Ottavio v Hayvio Pty Ltd

[2011] NSWSC 1125

Supreme Court

New South Wales

Medium Neutral Citation:	In the matter of Hayvio Pty Ltd - Ottavio v Hayvio Pty Ltd [2011] NSWSC 1125
Hearing dates:	12 September 2011
Decision date:	20 September 2011
Jurisdiction:	Equity Division - Corporations List
Before:	Ward J
Decision:	Summary judgment for part of plaintiff's claim and orders re costs in respect thereof. Stay of enforcement of part of the judgment sum pending determination of the proceedings, conditional upon payment into Court or securing of balance of judgment sum.
Catchwords:	CIVIL PROCEDURE - summary judgment application - loan conceded to be repayable - principles applicable to application for stay of judgment - HELD - summary judgment granted - stay of part of judgment sum conditional on payment into court of balance or other security - COSTS - costs orders made in relation to summary judgment application
Legislation Cited:	Civil Procedure Act 2005 (NSW) Uniform Civil Procedure Rules 2005 (NSW)
Cases Cited:	Adeels Palace Pty Ltd v Moubarah; Adeels Palace Pty Ltd v Najeem (No 2) [2009] NSWCA 130, Alexander v Cambridge Credit Corporation (1985) 2 NSWLR 685 Bowen Investments Pty Limited v Tabcorp Holdings Limited (No 2) [2008] FCAFC 107 Brott v Grey [2000] FCA 1727; (2000) 181 ALR 617 Costain Australia Ltd v State Superannuation Board (unreported Brownie J, 22 February 1991) Dey v Victorian Railways Commissioners (1949) 78 CLR 62 Dodds Family Investments Pty Limited (formerly Solar Tint Pty Limited) v Lane Industries Pty Limited (1993) 26 IPR 261 Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (No 3) (1998) 30 ACSR 20 General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 James v Surf Road Nominees Pty Limited (No 2) [2005] NSWCA 296 Lavender View Regency Pty Limited v North Sydney Council (No 2) [1999] NSWSC 775 Leallee v Commissioner of the NSW Department of Corrective Services [2009] NSWSC 518 Ogilvie v Adams [1981] VR 1041 Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 Sahab Holdings Pty Limited v Registrar-General and Anor (No 3) [2010] NSWSC 403 Switz Pty Ltd v Glowbind Pty Ltd [2000] NSWSC 222; (2000) 18 ACLC 343 Trade Practices Commission v Nicholas Enterprises Pty Limited (No 3) (1979) 42 FLR 213 Uniline Australia Limited (ACN 010 752 057) v Sbriggs Pty Limited (ACN 007 415 518) and Anor (No 2) [2009] FCA 920; (2009) 82 IPR 56 Windsurfing International Incorporated v Petit (1987) AIPC 90-441
Category:	Procedural and other rulings
Parties:	Antonio Ottavio (Plaintiff/Cross-Defendant) Hayvio Pty Ltd (First Defendant/First-Cross Claimant) Saso Petrovski (Second Defendant/Second Cross-Claimant) Paul Pannozzo (Third Defendant/Third Cross-Claimant)
Representation:	Counsel R D Marshall (Plaintiff/Cross-Defendant) N Potts (Defendants/Cross-Claimants) Solicitors Argyle Lawyers Pty Ltd (Plaintiff/Cross Defendant) Vision Law (Defendants/Cross-Claimants
File Number(s):	11/135866

Judgment

1. HER HONOUR : This matter was referred to me on 12 September 2011 from the Corporations List judge for the hearing of two applications. The substantive proceedings concern an oppression suit by the plaintiff who is one of three shareholders and directors of the first defendant company. The applications before me were: first, an application by the plaintiff, seeking a variation to the interlocutory regime whereby (by consent between the parties) amounts (representing what it is said would have been the plaintiff's usual drawings out of the business) are being paid on a monthly basis into a solicitors' trust account pending determination of these proceedings (the variation so sought being in order to permit the plaintiff to receive part of that monthly drawing pending the hearing, on the basis of the plaintiff's hardship), as well as orders in relation to the provision of particulars of the defence and for summary judgment on a particular aspect of the claim; and the second application being that of the defendants for leave to amend their cross-claim.

