Gorilla Rush Pty Ltd v Fraser

[2025] NSWCA 191

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation:

Gorilla Rush Pty Ltd v Fraser [2025] NSWCA 191

Hearing dates:

14 August 2025

Date of orders:

14 August 2025

Decision date:

19 August 2025

Before:

Ward P; Leeming JA

Decision:

1.   Refuse leave to appeal.

2.   Order the applicant to pay the respondent’s costs of the application for leave to appeal.

3.   Liberty to apply within 14 days by notice of motion if there is any variation to the costs order.

Catchwords:

CIVIL PROCEDURE – application for leave to appeal from interlocutory orders – where primary judge dismissed strike out motion brought under r 14.28 of the Uniform Civil Procedure Rules 2005 (NSW) – whether primary judge failed properly to consider strike out motion – whether primary judge erred in assessing pleadings issues in respect to collateral contract claim – leave to appeal refused.

COSTS – security for costs – application for leave to appeal – where primary judge ordered a security for costs against overseas plaintiff in the sum of $53,300 – whether primary judge erred by limiting security for costs on basis of amount respondent had readily accessible to avoid stultification of proceedings – leave to appeal refused.

Legislation Cited:

Civil Procedure Act 2005 (NSW), ss 56, 57, 58, 60

Competition and Consumer Act 2010 (Cth), Sch 2 – Australian Consumer Law, ss 18, 31, 236

District Court Act 1973 (NSW), s 127(2)(a)

Uniform Civil Procedure Rules 2005 (NSW), rr 13.4, 14.28, 42.21(1)(a), 42.21(1A)

Cases Cited:

Barton v Minister for Foreign Affairs (1984) 2 FCR 463

Be Financial Pty Ltd as Trustee for Be Financial Operations Trust v Das [2012] NSWCA 164

Carolan v AMF Bowling Pty Ltd t/as Bennetts Green Bowl [1995] NSWCA 69

Cheng v Motor Yacht Sales Australia Pty Ltd t/as The Boutique Boat Company (2022) 108 NSWLR 342; [2022] NSWCA 118

Clarke v State of New South Wales [2015] NSWCA 27

Commonwealth Bank of Australia v ZYX Learning Centres Limited [2014] NSWSC 1676

Fraser v Gorilla Rush Pty Ltd [2025] NSWDC 109

House v The King (1936) 55 CLR 499; [1936] HCA 40

Idoport Pty Ltd v National Australia Bank Limited [2001] NSWSC 744

In the matter of the Will of FB Gilbert (dec) (1946) 46 SR (NSW) 318

Inglis v English Language Company Australia Pty Ltd [2020] NSWSC 1058

Jaycar Pty Limited v Lombardo [2011] NSWCA 284

Lucas v Yorke (1983) 50 ALR 228

Polo Enterprises Australia Pty Ltd v Pinctada Hotels and Resorts Pty Ltd [2015] NSWCA 397

S1 v The Trustees of Marist Brothers [2016] NSWSC 970

Southern Cross Exploration NL v Fire & All Risks Insurance Co Ltd (1985) 1 NSWLR 114

Steiner v Strang [2016] NSWSC 9

Tim Barr Pty Ltd v Nauri Gold Coast Pty Ltd [2009] NSWSC 563

Wentworth v Rogers (No. 5) (1986) 6 NSWLR 534

Category:

Principal judgment

Parties:

Gorilla Rush Pty Ltd (First Applicant)
Samuel Oliver Johnson (Second Applicant)
Paul Fraser (Respondent)

Representation:

Counsel:
O Fagir (Applicants)
A Vernier (Respondent)

Solicitors:
Holding Redlich (Applicants)
My General Counsel (Respondent)

File Number(s):

2025/00167763

Publication restriction:

Nil

 Decision under appeal 

Court or tribunal:

District Court of New South Wales

Jurisdiction:

Civil

Citation:

[2025] NSWDC 109

Date of Decision:

3 April 2025

Before:

Neilson DCJ

File Number(s):

2024/00272199

JUDGMENT

1. THE COURT: The applicants, Gorilla Rush Pty (Gorilla Rush) and Mr Samuel Johnson (the sole director and shareholder of Gorilla Rush’s sole shareholder), by summons filed on 1 May 2025, seek leave to appeal from orders made in the District Court by Neilson DCJ on 3 April 2025, refusing their application for certain paragraphs of the respondent’s statement of claim to be struck out pursuant to r 14.28 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) and granting security for costs in their favour but not in the amount they had sought (see Fraser v Gorilla Rush Pty Ltd [2025] NSWDC 109). We refer to these as the pleading issue and the security for costs issue, respectively. Leave is necessary pursuant to s 127(2)(a) of the District Court Act 1973 (NSW) as the impugned decisions are interlocutory in nature.

