In the matter of Beverage Freight Services Pty Limited
[2020] NSWSC 1265
•17 September 2020
Supreme Court
New South Wales
Medium Neutral Citation: In the matter of Beverage Freight Services Pty Limited [2020] NSWSC 1265 Hearing dates: 3 August 2020, last submissions 5 August 2020 Date of orders: 17 September 2020 Decision date: 17 September 2020 Jurisdiction: Equity - Corporations List Before: Rees J Decision: Stay refused.
Catchwords: STAY – application pending leave to appeal – application before another puisne judge not trial judge or Court of Appeal – stay would serve no purpose as proceedings already otherwise stayed.
Legislation Cited: Civil Procedure Act 2005 (NSW), s 67
Uniform Civil Procedure Rules 2005 (NSW), r 50.7, 51.44
Cases Cited: Alexander v Cambridge Credit Corporation Ltd (1985) 2 NSWLR 685; (1985) 10 ACLR 42
Carolan v AMF Bowling Pty Ltd t/as Bennetts Green Bowl [1995] NSWCA 69
In the matter of Beverage Freight Services Pty Ltd [2020] NSWSC 509
In the matter of Beverage Freight Services Pty Ltd [2020] NSWSC 797
In the matter of Beverage Freight Services Pty Ltd [2020] NSWSC 861
In the matter of Beverage Freight Services Pty Ltd [2020] NSWSC 973
Kalafair Pty Ltd v Digitec (Australia) Pty Ltd [2002] NSWCA 383; (2002) 55 NSWLR 737
Mao v AMP Superannuation Limited [2017] NSWCA 296
Penson v Titan (No 2) National Pty Limited [2015] NSWCA 120
Zelden v Sewell [2011] NSWCA 56
Category: Procedural and other rulings Parties: J and E Vella Pty Limited (First Plaintiff)
Brian Hobson (First Defendant)
Joseph Vella (Second Plaintiff)
Hynadam Pty Ltd (Second Defendant)
Brett Soper (Third Defendant)
Mechita Pty Ltd (Fourth Defendant)
Beverage Freight Services Pty Limited (Fifth Defendant)
Beverage Distribution Australia Pty Limited (Sixth Defendant)Representation: Counsel:
Solicitors:
Mr F Amirbeaggi, Solicitor (Plaintiffs)
Ms M Dolenec (Defendants)
Yates Beaggi Lawyers (Plaintiffs)
McEvoy Legal (Defendants)
File Number(s): 2015/157614
Judgment
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HER HONOUR: The plaintiffs, J and E Vella Pty Limited and Joseph Vella, seek a stay under section 67 of the Civil Procedure Act 2005 (NSW) of an order requiring the plaintiffs to pay the defendants’ costs forthwith in the sum of $94,864. The order was made by Black J on 3 July 2020 and the plaintiffs have sought leave to appeal from his Honour’s decision.
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The plaintiffs’ solicitor, Farshad Amirbeaggi, exhibited the summons seeking leave to appeal, the applicants’ outline of submissions, a draft notice of appeal and various correspondence and deposed that a stay would not affect the ongoing prosecution of the proceedings. That is obviously correct as the proceedings are already stayed by an order of Black J made on 27 July 2020. The plaintiffs also sought to read an affidavit filed in support of an Interlocutory Process seeking asset preservation orders, but this was rejected for reasons given during the hearing. The defendants tendered some correspondence.
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Initially, the plaintiffs’ solicitor sought to adjourn the application for a stay as the defendants’ submissions served shortly before the hearing referred to authorities which he was not in a position to address. To address this difficulty, I gave leave to the plaintiffs to file and serve any written submissions in reply by 5.00 pm on 5 August 2020 “noting that this does not encompass any further evidence”. Notwithstanding the terms of the order, the plaintiffs filed written submissions and also sought to tender 55 pages of documents which, so far as I could tell, was the material rejected during the hearing. The defendants objected and I reject the tender but duly note the plaintiffs’ solicitor advice that, if his understanding of the leave granted was incorrect, then he maintained the submission in respect of which the documents were tendered.