1. I ruled on the respective motions on the day, save as to the application for summary judgment. I reserved my decision on that aspect in order to permit Counsel for the defendants, Mr Potts, to serve further written submissions addressing particular authorities which I had raised during the course of argument. There has been an exchange of short written submissions on that point (and on the consequences flowing from the acceptance of the second defendant that summary judgment is appropriate in relation to the claim in question). I now make orders in relation to that one outstanding aspect of the applications the before me.

Summary judgment application

1. The application for summary judgment relates to the relief claimed in paragraphs 5 and 6 of the Statement of Claim, namely a claim against the second defendant (Mr Saso Petrovski) for damages in contract in the sum of $40,000 (by reason of the alleged failure of Mr Petrovski to repay monies the subject of loans from Mr Ottavio as pleaded in paragraphs [59] - [64] of the Statement of Claim) plus interest at the rate of 6.5% on that amount from 10 January 2009 up to judgment.

1. Mr Petrovski does not dispute that he received a loan (in two instalments) from Mr Ottavio between about October 2008 and 10 January 2009 and has deposed in his affidavit sworn 12 August 2011 that he intended to repay the loan ([11]). However, it was submitted that the loan was not yet repayable (on the basis of Mr Petrovski's evidence that the loan was given on the basis that he could repay the loan "whenever" ([8] and [9]). (For Mr Ottavio, it was contended that the loan was given on the term that it was repayable on demand (Statement of Claim paragraph [61]) and that demand had been made therefor.)

1. Mr Petrovski also disputed that the loan was given on terms that he pay interest of 6.5% per annum on the loan. (Reference was made to the pleading in which the only terms of the loan as pleaded were that "the loans made by Ottavio to Petrovski were made on the term such that the loans were repayable by Petrovski on demand by Ottavio" ([61], Statement of Claim). Mr Potts noted that there was no further (undisputed) evidence as to the terms of the loan. It is admitted that the loan remains unpaid.

1. It is further conceded that Mr Ottavio made a demand for the repayment of the $40,000 loan on 24 March 2011 (and since then has made subsequent demands). Mr Petrovski denies, however, that any demand was made upon him by Mr Ottavio or his wife, Mrs Antonella Ottavia, for repayment of loan before 24 March 2011 (Defence [28]).

1. Mr Petrovski opposed the entry of summary judgment on the ground that he has a cross claim and/or setoff against Mr Ottavio in the sum of $17,997 ([37] of the Amended Cross Claim) together with a claim for pre-judgment interest thereon in accordance with section 100 of the Civil Procedure Act 2005 (NSW).

1. Pursuant to Part 13 rule 1 of the Uniform Civil Procedure Rules , the court may give judgment for the plaintiff on its claim or part of its claim where there is evidence on the facts on which the claim or part of the claim is based and there is evidence that there is no defence as to the claim or part thereof (or no defence except as to the amount of any damages claim). Summary judgment may therefore be obtained for part of a claim ( Costain Australia Ltd v State Superannuation Board (unreported Brownie J, 22 February 1991). Of course, a party will not be denied a hearing on the merits unless the absence of a defence is clearly demonstrated, having regard to the tests application in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 and Dey v Victorian Railways Commissioners (1949) 78 CLR 62).

1. Having regard to the admission by Mr Petrovski that there was a loan and that it remained unpaid, notwithstanding the demands for repayment, the only question was as to whether the loan was yet repayable (or whether it was only repayable at some indefinite time in the future, at the discretion of either Mr Petrovski or Mr Ottavio).

1. It was in this context that I raised with Counsel the applicability of the reasoning in Ogilvie v Adams [1981] VR 1041 (which was noted in Switz Pty Ltd v Glowbind Pty Ltd [2000] NSWSC 222; (2000) 18 ACLC 343), namely that, in the absence of an agreement as to the time at which the loan would be repaid, this would be characterised at law as a loan repayable on demand.

