida Kitchens under the Local Court costs order.

63. I am satisfied that it was open to her Honour to find that the indemnity costs order of the entire proceedings awarded in favour of Number One Cutting would be greater than the costs order pertaining to the costs thrown away, payable on the ordinary basis, in the Local Court in relation to an amended pleading.

64. Further, I am not satisfied, having regard to the explanation for the failure, that the failure to move or take any action on that invoice assists Florida Kitchens’ argument.

65. None of these four grounds disclose House v The King error or any error at all. They are without merit.

Whether or not this appeal is in fact a judicial review claim

“Ground 8: Her Honour erred in finding that ‘Florida Kitchens’ application for leave to appeal is not a judicial review of the decision of NCAT’. Her Honour should have found that Florida Kitchens’ appeal is a judicial review of the decision of NCAT.

Ground 9: Her Honour erred in concluding that ‘UCPR 59.11 does not apply to a summons seeking leave to appeal’, in circumstances where Her Honour has accepted that ‘Some of these matters raised in the summons seem to be grounds of judicial review and some are neither questions of law nor grounds of judicial review’.”

66. It was submitted before Harrison AsJ that “an appeal from NCAT is a judicial review of the decision made by NCAT” and that “these appeal proceedings are governed by sections 65 and 69 of the Supreme Court Act and UCPR r 59.11”. Accordingly, it was submitted that the issue of security for costs is governed by UCPR r 59.11. Her Honour was not satisfied that this was the case and found accordingly.

67. As I indicated to counsel for Florida Kitchens during the hearing of this appeal, the summons in this matter clearly states that it is an appeal from the decision of NCAT. The fact that some of the 106 grounds of appeal set out in the summons reflect bases for judicial review rather than appeals on a question of law does not transform the nature of those proceedings into judicial review proceedings. There is no reference to UCPR r 59 anywhere in the summons.

68. As I also indicated during the hearing of this matter, it is open to Florida Kitchens to seek to amend the summons to include proceedings for judicial review. However, merely stating that this appeal is in fact a summons seeking that this court exercise its supervisory jurisdiction does not make it so. Proceedings brought for judicial review are not “an appeal”. Section 83 of NCAT Act is a statutory appeal.

69. None of these four grounds disclose House v The King error or any error at all. They are without merit.

The reference to “numerous”

70. The tenth Ground of appeal advanced by the plaintiff was as follows:

“Ground 10: Her Honour erred in finding that ‘Despite numerous letters to Florida Kitchens’ solicitor, no profit and loss report or balance sheets for the financial years ending 30 June 2017 and 2018, or bank statements from the period of 1 July 2018 to date for any bank accounts operated on behalf of Florida Kitchens, have been provided to Number One’.”

71. The complaint under this ground is that her Honour used the word “numerous” at [29]-[40] of her Reasons to describe the efforts made by Number One Cutting to obtain material about Florida Kitchens’ financial circumstances. As the chronology set out above at [16]-[21] sets out, there were five emails exchanged, three of which were sent from Number One Cutting and two responses were received from Florida Kitchens. A subsequent subpoena was also issued. These constituted the efforts made by Number One Cutting to obtain profit and loss statements of balance sheets for the financial years ending 30 June 2017 and 2018 and bank statements for the period of 1 July 2018 to date.

72. This correspondence was not disputed and nor was it suggested that Florida Kitchens had ever in fact provided any of these documents to Number One Cutting. Her Honour had the correspondence and evidence of the subpoena before her. I am satisfied that it was open to her to describe these efforts in the manner in which she did.

73. This ground does not disclose House v The King error or any error at all. It is without merit.

Florida Kitchens’ non-compliance with the Subpoena

74. A number of complaints were made in relation to her Honour’s findings regarding the subpoena issued on Florida Kitchens after it refused to provide any information as to its financial circumstances. The following grounds address this topic:

“Ground 11: Her Honour’s conclusion that ‘The final step taken by the solicitor for Number One was to serve a subpoena on Florida Kitchens and its solicitor seeking the profit and loss reports and balance sheet for financial year ending in 30 June 2018, and bank statements for the period from 1 July 2018 to 20 February 2019 (CB 304)’, is inconsistent with the evidence, as the Subpoena was not served on the solicitor, but a copy was provided, with an email from the solicitor for the Defendant stating that it would be served on the Plaintiff (Defendant’s Court Book – CB p257), as well as the no proper service of the Subpoena as referred to in the one page document referred to in paragraph 31 of Her Honour’s Judgment dated 20 May 2019, and which formed part of the evidence in the Defendant’s Court Book (Defendant’s Court Book- CB p315), and with the Defendant conceding in its submissions dated 7 May 2019, in particular paragraph 19 of its submissions that the “Subpoena was served or at least came to the attention of the Plaintiff”.”