Facts
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On 8 May 2020, Black J gave judgment in In the matter of Beverage Freight Services Pty Ltd [2020] NSWSC 509 in respect of the plaintiffs’ compliance with orders for discovery. The defendants sought dismissal of the proceedings by reason of the plaintiffs’ default. Black J concluded that the proceedings need not be dismissed if the plaintiffs made good the detriment suffered by the defendants as a consequence of the plaintiffs’ default. This was to be achieved by an order that the plaintiffs pay wasted costs and also comply with such an order: [71]-[72]. To that end, Black J made orders as follows:
1. The Plaintiffs pay the Defendants’ wasted costs of and incidental to:
(1) the Plaintiffs’ failure to give discovery and access to discovered documents from 21 December 2019 until 30 April 2020; and
(2) the determination whether the proceedings should be dismissed,
on an indemnity basis and as determined (at the Defendants’ election), on a gross sum basis, such costs to be payable forthwith.
2. Direct the Defendants, unless they elect within 7 days not to pursue an application for a gross sum costs order, to file and serve an interlocutory process seeking such an order, their affidavit evidence and submissions in support of that order by 4pm on 22 May 2020.
3. Direct the Plaintiffs to file and serve their affidavit evidence and submissions in response by 4pm on 5 June 2020.
4. The Defendants’ application for determination of the quantum of their gross sum costs (if made) be listed with a view to hearing in the Corporations Motions List at 9.15am on 15 June 2020 before Black J, or such other date as may be agreed between the parties and available to the Court.
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The defendants elected to seek to have their costs determined on a gross sum basis. On 15 June 2020, Black J heard the defendants’ application for such an order and also as to the quantum of such an order. On 24 June 2020, Black J gave judgment in In the matter of Beverage Freight Services Pty Ltd [2020] NSWSC 797, concluding that a gross sum costs order should be made and directed the parties to bring in agreed short minutes of order to give effect to his Honour’s judgment, including to re-calculate the costs on the basis determined by his Honour to be appropriate. Black J noted that the proceedings may be dismissed if the order for payment of costs was not complied with: at [45].
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On 25 June 2020, the defendants sent an email to the plaintiffs re-calculating their costs in accordance with Black J’s judgment. On 3 July 2020, Black J fixed the amount of the gross sum costs order in In the matter of Beverage Freight Services Pty Ltd [2020] NSWSC 861 and ordered:
1. The Plaintiffs pay the Defendants' wasted costs of and incidental to:
(1) the Plaintiffs' failure to give discovery and access to discovered documents from 21 December 2019 until 30 April 2020; and
(2) the determination whether the proceedings should be dismissed,
on an indemnity basis, quantified in the gross sum of $94,864.00, such costs to be paid forthwith.
2. The matter be listed for directions in the Corporations Directions List at 10am on 27 July 2020.
3. The Plaintiffs pay the Defendants’ costs of the Interlocutory Process filed on 22 May 2020 as agreed or as assessed.
As I understand it, the purpose of standing the matter over for directions on 27 July 2020 was to ascertain whether the costs order had been complied with and what consequential orders should be made.
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On 6 July 2020, the plaintiffs’ solicitor advised the defendants’ solicitor that the plaintiffs would be filing a notice of appeal in respect of the gross sum costs order and asked whether the defendants would entertain discussion of an alternate resolution of the matter of costs, “because whilst we believe our clients may succeed on Appeal it is obvious that the costs that are going to be incurred might be just as much as the sum contested.”
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On 27 July 2020 at 9.22 am, the plaintiffs’ solicitor sent an email to the Registry for the Court of Appeal requesting an urgent appointment to attend to filing a White Book to appeal from the costs order. A summons, outline of submissions and draft notice of appeal were supplied. The Registry responded at 9.29 am, advising that the Registrar was available at 11.00 am. At 10.00 am, the matter was listed before Black J and, on being informed that papers were being filed with the Court of Appeal Registry, stood the matter down to 2.30 pm. At 10.15 am, the plaintiffs filed the Interlocutory Process seeking a stay, which is presently before me. At 2.30 pm, Black J resumed the directions hearing in the matter and stayed the proceedings until 14 December 2020: In the matter of Beverage Freight Services Pty Ltd [2020] NSWSC 973. His Honour concluded that, where an application for leave to appeal was on foot, he should not accede to the defendants’ submission to dismiss the proceedings but nor should the Court make orders that required the defendants to incur costs for further steps in the proceedings while the plaintiffs had not paid the costs ordered and the detriment identified in his Honour’s judgment of 8 May 2020 had not been cured: at [16]-[18].
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On 30 July 2020, the plaintiffs’ solicitor advised that the plaintiffs were in funds and wished to prosecute their claims.