2. The respondent, Mr Paul Fraser, is resident in the United Kingdom. The underlying dispute between Mr Fraser and the applicants relates to a claim by him for payment pursuant to an employment agreement with Gorilla Rush and claims for damages for breach of an alleged collateral contract between him and Mr Johnson and for compensation under s 236 of the Competition and Consumer Act 2010 (Cth), Sch 2 – Australian Consumer Law (Australian Consumer Law) for various alleged misrepresentations.

Interlocutory applications in the District Court

3. Mr Fraser filed a Statement of Claim commencing the proceedings against the applicants in the District Court on 24 July 2024. Defences were filed by Gorilla Rush and Mr Johnson on 19 September 2024 and 9 October 2024, respectively.

4. On 18 November 2024, the applicants filed two notices of motion. One sought an order pursuant to r 14.28 of the UCPR striking out the whole of the Statement of Claim and, in the alternative, orders pursuant to r 14.28 that the paragraphs relating to the collateral contract claim ([10], [14], [25] and [26]) be struck out and pursuant to r 13.4 of the UCPR that the paragraphs relating to the Australian Consumer Law claim ([17], [18] and [25(a)-(c)]) be dismissed. The other, sought an order pursuant to r 42.21(1)(a) of the UCPR for the provision by Mr Fraser of security for the applicants’ costs, in two tranches: $90,000 to be paid within 28 days; and a further $50,000 to be paid within 42 days of the court setting the matter down for trial; and consequential orders in relation thereto. It was not in dispute that Mr Fraser is a resident of the United Kingdom and has no assets in Australia.

5. In support of the application for security for costs, the applicants’ solicitor (Mr Stephen Trew) swore an affidavit on 18 November 2024, deposing, among other things, that he estimated the total costs of defending the proceedings to be approximately $246,315 ([21]) (though the letter demanding security had generously rounded this up to approximately $300,000 plus GST); and that the legal costs incurred up to 31 October 2024 by Gorilla Rush were $77,516 plus GST and by Mr Johnson were $4,818 plus GST ([23]) (a total of just over $81,000, perhaps including the costs of preparation of the application for security for costs). The estimated costs of the hearing were based on an assumed two day hearing (see [29]). Mr Trew further estimated that if party/party costs were awarded in his clients’ favour in the proceedings, his clients would be entitled to seek recovery of approximately $172,420.50 (on the basis of that being 70% of the total estimated costs) ([31]).

6. The sum sought by way of security for costs (representing a discount on the estimated recoverable party/party costs) thus incorporated a proportion of past costs (i.e., costs already incurred at the time of the security for costs application), as counsel for the applicants conceded on the hearing of the present leave application.

Primary judgment

7. The primary judge refused both the principal and alternative relief sought on the pleading issue. The only aspect of his Honour’s decision on the pleading issue that is here sought to be appealed is that in relation to the alleged collateral contract (the relief in this respect being based on r 14.28 of the UCPR, which permits the strike out of the whole or any part of a pleading if, relevantly, it discloses no reasonable cause of action, has a tendency to cause prejudice, embarrassment or delay in the proceedings or is otherwise an abuse of process). His Honour dealt with the collateral contract claim at [23]-[26] of the primary judgment and refused to strike out the paragraphs in question ([10], [14], [25] and [26]).

8. His Honour discerned from the pleading that the alleged promise identified as the “funding representation” could be considered to be an offer accepted by Mr Fraser by his agreeing to enter into the Employment Contract alleged in the pleading at [9]; and that the collateral contract was, in essence, alleged to be a personal guarantee by Mr Johnson on which Mr Fraser now sought to rely to claim damages from him (see at [26]). His Honour did not accept the categorisation placed by counsel for the applicants on the pleading at [10] of the statement of claim (i.e., that it pleaded a legal conclusion unsupported by any relevant material fact – as recorded by his Honour at [23] of the primary judgment).