1. In Ogilvie , Fullagar J ( holding that, when money is advanced on terms that it is to be repayable "on demand", then the cause of action for recovery accrues on the date of the advance without the need for any demand) said (at 1043):

The common law has always regarded the fact of indebtedness as a continuing detention by the debtor of the creditor's money, and this whether the creditor brought an action of debt or an action in indebitatus assumpsit. Therefore if A lends money to B, then instantly B is detaining A's money. In order to prevent a cause of action for recovery arising in A instantaneously on paying the money, the parties must expressly contract out of that situation by words clearly inconsistent with that situation. The courts have long since settled it that a mere statement or agreement that the money is repayable on demand (or request or at call) is not sufficient to contract out of that situation where all else that is known of the terms of the contract is that A has paid money to B by way of loan. The lender's cause of action still arises instanter on the receipt of the money by the borrower, so that the lender's cause of action becomes statute barred at the expiry of six years after the receipt of the money. (my emphasis)

1. In Switz , Hodgson CJ in Eq (as his Honour then was) noted that the prima facie position where there were loans by a company to associated companies and persons, and there was no evidence that this money was not immediately due and payable, (as shown by Ogilvie v Adams ), was that such loans would be immediately payable, without demand. (See also Brott v Grey [2000] FCA 1727; (2000) 181 ALR 617 per Cooper J.)

1. Having noted those authorities, and in particular Ogilvie v Adams , it was conceded by Mr Potts that (in light of Mr Petrovski's evidence that no firm period of time was expressed as a condition for repayment of the loan save that it be "whenever"), the loan is one that would be repayable on demand or at least within a reasonable time period following the making of the demand.

1. Mr Petrovski nevertheless maintained his position that there was no term in relation to the payment of interest on the loan (and on an application for summary judgment I agree that there would be no basis for a finding that there was a contractual entitlement to interest).

1. Mr Potts did concede that it would be open to the court to award pre-judgment interest from 24 March 2011 (that being the first date on which it is accepted that a demand for repayment of the moneys was made). (He also submitted that the date for pre-judgment interest on the relevant part of the cross claim, were that to be successful, would be from an earlier date in 2004.) Mr Potts provided interest calculations on both the loan claimed (from March 2011) and on the cross-claim (from 2004). Counsel for Mr Ottavio (Mr Marshall) broadly accepts the interest calculations (although submitting that the 2004 claim is likely to be statute barred - a point which is not taken in regard to the stay but is, as I understand it, a point that may be raised on the hearing of the cross-claim in due course).

1. There seems, therefore, to be no dispute that there was a loan and that (on Mr Petrovski's own evidence) that was a loan repayable on demand (such that damages would flow if the loan were not repaid at least within a reasonable time of the making of a demand) and it was the common position of the parties that the plaintiff would be entitled to summary judgment on the loan should be entered. I consider that there should also be an order for pre-judgment interest on the amount of the outstanding loan calculated as from 24 March 2011 (that was calculated by Mr Potts at $1,687.00 as at 15 September 2011 - on my calculation that would now be increased to $1,735.30 as at today's date, i.e. an additional 5 days' interest).

Stay

1. The question then is as to whether, and on what terms, there should be a stay on the enforcement of that summary judgment pending determination of Mr Petrovski's cross-claim.

1. Mr Petrovski seeks a stay (in the exercise of the court's discretion pursuant to ss 67 and 135 of the Civil Procedure Act ) of enforcement in respect of the difference between the amount awarded in respect of the loan (including any pre-judgment interest) and the amount claimed by him way of set-off or cross claim against the plaintiff (including the potential amount of pre-judgment interest on that claim), pending the determination of his cross claim at the final hearing. Mr Ottavio did not oppose such a stay (albeit on certain terms).

1. Mr Potts sought an order that Mr Petrovski have not less than 28 days from the handing down of judgment for payment of the amount of the judgment debt after taking into account a stay in respect of the cross-claim amount. The calculations differed from the amount so payable being $11,297.00 or $11,384.00, which I think is simply a function of the dates on which interest is calculated. Mr Marshall does not cavil with the suggestion that the due judgment debt (i.e. the balance after taking into account the cross-claim) should be paid within 28 days,

1. On my calculations, using the interest schedule provided by Mr Potts, pre-judgment interest payable on the sum claimed by Mr Ottavio as at and including 20 September 2011 is the sum of $1,735.30 (i.e. a total judgment sum of $41,735.30). Mr Petrovski, on the other hand, has claimed the sum of $17,997 (and sought pre-judgment interest thereon in the amount of $12,306.00 up to 15 September 2011, which I have updated to $12,327.78 as at 20 September 2011 again using Mr Potts' schedule), namely a sum of $30,324.78. The balance to be paid within 28 days would therefore be $11,410.52. (If there is any correction required to my interest calculations then I give the parties liberty to apply within 2 days for such correction to be made.)