Submissions
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The plaintiffs submitted that the proposed Notice of Appeal raised a number of serious issues, including whether the primary judge failed to apply a relevant principle or misapplied a relevant principle in determining to make a gross sum costs order, that is, whether the primary judge should have made a gross sum costs order at all and the quantification of such a gross sum if the initial question should have been answered in the affirmative. A challenge to findings in respect of failure to cross examine persons not called as witnesses was also said to involve issues of principle and fact.
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The plaintiffs submitted that, if the gross sum was paid and the appeal was successful, then there were serious concerns that the defendants would dissipate their assets. This submission, of course, depended on documents sought to be tendered but rejected. However, the plaintiffs offered to pay the amount of $58,212 (being the appropriate gross sum assessed by the plaintiffs’ expert) into Court or such other sum as the Court considered appropriate in support of a stay. However, in that event, it was said that the stay on the proceedings generally should be lifted.
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The defendants submitted that there was no serious issue for determination for the appellate court and the Court could not be satisfied that leave would be granted. To summarise the defendants’ detailed submissions:
The submissions in the White Book are hyperbole, selective in the case referencing, inaccurate as to the facts, and do not raise any serious issue for the appellate court.
It was said that many of the plaintiffs’ submissions in support of a grant of leave were “plainly wrong” or not made at first instance or, even if correct, would not constitute a material error. The defendants submitted that the prospects of the grant of leave to appeal were low.
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The defendants submitted that the interests of justice did not favour a stay. The submissions filed in the White Book are based on the proposition that Black J should have accepted the plaintiffs’ expert report in its entirety. The plaintiffs therefore accepted that they were liable for at least $58,212 in costs. There was no explanation as to why the plaintiffs had not at least paid that sum. The amount in dispute was really $38,000, being the additional costs assessed by Black J. The plaintiffs had not filed any evidence to support a submission that the defendants could not repay the money. Indeed, as the plaintiffs asserted their claim against the defendants was worth $8,000,000, it was said that the Court could comfortably infer that the plaintiffs were confident of recovery.
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In addition to the detriment identified by Black J, it was submitted that the defendants now had the additional detriment of incurring further costs in respect of an appeal which they contended was without merit, in respect of which the plaintiffs’ solicitor had advised that the costs of the appeal might be just as much as the sum contested. Accordingly, it was said that a stay should only be granted on condition that the plaintiffs pay the sum of $58,212 to the defendants and the balance into Court within a certain time, say 14 days. If the condition was satisfied, the position of both parties was said to be protected. Payment of the uncontested amount to the defendants and payment of the contested amount into Court was said to preserve the status quo, ensure that the fruits of the litigation were preserved and no injustice was done in accordance with the principles in Alexander v Cambridge Credit Corporation Ltd (1985) 2 NSWLR 685; (1985) 10 ACLR 42.
Principles
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The parties were agreed as to the principles. As Campbell AJA explained in Penson v Titan (No 2) National Pty Limited [2015] NSWCA 120 at [44] to [49], the lodging of an appeal does not operate as a stay; a successful party is prima facie entitled to the fruits of a judgment in their favour; and it is for the applicant to demonstrate a proper basis for a stay that will be fair to all parties. The question for the court is to ask what the interests of justice require. The applicant must show that it has an arguable case and that there are serious questions for the determination of the appellate court. As McColl JA explained in Kalafair Pty Ltd v Digitec (Australia) Pty Ltd [2002] NSWCA 383; (2002) 55 NSWLR 737 at [18]:
Thus the relevant principles are analogous to those which govern the grant of interlocutory relief before trial to protect the status quo. The appellant must show that the appeal raises serious issues for the determination of the appellate court and that there is a real risk that he will suffer prejudice or damage if a stay is not granted which will be redressed by a successful appeal. This requirement will be satisfied if the appeal will be rendered abortive or nugatory unless a stay is granted. If these pre-conditions are established the Court will then consider the balance of convenience.
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Perhaps of particular relevance here where the amount in issue is modest, the observations of the Court of Appeal in Carolan v AMF Bowling Pty Ltd t/as Bennetts Green Bowl [1995] NSWCA 69 were adopted in Penson v Titan (No 2) at [73]:
Granting of leave to appeal is far from automatic. In Carolan v AM[F] Bowling Pty Ltd [1995] NSWCA 69, followed in Zelden v Sewell [2011] NSWCA 56 at [22], Sheller JA said that an applicant for leave must demonstrate something more than that the trial judge was arguably wrong in the conclusion arrived at. Cole JA relied on a principle that where small claims are involved it is important that there be early finality in the determination of litigation, otherwise the costs that will be involved are likely to swamp the money sum involved in the dispute. Kirby P recognised that ordinarily it was appropriate to grant leave to appeal only concerning matters that involve issues of principle, questions of public importance or an injustice which is reasonably clear in the sense of going beyond what is merely arguable.