9. As to the security for costs issue, the primary judge noted the relevant provisions of the rules and the evidence of Mr Fraser concerning his financial position (his affidavit of 15 January 2005), including that Mr Fraser had deposed to his accessible assets (at [16] of his affidavit). The primary judge accepted the evidence as to Mr Fraser’s assets and liabilities ([34]) and his income and expenditure ([34]) and said that this indicated that Mr Fraser was unable to provide security in the amount sought but that he could give security in the sum of “say, $53,000” ([35]).

10. His Honour then summarised and addressed the submissions of the applicants as to this issue ([37]-[44]), concluding that he intended to apply what had been described by Ierace J in Inglis v English Language Company Australia Pty Ltd [2020] NSWSC 1058 at [42] as the “balancing process” to order the provision of security for costs “but not such amount of costs as would stifle these proceedings” (primary judgment at [44]). His Honour thus ordered security in the sum of $53,000 (which security has since been provided in compliance with the orders made).

Application for leave to appeal

11. The applicants seek leave to appeal on the following grounds (in their draft notice of appeal):

1   Having determined that the Court's power to requirement payment of security for costs was enlivened and that the Court's discretion should be exercised in favour of an order for payment of security, the learned primary judge determined that he should fix the quantum of the security payable as an amount no more than the amount which the plaintiff had readily available so as to avoid stultifying the proceedings. In doing so, the learned primary judge erred in the exercise of his discretion to quantify the amount of the relevant security by:

a.   acting on a wrong principle, namely a principle that it is permissible to limit the quantum of security to an amount which would avoid the risk of the stultification of the proceedings; and

b.   taking into account an irrelevant consideration, being the need to fix the quantum of security in an amount that would not stultify the proceeding.

2 In respect of the determination of the First and Second Appellants' Notice of Motion dated 18 November 2024 seeking orders that paragraphs 10, 14, 25(d) and 26 of the Statement of Claim be struck out under r14.28 of the UCPR to the extent they sought relief under the “Australian Consumer Law’, the learned primary judge erred because he:

a.   failed to consider and determine the Appellants' contentions in support of its application to strike out the pleaded “Australian Consumer Law’ claims; and

b.   proceeded on a wrong principle, namely that it was necessary for the defendant to disprove the application of the “Australian Consumer Law’ in the pleaded circumstances before the pleadings would be struck out; and

c.   determined the issue in a manner that was unreasonable and plainly unjust.

3 In respect of the First Second Appellants' Notice of Motion dated 18 November 2024 seeking orders that paragraphs 10, 14, 25(d) and 26 of the Statement of Claim be struck out under r14.28 of the UCPR to the extent they sought damages in respect of an alleged collateral contract, the learned primary judge erred in refusing to strike out the pleadings in circumstances where the pleading did not explicitly allege any offer or acceptance, and where the pleading did not identify any relevant consideration or intention to create legal relations. In doing so, he acted on the wrong principle, namely that it is not necessary to expressly plead such elements of a collateral contract.

12. By way of relief, if leave be granted and the appeal be successful, the applicants seek that orders (1), (2) and (5) made by the primary judge on 3 April 2025 be set aside; that further security be provided in the sum of $86,700; and that the District Court be directed to redetermine the application for orders striking out [10], [14], [25] and [26] of the Statement of Claim.

13. We note that there was no dispute that, on an application for leave to appeal, the applicant must establish that the proposed appeal raises an issue of principle, a question of public importance or a clear injustice that is more than merely arguable (see, for example, Clarke v State of New South Wales [2015] NSWCA 27; Carolan v AMF Bowling Pty Ltdt/as Bennetts Green Bowl [1995] NSWCA 69; Jaycar Pty Limited v Lombardo [2011] NSWCA 284; Be Financial Pty Ltd as Trustee for Be Financial Operations Trust v Das [2012] NSWCA 164 and, more recently, Cheng v Motor Yacht Sales Australia Pty Ltd t/as The Boutique Boat Company (2022) 108 NSWLR 342; [2022] NSWCA 118 at [15]). Where, as here, the subject of the appeal relates to matters of practice and procedure, there is a well-known (and understandable) reluctance to grant leave (see In the matter of the Will of FB Gilbert (dec) (1946) 46 SR (NSW) 318 (Re Gilbert’s Will) at 323). Where the matter involves exercise of a discretion, error in the House v The King sense (referring to House v The King (1936) 55 CLR 499; [1936] HCA 40) must be shown.