Ground 12: Her Honour erred in holding that ‘the step by step guide to issuing subpoenas in relation to the obligation to pay conduct money does not differentiate between a subpoena to give evidence and one to produce documents. So the failure to tender conduct money when the subpoena was served is not a valid objection’, as in paragraph 34 of Her Honour’s Judgment dated 20 May 2019, Her Honour refers to the Step by Step Guide and recite it, where there is a clear reference to the requirement for the payment of conduct money for a Subpoena to Produce.

‘Under the heading “Step 4: Serve the subpoena”, it states:

‘Step 4: Serve the subpoena

…

When you serve the subpoena you must also give the person or organisation you are serving with the subpoena some money, called ‘conduct money’. The amount to be given for a Subpoena to Produce is not specified but must be reasonable. Many organisations will have a set amount for conduct money. You should contact the organisation before serving the subpoena to make sure you provide enough conduct money.

…”

Ground 13: Her Honour's conclusion that ‘Despite letters addressed to Florida Kitchens' solicitor and a subpoena addressed to Florida Kitchens served upon it and its solicitor, Florida Kitchens failed to produce the profit and loss reports or balance sheets for the financial years ending 30 June 2017 and 2018 and bank statements the period from 1 July 2018 to date for any bank accounts operated on its behalf’, is inconsistent with the evidence as referred to in the Grounds above.”

75. These grounds concern the evidence I have summarised above at [21]–[24]. After Number One Cutting’s requests to Florida Kitchens to provide documents to allay their fears in regard to Florida Kitchens ability to pay any costs order were refused, a subpoena was subsequently issued to the same effect.

76. The portion of her Honour’s reasons complained of is at [30] where her Honour simply noted:

“30. The final step taken by the solicitor for Number One was to serve a subpoena on Florida Kitchens and its solicitor seeking the profit and loss reports and balance sheet for financial year ending in 30 June 2018, and bank statements for the period from 1 July 2018 to 20 February 2019 “.

77. After questioning counsel for Florida Kitchens as to why error is disclosed in relation to this finding, it was submitted that the subpoena was not properly served but only “provided” and, in any event, no conduct money had been provided. That is, the complaint under Ground 13 is that it was not open to her Honour to find that it had in fact been “served”.

78. Mr Simons’ evidence is that service was affected. In any event, the subpoena was answered thus any argument that it was not served and/or that Florida Kitchens was not aware of it is of little significance.

79. In any event, as I indicated to counsel for Florida Kitchens at the hearing, it is difficult to see how Florida Kitchens’ intransience regarding requests for it to provide any evidence of its liquidity including non-compliance with a subpoena assists its case. In particular, the fact that the subpoena was responded to by a note stating simply: “NO PROPER SERVICE, NO CONDUCT MONEY, NO DOCUMENTS” leaves open one interpretation that Florida Kitchens has “no documents” meeting the description of “profit and loss statements”. It seems to me that whether or not there is an actual requirement for conduct money, taking these technical points does not improve Florida Kitchens’ case as to its ability to pay any costs order.

80. None of these grounds disclose House v The King error or any error at all. They are without merit.

Whether or not Florida Kitchens would be able to meet a costs order

81. Grounds 17, 18, 19, 21 and 29 can be addressed together. They all go to the ultimate question of the available evidence to conclude that there were reasonable grounds to believe that its costs could not be paid in the event Florida Kitchens is unsuccessful in this court. Those grounds are as follows:

“Ground 17: Her Honour erred in holding that the solicitor for the Defendant had concern (sic) about the Plaintiff being unable to meet a costs order, after ‘Florida Kitchens and/or its solicitor have refused to provide any of the financial records requested, and have not offered any security for costs‘.

Ground 18: Her Honour erred in not finding that the Defendant has failed to

identify the nature and basis of their concerns in relation to the ability of the Plaintiff in meeting a costs order, in their correspondence from 27 December 2018 to February 2019, as well as in the affidavit in support of the Notice of Motion, sworn by their instructing solicitor on 20 February 2019.