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A stay may be granted on terms: Alexander v Cambridge Credit Corporation at 697 (NSWLR). As Campbell AJA summarised the position in Penson v Titan (No 2) at [45]-[46]:
[45] When a stay is granted the court should endeavour to preserve the status quo by protecting the judgment creditor from the risk of loss by framing orders, which, as far as practical, ensure that the existing value of the judgment appealed against will still be available to the judgment creditors if the appeal fails: Kalifair v Digi-Tech at [28].
[46] One way in which this might be done is by requiring security as a condition of a stay; another is requiring an undertaking in the nature of a Mareva order: Kalifair at [28]-[32].
See also Mao v AMP Superannuation Limited [2017] NSWCA 296 at [7] per White JA.
Consideration
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An application for a stay pending an appeal is ordinarily heard by either the trial judge or the Court of Appeal but not by another puisne judge, hence, the plaintiffs’ amendment of its interlocutory process to seek a stay under section 67 of the Civil Procedure Act rather than rule 50.7 or rule 51.44 of the Uniform Civil Procedure Rules 2005 (NSW). Not being the judge at first instance, I am not imbued with familiarity with the judgment (or, in the case, multiple judgments) of Black J and am at something of a disadvantage to consider the proposed Notice of Appeal.
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That said, the proposed appeal is from Black J’s judgment of 3 July 2020 in which his Honour, having earlier determined that it was appropriate to make a gross sum costs order, proceeded to fix the quantum of the order. Consistently with this, the proposed grounds of appeal are directed to the quantum of the gross sum costs order, in particular, whether Black J erred by failing to adopt the plaintiffs’ expert evidence. That is not to say that the plaintiffs may not ventilate other issues but simply to say that that appears to be the focus of the proposed appeal.
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Where the difference between the amount suggested as appropriate by the plaintiffs’ expert witness and the amount fixed by his Honour was some $40,000, the small quantum in issue may reduce the prospects of leave being granted in the absence of an issue of principle or significance arising in the matter, which was not prominent in the draft Notice of Appeal. The fact that costs orders are discretionary, routinely made and thus plentiful may have a similar consequence. It was not demonstrated, at least to me, that the proposed appeal raises serious issues for the determination of an appellate court.
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Turning to balance of convenience considerations, the defendants’ submission that the ‘uncontested’ portion of the gross sum be paid as a condition of the grant of a stay is attractive, although I note the plaintiffs’ submission that the appeal is not limited to the quantum of the gross sum costs order but also as to whether it should have been made. Less attractive is the plaintiffs’ offer to pay the ‘uncontested’ portion into Court (rather than to the defendants) but only if the stay of the proceedings ordered by Black J on 27 July 2020 is also lifted. There is no appeal, as I understand it, from that stay. The plaintiffs’ proposed orders would denude the orders made by Black J on 27 July 2020 of effect by lifting the stay on the proceedings generally without the defendants receiving even the ‘uncontested’ portion of the gross lump sum nor being spared the further expense of defending these proceedings in circumstances where prima facie Black J was right.
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But the real difficulty I have is that, as far as I can see, the stay presently sought is without a purpose. These proceedings are presently stayed due to a combination of:
the plaintiffs’ failure to pay the gross lump sum costs assessed in the amount of $94,864; and
orders made on 27 July 2020 to stay the proceedings until the plaintiffs’ application for leave to appeal against the costs order is finalised.
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If I stay the costs order – effectively creating a ‘double stay’ – what will follow? The plaintiffs will not have to pay the costs until after the appeal is determined. So far as I can tell, that is what is going to happen in any event under the orders made by Black J on 27 July 2020. Thus, I am not prepared to grant a stay as I am not satisfied that the proposed appeal raises serious issues for the determination of an appellate court and the stay serves no purpose in proceedings which are already stayed.
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For these reasons I make the following order:
Dismiss the plaintiffs’ Interlocutory Process filed on 27 July 2020 seeking a stay.
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Decision last updated: 17 September 2020
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