14. At the conclusion of the hearing of the application we made orders refusing leave to appeal (and that the applicants pay the respondent’s costs of the application) with reasons to follow. These are our reasons for so doing.

Pleading issue

15. Turning first to the pleading issue in relation to the collateral contract claim, the applicants complain that the primary judge erred in refusing to strike out the pleadings in circumstances where the pleading did not explicitly allege any offer or acceptance and did not identify any relevant consideration or intention to create legal relations. The applicants contend that the primary judge acted on the wrong principle, namely that it is not necessary expressly to plead such elements of a collateral contract, and that a collateral contract was sufficiently pleaded by identifying a representation and subsequent entry into a principal contract.

16. As to the Australian Consumer Law claim, the applicants contend that the primary judge erred because: he failed to consider and determine their contentions in support of the strike out application; proceeded on a wrong principle (namely that it was necessary for the defendant to disprove the application of the Australian Consumer Law in the pleaded circumstances before the pleadings would be struck out); and determined the issue in a manner that was unreasonable and plainly unjust.

17. The applicants contend that those alleged errors involve “clear cut errors in the exercise of the Court’s power to strike out pleadings”, including a manifest failure on the part of the primary judge properly to consider and determine the application to strike out the pleadings; and that, as a consequence, the applicants are forced to continue to defend the proceedings against them in circumstances where there may never have been any viable claim against them (a fortiori they say, where the decision as to security for costs means that they will not recover anything more than a small portion of their costs if successful); and, in the case of Mr Johnson, it is submitted that if the application to strike out the collateral contract and Australian Consumer Law claims against him were successful, the case against him would end (subject to any successful application to replead). In oral submissions, it was accepted by counsel for the applicants that in the ordinary course where there is a successful strike out application it is likely that liberty to replead will be granted (see, for example, the discussion in Steiner v Strang [2016] NSWSC 9 at [26]-[27], [49]; S1 v The Trustees of Marist Brothers [2016] NSWSC 970 at [51]-[52]; Wentworth v Rogers (No. 5) (1986) 6 NSWLR 534 at 536-537; and Commonwealth Bank of Australia v ZYX Learning Centres Limited [2014] NSWSC 1676 at [254]-[256]). Further, it is submitted by the applicants that the claim(s) as currently pleaded will require the applicants to speculate as to the true case against them (with the real prospect of wasted time and cost in the preparation of evidence), although that has not apparently prevented them from pleading their defences to the claims.

18. Significantly, the day before the hearing of the leave application, this Court was provided with a proposed Amended Statement of Claim (MFI 1), which had been served on the applicants’ solicitors earlier that week and in respect of which counsel for Mr Fraser indicated that he had instructions to seek leave to amend in the District Court. Among other proposed amendments, the document deletes the impugned paragraphs [10], [14], [25] and [26] and repleads both the collateral contract claim and the Australian Consumer Law claim (the latter identifying the relevant representation as made by Mr Johnson on behalf of Gorilla Rush; asserting that it was false, misleading, deceptive or likely to mislead or deceive contrary to s 18 and s 31 of the ACL and that, by reason of those contraventions by Gorilla Rush, Mr Fraser had suffered loss and damage that he seeks to recover pursuant to s 236 of the ACL; and including a claim against Mr Johnson for accessorial liability – knowing involvement in the said contraventions by Gorilla Rush).

19. While we were told that the applicants have not indicated their consent to the foreshadowed application for leave by Mr Fraser to amend his pleaded claims against them (and it was emphasised that leave has not yet been obtained for the amendment), it seemed to be accepted by counsel for the applicants that the proposed amendments broadly address the previous criticisms made of the pleading (which formed the basis of the applicants’ strike out application).