1. Mr Ottavio, however, contends that the stay should not be without terms and seeks an order that Mr Petrovski pay into Court, or otherwise give security satisfactory to Mr Ottavio, for the balance (on my calculations of $30,324.78. Mr Marshall submits that a reasonable period of time (two months) could be afforded to Mr Petrovski for that purpose.

1. As to the suggestion that the balance of the judgment debt (as stayed) should be paid into Court or otherwise secured, Mr Potts submits that no such order should be made. It is noted that on ordering a stay there is a discretion as to whether such an order should be made unconditionally or on terms. Mr Potts submits that the effect of such an order would be onerous on Mr Petrovski (and is essentially a means of securing the amount of Mr Ottavio's judgment in a manner similar to that applicable on an application for security for costs, should the Mr Petrovski's claim or set-offset prove unsuccessful at hearing.

1. Mr Potts submits that there is no evidence that Mr Petrovski would be unable to pay the outstanding amount of the judgment, if stayed, should his case prove unsuccessful and submits that the evidence to date as to Mr Petrovski's financial position is that he is a director and shareholder in a successful business.

1. In Adeels Palace Pty Ltd v Moubarah; Adeels Palace Pty Ltd v Najeem (No 2) [2009] NSWCA 130, Hodgson JA affirmed that the principles on which a stay of a judgment or order may be granted are those set out in Alexander v Cambridge Credit Corporation (1985) 2 NSWLR 685 (namely that, prima facie, the successful party is entitled to the benefit of a judgment but a stay may be granted where the applicant demonstrates an appropriate case to warrant the exercise of discretion in its favour) but said that even where the usual requirements for a stay are met (there speaking of the requirements in the context of a stay in connection with an application for special leave to appeal to the High Court) the onus remains on an applicant to demonstrate "a proper basis for a stay that will be fair to all parties".

1. In Adeels , Hodgson JA considered that the onus referred to in Alexander meant that "unless the circumstances make it reasonably clear that delay will not involve a risk of diminished ability to pay, there is an onus on an applicant to show that there is no such risk of this kind as to justify refusing a stay or imposing conditions to minimise the risk". Thus, his Honour considered that it may be necessary for an applicant for a stay to bring evidence excluding the risk of a diminished ability to pay or showing it is small (though not in terms suggesting that it was fatal to an application for a stay if the applicant did not do so). It seems from his Honour's judgment that in the absence of evidence of this kind, this would be a factor tending towards the imposition of security for the grant of a stay.

1. As recognised in Adeels the balance to be struck is for any stay to be on a basis fair to all the parties. In the present case, although Mr Petrovski is a shareholder of a company which the evidence suggests is running a successful business (and is drawing a monthly amount in the order of $15,000), the suggestion that it would be onerous to require him to pay the balance of the judgment into court or otherwise secure that amount runs counter to the proposition that the stay would not involve a risk of a diminished ability to pay. In the circumstances, I consider that in the absence of evidence that excludes the risk of a diminished ability to pay (and having regard to the need for a stay to be on a fair basis to the judgment creditor), I consider that the appropriate order is for the stay to be conditional on the payment into Court (or otherwise on the proffering of security in a form acceptable to Mr Ottavio) of the amount of the judgment debt so stayed within 2 months.

Costs

1. Finally, there is a dispute between the parties as to what costs orders should be made in relation to the summary judgment. Mr Marshall submits that the orders made on the present application should include costs orders in favour of Mr Ottavio in respect of the issue on which summary judgment was obtained but that the assessment of those costs ought to await the final outcome of these proceedings, as a matter of convenience.

1. Mr Potts submits that, as both parties have gained something from the proposed orders and Mr Ottavio has not pressed his claim in paragraph [6] of the Statement of Claim for interest running from the inception of the loan at 6.5% per annum, the appropriate order is that each party should pay its own costs in relation to prayer 1 of Mr Ottavio's Amended Interlocutory Process dated 9 September 2011.

1. There is a broad discretion in relation to costs ( Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72) and that the general rule is that costs follow the event. That requires determination as to what is in fact the event. In Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (No 3) (1998) 30 ACSR 20, Young J, as his Honour then was, considered that it was unwise to be too technical about what was meant by an event or issue in this context and that one should look at issues not as if they were pleaded issues but to approach the matter with a broad brush.