Ground 19: Her Honour erred in not finding that the Defendant's solicitor has further failed to identify the basis for his belief that the Plaintiff will not be able to pay the Defendant's costs of defending the proceedings, in the event that the Defendant is successful.

Ground 20: Her Honour's conclusion that ‘Florida Kitchens' failure to provide any evidence of its financial position, despite being served with a subpoena, leads me to believe, on the balance of probabilities, that there is reason to believe that Florida Kitchens will be unable to meet the costs of Number One if ordered to do so’, is unsubstantiated and against the evidence before Her Honour, in relation to the contested matters regarding the Subpoena, the Plaintiffs position in relation to the security for costs as communicated to the Defendant and during the hearing, as well as the clear evidence of the Plaintiffs ability to pay the NCAT's order of $ 20,130.00 and the making by the Plaintiff of a further offer to settle the proceedings for a further payment of $ 20,000.00. (Defendant's Court Book- CB pp 42, 44, 115, 116, 117, 118, 144, 145, 150-176).

Ground 21: Her Honour erred in finding and concluding that ‘the threshold issue has therefore been satisfied’.

Ground 29: Her Honour erred in finding that ‘Number One's solicitor's estimate of costs does not seem to be excessive and unreasonable’.”

82. These grounds all contend that it was not open to her Honour to make the threshold finding she did. That is, it was contended that it was not open to her Honour to find that there is reason to believe that Florida Kitchens, being a corporation, will be unable to pay Number One Cutting’s costs if ordered to do so.

83. Pursuant to UCPR r 42.21(1)(d), the Court must be satisfied that there are reasons to believe that Florida Kitchens will be unable to pay Number One’s costs if ordered to do so (“the threshold issue”).

84. I have had regard to her Honour’s judgment and the relevant material before her Honour. I am not satisfied that any of these grounds can be made out either. In considering this threshold test her Honour stated the following at [40]-[42]:

“40. I agree that the onus is on Number One to establish that there is reason to believe that Florida Kitchens will be unable to pay costs of Number One if ordered to do so. In this case, despite numerous letters, Florida Kitchens and/or its solicitor have refused to provide any of the financial records requested, and have not offered any security for costs. In these circumstances, the solicitor for Number One, Mr Simons, believes that Florida Kitchens has no assets to satisfy any costs order, or at least does not reveal any assets. It is his concern that Florida Kitchens will not be able to pay Number One’s costs of defending these proceedings.”

41. Florida Kitchens’ failure to provide any evidence of its financial position, despite being served with a subpoena, leads me to believe, on the balance of probabilities, that there is reason to believe that Florida Kitchens will be unable to meet the costs of Number One if ordered to do so.

42. The threshold issue has therefore been satisfied. I will now turn to consider all of the remaining grounds of appeal.”

85. No error is disclosed in this reasoning. It was not suggested that her Honour misstated the relevant principles. Rather, the complaint under these grounds is, in effect, that her Honour ought to have found in favour of Florida Kitchens. It could not be said that there was “no” evidence upon which this finding could be made nor that her Honour acted unreasonably.

86. None of these grounds disclose House v The King error or any error at all. They are without merit.

Typographical error

87. The plaintiff’s twenty-second Ground of appeal is as follows:

“Ground 22: Her Honour erred in stating that she ‘will not consider the application of these principles to the present case’ and then proceeded to do so.”   

88. At [43]-[44] her Honour set out the relevant principles applicable to the discretionary decision to make an order for costs as stated by Beazley J (as her Excellency then was) in KP Cable Investments Pty Ltd v Meltglow Pty Ltd (1995) 56 FCR 189

“43. In Meltglow, Beazley J stated:

“The law is now settled that the discretion to order security for costs is unfettered and should be exercised having regard to all the circumstances of the case without any predisposition in favour of the award of security....

Notwithstanding the broad unfettered discretion with which the court approaches an application for security for costs, there are a number of well established guidelines which the court typically takes into account in determining any such application. They are:

1.   That such applications should be brought promptly...

2.   That regard is to be had to the strength and bona fides of the applicant’s case are relevant considerations... As a general rule, where a claim is prima facie regular on its face and discloses a cause of action, in the absence of evidence to the contrary, the court should proceed on the basis that the claim is bona fide with a reasonable prospect of success.