20. The significance of this belated foreshadowing by Mr Fraser of an intention to apply to amend his pleading is that there is no real utility in a grant of leave to appeal in relation to the pleading issue (even if it would otherwise have been appropriate to grant such leave). Whether or not the primary judge erred in refusing to strike out parts of a pleading that the respondent no longer seeks to press would be an arid exercise, hardly consistent with the just, quick and cheap resolution of the real issues in dispute. The costs consequences of such an amendment would appropriately be dealt with by the judge in the District Court before whom such an application is made.

21. Therefore, leave to appeal on the pleading issue was refused.

Security for costs issue

22. As to the security for costs issue, it was not disputed that the power to grant security was enlivened in the present case (the respondent not being resident in the jurisdiction). And, as already noted, the complaint here is not that no order for security was made but, rather, that it was not in the amount for which the applicants had contended.

23. The applicants contend that the primary judge erred by acting on a wrong principle, namely that it was permissible to limit the quantum of security to an amount which would avoid a risk of stultification of the proceedings, and by taking into account an irrelevant consideration (being the need to set the security in an amount that would not stultify the proceeding). The applicants argue that this ground of appeal involves an important question of principle related to the correct approach to the quantification of security; and that the decision involves a significant error of principle which ought to be corrected.

22. Indeed the applicants go so far as to assert that it was not open to the primary judge to fix the quantum of security by reference to the need to avoid risk of stultification of the proceedings; they say that this was a matter relevant to the anterior question of whether security should be ordered but irrelevant to the quantification of security. The applicants submit that “the refusal of leave to appeal on this issue would render the appeal nugatory in relation to security”. (It is by no means clear what is meant by this, since the refusal of leave to appeal would simply mean that there is no appeal on that issue.)

23. The applicants, in support of their application for leave to appeal on this issue, raise four points. First, that the very purpose of the grant of security is to avoid the risk that an order for costs would ultimately be futile and the discretion is to be exercised for that purpose (hence it is argued that it is only appropriate to focus on the appropriate quantum considered adequate for the costs incurred; and not for such an order to be capped at an amount to avoid stultification). Second, that the text of r 42.21 of the UCPR (i.e., contemplating an order that the plaintiff give such security as the court thinks fit “for the defendant’s costs of the proceedings”) supports the applicants’ first point and requires that the quantification proceed by reference to the costs likely to be incurred “not some other overriding criterion”. Third, that the factors identified at r 42.21(1A) to which the Court may have regard in determining whether it is appropriate to make an order for security are not factors that go to the terms of such an order. Fourth, that the enquiry is as to what is adequate security (and, by analogy with principles relating to appeals, if security is not adequate it may render the appeal nugatory).

24. The applicants accept that there is a broad discretion and that a range of factors may be considered in assessing the quantum of security which would be appropriate in any given case but they complain that in the present case the desire to avoid stultification (which they maintain is an irrelevant consideration and not open to the primary judge to have taken into account) was dispositive. The applicants accept that they would not be entitled to full indemnification for their costs by way of security but they argue that it was incumbent on his Honour to assess the costs likely to be incurred and form a view as to the adequacy of security in that context.

25. In that regard, they contend that the error of the primary judge was to fix the quantum of security in this case, not as a proportion of the applicants’ likely costs but, at the maximum amount which his Honour considered Mr Fraser had readily available; i.e., to fix the quantum of security not by reference to the likely costs of the proceeding, but by reference to the amount which the plaintiff is readily able to pay.

26. The respondent emphasises the nature of the discretion of the primary judge as being absolute and unfettered (citing Lucas v Yorke (1983) 50 ALR 228 at 228-229) and submits that there is no principle that the primary judge is bound to calculate security on the basis of the costs that will be incurred, nor is there authority for the contention that security may not be fixed in an amount other than the expected quantum of costs. Reliance is placed on the fact that r 42.21(1A) includes as a factor that may be taken into account the need to avoid the stultification of the proceedings.

27. The respondent points to what was said in Idoport Pty Ltd v National Australia Bank Limited [2001] NSWSC 744 by Einstein J at [62] as to the requirement, once an entitlement to security is established, for the plaintiff to satisfy the Court taking into account all relevant factors that the Court’s discretion ought to be exercised by either refusing to order security or by ordering security in some lesser amount than was sought by the defendants.

