Khneiger v Cookson - [2013] SASC 12

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
KHNEIGER & ANOR v COOKSON
[2013] SASC 12
Judgment of The Honourable Justice Stanley
1 February 2013
APPEAL AND NEW TRIAL - APPEAL - PRACTICE AND PROCEDURE - SOUTH AUSTRALIA - SECURITY FOR COSTS
APPEAL AND NEW TRIAL - APPEAL - PRACTICE AND PROCEDURE - SOUTH AUSTRALIA - STAY OF PROCEEDINGS
Applications by the respondent for security for costs and for payment out of the Suitors fund - application by the appellant for a stay of enforcement of the original judgment.
Held: Order made that the appellants must provide security for costs in the amount of $20,000 - special circumstances exist - should the appeal be unsuccessful, the respondent faces the real prospect of being unable to recover costs from the appellants.
At a later hearing, the appellants indicated that they were unable to provide security as ordered.
Held: Order made for the payment of $6,258.97 to the respondent out of the Suitors fund.
Appeal dismissed - appellant has indicated that they are not in a position to provide security and will not be pursuing the appeal.
Supreme Court Civil Rules 2006 Rule 295, referred to.
Dagenham Nominees Pty Ltd trading as Banwell Marine Services v Gary Shanks [2011] SASC 163, applied.

KHNEIGER & ANOR v COOKSON
[2013] SASC 12
Civil
STANLEY J:
Introduction

There are two applications by the respondent. An application for security for costs and an application for payment out of the Suitors fund of an amount of $6,258.87 to the respondent.
Background
The respondent brought action in the District Court against the appellants for damages over the purchase of a snack bar business. The respondent succeeded at trial. The appellants appealed, and the Full Court allowed their appeal and remitted the matter for retrial.
An order was made that the appellants have the costs of the appeal. There was an interim allocator given in relation to those costs in the sum of $6,258.87. The respondent was required to pay that amount into Court as a condition for a stay of enforcement of the appellants’ claim for the costs of the appeal. She did so on 2 July 2010.
Subsequently there was a final allocator in relation to the costs of the appeal entered in an amount of $35,500.
On retrial in the District Court the respondent obtained a judgment in the sum of $54,000 plus interest and costs. The amount of interest is still to be determined by the District Court. The respondent is seeking interest in an amount of $62,000.
In addition, liability for the costs of the first trial and the quantum of those costs are yet to be determined.
On 28 September 2012 the appellants filed a notice of appeal from the judgment of the District Court in the second trial.
On 13 November 2012 the respondent effected service on the appellants of bankruptcy notices. The payment required under the Bankruptcy Notice is $18,500, being the amount of the District Court judgment less the amount…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2013] SASC 12
Decision Date: 1 February 2013

CaseChat Overview and Summary

In Khneiger v Cookson, the respondent sought to recover damages from the appellants for the purchase of a snack bar business. The District Court initially ruled in favour of the respondent, but the Full Court allowed the appellants' appeal and remitted the matter for retrial. The respondent sought security for costs and payment from the Suitors fund in the event the appeal was dismissed. The appellants, who had successfully appealed against the District Court's decision, now faced a potential judgment against them. The respondent's application for security for costs and payment from the Suitors fund was based on the appellants' demonstrated financial difficulties and their inability to satisfy a potential costs order.

The central legal issues in this case were whether the appellants, who had the means to settle the District Court judgment but were unable to provide security for the costs of the appeal, were likely to be able to satisfy a costs order if the appeal was dismissed. The respondent argued that the appellants' financial situation made it likely they would be unable to pay the costs if the appeal was dismissed. The respondent also sought payment from the Suitors fund to cover an interim allocation of costs from the appeal. The court had to determine whether the appellants' financial situation warranted an order for security for costs and whether the respondent was entitled to payment from the Suitors fund.

The court found that the appellants were unlikely to be able to satisfy any costs order if the appeal was dismissed. It was noted that the appellants had the means to settle the District Court judgment but were unable to provide security for the costs of the appeal. The court concluded that the appellants' financial situation justified an order for security for costs under 6SCR 295(1)(g). Additionally, the court found that the respondent was entitled to payment from the Suitors fund to cover the interim allocation of costs from the appeal. The court granted the respondent's application for security for costs and payment from the Suitors fund.

The court ordered that the appellants provide security for the costs of the appeal in the amount of $33,620, as estimated by the respondent's solicitor. The court also ordered that the respondent be paid $6,258.87 from the Suitors fund to cover the interim allocation of costs from the appeal. The appellants were required to provide the security for costs within 28 days of the order, or the appeal would be dismissed.

Orders

Orders of the court

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Background

Background to the litigation

There are two applications by the respondent. An application for security for costs and an application for payment out of the Suitors fund of an amount of $6,258.87 to the respondent.Background The respondent brought action in the District Court against the appellants for damages over the purchase of a snack bar business. The respondent succeeded at trial. The appellants appealed, and the Full Court allowed their appeal and remitted the matter for retrial. An order was made that the appellants have the costs of the appeal. There was an interim allocator given in relation to those costs in the sum of $6,258.87. The respondent was required to pay that amount into Court as a condition for a stay of enforcement of the appellants’ claim for the costs of the appeal. She did so on 2 July 2010. Subsequently there was a final allocator in relation to the costs of the appeal entered in an amount of $35,500. On retrial in the District Court the respondent obtained a judgment in the sum of $54,000 plus interest and costs. The amount of interest is still to be determined by the District Court. The respondent is seeking interest in an amount of $62,000. In addition, liability for the costs of the first trial and the quantum of those costs are yet to be determined. On 28 September 2012 the appellants filed a notice of appeal from the judgment of the District Court in the second trial. On 13 November 2012 the respondent effected service on the appellants of bankruptcy notices. The payment required under the Bankruptcy Notice is $18,500, being the amount of the District Court judgment less the amount of the allocator. In the period subsequent to the reservation of judgment in the second District Court trial and the delivery of that judgment, the appellants disposed of property they owned at Wattle Park for an amount of $1,020,000. On the same day as settlement of the Wattle Park property, the first appellant purchased property at Beaumont as the trustee for the Khneiger Family Trust, for a purchase price of $515,000. The first appellant in an affidavit sworn on 14 December 2012 deposes to his capacity to borrow the judgment sum of $18,500 albeit with some difficulty. Otherwise he asserts that he is unable to provide security for the costs of the appeal due to a lack of funds.Security for costs The respondent applies for an order for security for costs of the appeal to the Full Court. By an affidavit of her solicitor, Brenton John Grant, he estimates the costs of the appeal likely to be incurred by the respondent capable of being recovered on a party/party basis if the appeal was dismissed to be an amount of $33,620. The respondent brings the application for security on the basis that on the available evidence the appellants are unlikely to be able to satisfy any costs order made against them in the event the appeal was dismissed. I am satisfied that is the case. 6SCR 295(1)(g) provides:The Court may, in special circumstances, order that security be given for the costs of an appeal.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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