3.   Whether the applicant’s impecuniosity was caused by the respondent's conduct subject of the claim...

4.   Whether the respondent’s application for security is oppressive, in the sense that it is being used merely to deny an impecunious applicant a right to litigate...

This factor is related to the next, namely:

5.   Whether there are any persons standing behind the company who are likely to benefit from the litigation and who are willing to provide the necessary security...

6.   An issue related to the last guideline is whether persons standing behind the company have offered any personal undertaking to be liable for the costs and if so, the form of any such undertaking ...

7.   Security will only ordinarily be ordered against a party who is in substance a plaintiff, and an order ought not to be made against parties who are defending themselves and thus forced to litigate.

44. I will not consider the application of these principles to the present case.”

(Emphasis added.)

89. This ground of appeal asserted that, after her Honour set out the relevant principles applicable to an application for security for costs; she expressly stated that she would not consider the application of these principles to the present case.

90. I am satisfied that the word “not” as it appears in paragraph [44] is a typographical error. The correct word is “now”. I am satisfied of this for two reasons. First, her Honour did in fact go on to consider the relevant principles as is evident from the paragraphs of the judgment that follow [44]. Second, it defies logic that her Honour would carefully set out the relevant principles and then state that she was not going to apply them before going on to do so.

91. This ground does not disclose House v The King error or any error at all. It is without merit.

The ultimate finding

92. Grounds 27 and 30 are as follows:

“Ground 27: Her Honour erred in law in the exercise of her discretion, and further erred in finding and stating that "taking all the above factors into account, they are overwhelmingly in favour of granting an order for security for costs ".

Ground 30: Her Honour erred in law in the exercise of her discretion in ordering the Plaintiff to pay the costs of the Defendant's Notice of Motion.”

93. These grounds contend that it was “not open” to her Honour to have made an order for security for costs. To use the language of House v The King, it was contended that the finding was “unreasonable” or “plainly unjust”: Markarian v The Queen (2005) 228 CLR 357; [2005] HCA 25 at [25].

94. I am not satisfied that her Honour’s ultimate finding was “unreasonable”. No basis for contending it was was ever put by Florida Kitchens beyond an over-arching complaint that her Honour ought to have arrived at a different result.

95. Neither of these grounds disclose House v The King error or any error at all. They are without merit.

The third-party payment

“Ground 26: Her Honour erred in law in finding that "while there is no evidence of Florida Kitchens' assets, it has paid the verdict moneys and the filing fee in this Court. However, it appears that they were not paid by Florida Kitchens but by an unidentified third party". Furthermore, Her Honour's finding could not reasonably be arrived at upon the evidence, as the evidence before Her Honour was the verdict moneys were paid by the Plaintiff. (Defendant's Court Book- CB pp 42, 44,116,117, 118,144 and 145).”

96. In their written submissions, Florida Kitchens maintain that the “verdict moneys” were paid for by Florida Kitchens and there was “no evidence before her Honour to suggest that the filing fee of $3,074.00 was not paid for by Florida Kitchens”.

97. In reply, Number One Cutting submitted that Florida Kitchens produced no accounts and no bank statements to the Supreme Court.

98. It could not be said that it was not open to the Court to come to the conclusion that it appeared a third party paid the money. There was a conflict on the evidence and she made a finding based on that evidence.

99. This ground does not disclose House v The King error or any error at all. It is without merit.

No delay bringing the application for security for costs

“Ground 23: Her Honour erred in concluding that "there is no dispute that the application for security for costs was brought promptly", which is contrary to the evidence where the Summons was filed on 20 December 2018 and served in December 2018, and the Notice of Motion was not filed until 20 February 2019.”

100. Under this ground Florida Kitchens contends that it was not open to Harrison AsJ to find that the application for security for costs was bought “promptly”.

101. The evidence discloses that the summons was filed just before Christmas 2018 and that Florida Kitchens solicitor was on leave until late January 2019. During the Christmas break and the solicitor for Number One Cutting sought to obtain information from Florida Kitchens, first by way of email and later by way of subpoena before resorting to bringing the application for security for costs. Taking into account the Christmas break in the efforts made by Number One Cutting to avoid having to bring such an application, I am satisfied that it was open to her Honour to find that the application for security for costs was brought “promptly” as that term is used in Meltglow at [43(1)].

102. The reference by her Honour to this being a matter about which there was “no dispute” obviously means that there was no dispute as to the relevant dates involved, rather than as to how those dates are to be categorised.