1. There is authority for the proposition that in certain circumstances it may be appropriate in a costs order to reflect the fact that the successful party has failed on one or more issues in the proceedings (see, for example, Lavender View Regency Pty Limited v North Sydney Council (No 2) [1999] NSWSC 775 per Rolfe J; Uniline Australia Limited (ACN 010 752 057) v Sbriggs Pty Limited (ACN 007 415 518) and Another (No 2 ) [2009] FCA 920 ; ( 2009) 82 IPR 56 per Greenwood J; Leallee v Commissioner of the NSW Department of Corrective Services [2009] NSWSC 518 per Price J; Sahab Holdings Pty Limited v Registrar-General and Anor (No 3) [2010] NSWSC 403 per Slattery J at [36]). In Windsurfing International Incorporated v Petit (1987) AIPC 90-441 Waddell J (as his Honour then was) referred, with general approval, to decisions to the effect that a successful party should have the whole costs of the proceedings, including the costs of an issue on which that party had failed unless in respect of that issue the successful party had unfairly, improperly or unnecessarily increased the costs but added that in certain contexts, courts had referred to distinct issues with the result that the general costs might go to the party which on the whole succeeded in the action but where the other party might have its costs on separate issues on which that party succeeded. His Honour's decision has been taken in subsequent decisions to suggest that in an appropriate case a costs order may be moulded to reflect the degree of success on distinct issues.

1. Caution has, however, been expressed in various cases as to the need for there to be (if not exceptional circumstances) very clear circumstances, in which the discretion to apportion costs across issues should be exercised, and I refer in that regard to Trade Practices Commission v Nicholas Enterprises Pty Limited (No 3) (1979) 42 FLR 213 .

1. Ultimately, as made clear in Bowen Investments Pty Limited v Tabcorp Holdings Limited (No 2) [2008] FCAFC 107, costs are in the Court's discretion and fairness should dictate how that discretion is to be exercised and whether that should be an issue by issue approach or the application of a traditional rule. In Dodds Family Investments Pty Limited (formerly Solar Tint Pty Limited) v Lane Industries Pty Limited (1993) 26 IPR 261 ( which was cited by the Court of Appeal in James v Surf Road Nominees Pty Limited (No 2) [2005] NSWCA 296) in the Federal Court, Gummow, French and Hill JJ noted that where there was a mixed outcome in proceedings the question of apportionment was very much a matter for discretion for the trial judge, and that mathematical precision would be illusory in the exercise of discretion often depending upon matters of impression and evaluation.

1. In the present case, although the claim for interest on the loan was not pressed, the event in question was the claim for summary judgment on the loan (denied by Mr Petrovski on the basis that the loan was not repayable). Ultimately, Mr Ottavio succeeded in obtaining summary judgment on that claim (albeit not for the interest component initially claimed). In my view the costs should follow that event and Mr Ottavio should have an order for his costs referable to the claim in respect of that loan, such costs to be assessed and payable at the conclusion of the hearing and determination of these proceedings.

Orders

1. For the above reasons, I now order as follows:

1. There be judgment for the plaintiff against the second defendant in the amount of $40,000.00 plus pre-judgment interest up to and including today's date ($41,735.30) in regard to the claims made in paragraph 5 of the Statement of Claim ("Judgment Sum").

2. Of the Judgment Sum, $11,410.52 is payable by the second defendant to the plaintiff within 28 days. Subject to order 3 below, the balance of the Judgment Sum is to be payable on the final determination of these proceedings and subject to any orders made on the final determination of these proceedings in relation to the second defendant's cross-claim or claim for set-off against the plaintiff. Enforcement of the judgment entered in Order 1 is therefore stayed (on the condition set out in order 3 below) pending the final outcome of these proceedings but only as to the amount of $30,324.78.

3. Insofar as order 2 effects a stay of the payment of the balance of the Judgment Sum (over and above the sum of $11,410.52) until the determination of the proceedings, this is conditional upon payment of the amount of $30,324.78 into Court (or the securing of that sum in a manner otherwise acceptable to the plaintiff by 19 November 2011), failing which the stay shall be at an end and the balance of the Judgment Sum shall become immediately due and payable.

4. The second defendant pay the plaintiff's costs of these proceedings in relation to prayer 1 of the Plaintiff's Amended Interlocutory Process dated 9 September 2011, such costs to be assessed and payable on the determination of these proceedings.

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Decision last updated: 20 September 2011