28. Reference is also made by the respondent to the decision of Morling J in Barton v Minister for Foreign Affairs (1984) 2 FCR 463, where a, if not the, dispositive factor in the exercise of discretion to award security for costs against an overseas impecunious applicant was the concern not, by reason of such an order, effectively to bar the applicant from prosecuting his claim (see at 470). There, security was ordered in an amount considered sufficient to cover the costs of registering and enforcing a judgment of the Federal Court in the United Kingdom.

29. In the present case, one might well think that the order for security that was made was (contrary to the import of the applicants’ submissions) generous. The estimated costs seem very high. Certainly, the quantum of the order for security would go well beyond the likely cost of registering a judgment for enforcement in the United Kingdom. Moreover, to the extent that the claim for security for costs included (as is accepted the calculation of the amount claimed by the applicants did) a component for past costs, this is problematic (see Southern Cross Exploration NL v Fire & All Risks Insurance Co Ltd (1985) 1 NSWLR 114 as to the reluctance to grant such applications, although there the application was made well into the duration of the hearing). That said, in appropriate cases an order for security for costs may include both past and future costs (see Tim Barr Pty Ltd v Nauri Gold Coast Pty Ltd [2009] NSWSC 563, for example).

30. The costs already incurred are high (let alone the estimate given for total costs of a two day hearing in the District Court). Section 60 of the Civil Procedure Act 2005 (NSW) (Civil Procedure Act) requires consideration to be given to the proportionality of costs. Where a disproportionate amount of time and cost will be involved, that is a factor tending against the grant of leave to appeal, particularly having regard to the case management principles enshrined in the Civil Procedure Act (as recognised in Polo Enterprises Australia Pty Ltd v Pinctada Hotels and Resorts Pty Ltd [2015] NSWCA 397 at [45]).

31. In circumstances where, approached pragmatically, the present application for leave (though seeking a further $86,700 in security – i.e., in effect the balance of the amount initially claimed) seems likely, even if successful and if the appeal were to be allowed, to result in no more than a ‘top up’ of a far lesser sum (and might well not even result in that); and bearing in mind the factors underlying the $100,000 monetary threshold for appeals to this Court as of right, even if there were to be a point of principle as identified by the applicants (and we do not accept that there is), this would strongly tend against a grant of leave.

32. The caution expressed in Re Gilbert’s Will and subsequent cases as to appellate intervention in discretionary decisions on matters of practice and procedure must be steadily borne in mind. Litigants should not be encouraged to incur additional costs in derivative litigation on issues such as the present, well removed from the real issues to which ss 56-58 of the Civil Procedure Act require them to direct their attention. We do not consider there to be any issue of public interest or of principle to justify a grant of leave to appeal in the present case.

33. As to costs, it was submitted by the applicants’ counsel that, given the late proposed amendment to the pleadings, the appropriate order would be that each party bear its own costs (or that the applicants have a costs order in their favour in respect of the pleading issue). The respondent simply sought an order that costs follow the event.

34. We considered that it was appropriate for the applicants to be ordered to pay the costs of the leave application. It was misguided from the outset. As to the pleading issue, as the applicants conceded the likely course had the impugned paragraphs been struck out would have been for there to be liberty to replead (not that the whole proceeding be dismissed as the primary relief in their notice of motion contemplated). As to the security for costs issue, the stance adopted on the present application was novel. The inference open to be drawn is that the applicants have simply sought to achieve a position where the respondent (who has adduced evidence of his impecuniosity which was accepted by the primary judge) is unable to prosecute his claims against them. That is inconsistent with the fact that, in determining whether to grant security, account can be taken of the potential stultification of the proceedings. Moreover, we did not consider anything advanced by the applicants gave rise to House v The King error on the part of the primary judge. The application well illustrates the force of the familiar passage in Re Gilbert’s Will as to the need to keep a tight rein upon interference with orders of first instance judges in the exercise of discretion on a point of practice or procedure (see Jordan CJ at 323).

35. For the above reasons, we made orders refusing the grant of leave to appeal, with costs.

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Decision last updated: 19 August 2025