103. This ground does not disclose House v The King error or any error at all. It is without merit.

Prospects of success of appeal from NCAT

“Ground 7: Her Honour erred in finding that ‘Two witnesses for Number One gave evidence’, as it is inconsistent with the evidence that there were three witnesses for Number One. Her Honour erred in law in the exercise of her discretion in that she failed to take into account Number One’s expert whose quantum meruit evidence was found to be unsatisfactory by the Tribunal Member, and therefore no quantum meruit evidence was relied upon in reaching a decision on quantum meruit.

Ground 24: Her Honour erred in law in finding that the application for leave to appeal has poor prospects of success, without dealing with it, nor giving any reasons or justifications, as to why Her Honour has reached such an erroneous view, and in circumstances where the Defendant appears to not have challenged the leave application prospects of success.

Ground 25: Her Honour erred in law in finding that the application for leave to appeal has poor prospects of success, without dealing with it, nor giving any reasons or justifications, as to why Her Honour has reached such an erroneous view, and in circumstances where the Defendant appears to not have challenged the leave application prospects of success.”

104. Grounds 24 and 25 were in identical terms. These grounds pertain to her Honour’s consideration of the merits of the appeal from NCAT to this Court. It was contended on behalf of Florida Kitchens that there are merits to the appeal and her Honour misunderstood the nature of its case.

105. It was common ground that there were two lay witnesses for Number One Cutting and one expert witness. The Tribunal member did not accept the evidence of the expert and relied on the tax invoices issued by Number One Cutting instead in determining quantum merit. Florida Kitchens submitted that the tax invoices were not quantum merit evidence and complained that her Honour failed to mention in this part of her Reasons that the Tribunal Member did not accept the expert evidence. I am not satisfied that any error is disclosed in the way in which her Honour summarised this aspect of the procedural history of the matter.

106. Under a heading “The strength and bona fides of Florida Kitchen’s case” Harrison AsJ stated at [46]:

“46. I have reviewed Florida Kitchens’ submissions on appeal to the Appeal Panel and the 106 grounds seeking leave to appeal in this court. They are much the same, only they contain more grounds than were raised before the Appeal Panel. Florida Kitchens submitted that the appeal has merits and good prospects of success, and refers to the summons. I disagree. I have carefully read the decision of the Appeal Panel and considered its decision. I have earlier set out the issues canvassed by the Appeal Panel. It is my view that the application for leave to appeal has poor prospects of success.”

107. To the extent that Florida Kitchens suggests that it was “not open” to her Honour to find that the application for leave to appeal to this court has “poor prospects of success”, I am satisfied that her Honour properly addressed this issue and provided reasons for her conclusion. I am not satisfied that her Honour’s conclusion was “not open” to her.

108. Florida Kitchens contended that the importance of her Honour’s mis-stating of whether there were two or three witnesses is that her Honour was required to assess the prospects of success of the appeal to this court. I am not satisfied that is the case. It is to be accepted that in Meltglow Beazley J stated that one of the relevant discretionary factors to have regard to in any security for costs application was “the strength and bona fides of the applicant’s case”, but that does not mean that her Honour was required to, in effect, conduct a preliminary hearing of the appeal. The prospects of success will always be a matter of impression at this interlocutory stage. In the present matter that impression was made all the more difficult by the excessive number of grounds and the failure by Florida Kitchens to apply any effort to focussing on the real issues in those grounds. Although her Honour was satisfied of the bona fides of the claim that may well have been a matter on which judicial minds may differ.

109. None of these grounds disclose House v The King error or any error at all. They are without merit.

Conclusion

110. I am satisfied that none of the 30 grounds of appeal have been established. No error is established in her Honour’s judgment. I am satisfied that the decision is correct and that the relevant statutory prerequisites for making an order for security of costs are established in this matter.

Costs

111. At the hearing of this appeal counsel for Number One Cutting foreshadowed that, in the event that it was successful, it would be seeking a personal costs order against the director of Florida Kitchens. I indicated that I would reserve the question of costs and I propose to do so.

ORDERS

112. Accordingly, I make the following orders:

1. The notice of motion is dismissed.

2. The stay of Harrison AsJ’s order of 20 May 2019 is lifted.

3. The question of costs is reserved.

4. The relevant time from which time commences for security to be lodged is 15 November 2019.

Amendments

13 March 2020 - [74] "Florida Kitchens" instead of "Florida Projects"

Decision last updated: 13 March 2020