Palermo Seafoods Pty Ltd v Lunapas Pty Ltd

[2015] NSWCA 149

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation:	Palermo Seafoods Pty Ltd v Lunapas Pty Ltd [2015] NSWCA 149
Hearing dates:	25 May 2015
Decision date:	25 May 2015
Before:	Leeming JA
Decision:	1.Dismiss appellant’s application for an adjournment. 2.The appellant to provide security for the respondents’ costs by paying into Court the sum of $20,000 or by otherwise providing security for that amount in a manner satisfactory for the security of the respondents. 3.Until that security is provided, the appeal is stayed. 4.Otherwise dismiss the notice of motion filed 23 April 2015. 5.The appellant pay the respondents’ costs of the Notice of Motion filed 23 April 2015.
Catchwords:	PRACTICE – appeals – security for costs – solicitor ceasing to act for appellant – appellant with history of default judgments against it – security ordered even though limited evidence of actual and anticipated costs
Category:	Procedural and other rulings
Parties:	Palermo Seafoods Pty Ltd ACN 116 746 859 (Appellant) Lunapas Pty Ltd ACN 104 180 742 (First Respondent) Luciano Menniti (Second Respondent)
Representation:	Counsel: L Green (Appellant) B Wright (Respondents) Solicitors: Gregg Lawyers (Respondents)
File Number(s):	2014/313606
Decision under appeal	Court or tribunal: Supreme Court of New South Wales Citation: [2014] NSWSC 792; [2014] NSWSC 1323 Date of Decision: 16 June 2014; 26 September 2014 Before: Young AJA File Number(s): 2013/206954

Ex tempore Judgment

1. LEEMING JA: By notice of motion filed 23 April 2015, the respondents seek security for the costs of the appeal which is brought by notice of appeal filed 22 December 2014 by the appellant, Palermo Seafoods Pty Ltd. There has previously been an application for the appeal to be dismissed as incompetent, by reason of the $100,000 threshold in s 101(2)(r) of the Supreme Court Act 1970 (NSW), but that application is not before me today. It is relevant only in terms of the quantum of security that is sought by the substantially successful respondent.

2. When the application was heard, Ms Green described herself as “an agent for the purposes of coming here today to request an adjournment”. She applied for the motion to be adjourned for two weeks. Her application was unsupported by any evidence whatsoever. She said that the former solicitors for the appellant had ceased to act and that a new solicitor, who was not named, had recently commenced acting. This appeal has already seen a new solicitor come onto the record since it was commenced who has ceased to act for the appellant.

3. The application for security for costs was previously adjourned on Palermo Seafoods’ application, and was set down for hearing today. Part of the basis of the application is the impecuniosity of the appellant. The history of the matter in this Court, coupled with the absence of any evidentiary basis for the adjournment that was sought by Ms Green, led me to dismiss her application. I should say that when it was made, no appearance had been filed on behalf of the appellant, which is a company, nor was there any indication that an appearance was imminently to be filed, save for what was said from the Bar table about a solicitor recently having been retained.

4. The application for security for costs thereafter proceeded ex parte. I was taken to an affidavit of service which persuaded me that the substantive affidavits upon which the applicants relied had been served upon Palermo Seafoods’ former solicitors at a time during which they continued to act for the appellant. I was also taken to a letter from the former solicitors, dated 25 April 2015, in which the solicitor confirmed that he had and would continue to forward all correspondence received in this matter to the Mr Palermo, who is the sole director and shareholder of Palermo Seafoods.

5. In those circumstances, I am satisfied that Palermo Seafoods has notice of the application and that it is appropriate to proceed. The evidence before me comfortably establishes that this is a case where, in the event of success, there is every prospect that the respondents will be unable to recover their costs.

6. The ASIC company extracts tendered by the applicant indicate that there has been one insolvency notice and six court actions involving Palermo Seafoods Pty Ltd, including an application for a winding up order received by ASIC on 28 February 2014. That appears to have been preceded by a notice of application for a winding up order dated 6 January 2014.

7. There is a history of default judgments, including one which appears to be the subject of rent owed to Lunapas Pty Ltd but, of present relevance, no fewer than five default judgments in Victoria, Southport Queensland, Maroochydore Queensland, North Sydney and Balmain by various relatively small creditors. The details are: Australian Food Group Pty Limited, $3,146; Reward Supply Company Pty Limited, $5,705; the Workers Compensation Nominal Insurer, $6,671; Mooloolah River Fisheries Pty Limited, $9,368 and Hanave Pty Limited trading as Cyndan Chemicals, $1,761. The application for security for costs was filed relatively promptly after the notice of appeal was filed (the appellant has not filed its submissions in support of the appeal). The sustained history of Palermo Seafoods Pty Ltd failing to pay creditors leading to the default judgments I have referred to above, means that this is a plain case for the exercise of the power under s 1335 of the Corporations Act 2001 (Cth) for security for costs to be ordered.

8. The amount of security that is sought is $43,500. The affidavit identifying those costs does no more than to list seven items comprising costs, namely: attendance and preparation by counsel, $16,900; filing fees, $2,100; travel, $3,300 (to date); professional fees, preparation of book, $5,000; professional fees for hearing, $6,600; counsel fees for hearing, $6,600; travel hearing, $3,000. There is no articulation of the hourly rates of counsel or solicitor. It is also plain that some of the costs already incurred are attributable to an application for dismissal of the appeal as incompetent, in respect of which a motion and substantial submissions have been filed. The proposition that an amount of $5,000 is required by way of professional fees for the preparation of book is not one which, as a bare allegation, gives me any comfort that those costs will in fact be incurred. It is the appellant, not the respondent, who has the primary responsibility to prepare appeal books. It is a matter for the respondents to the appeal whether they wish to continue to retain interstate solicitors and counsel (I note that the travel expenses are one-sixth of the total amount claimed). The materials before me do not provide any detailed approach to identifying which of the $16,900 costs are attributable to the motion before me today, as opposed to the motion for dismissal for want of competence. Even where a relatively detailed and more realistic estimate of actual and apprehended costs of an appeal is provided in the evidentiary material, it is the ordinary course for only a fraction of those costs to be ordered by way of security. That reflects the fact that the actual costs incurred will likely be less than any costs ordered in the event that the appeal is dismissed with costs following the event.

9. However, for all the deficiencies of their quantification, the costs involved here are relatively small and the history of default judgments makes this a strong case for security. In my view the appropriate course, rather than adjourning the application and inviting a more detailed articulation of the costs incurred and to be incurred, is to take a relatively broad brush approach.

10. In all of the circumstances, I propose to order that the appellant provide security for the respondents’ costs by paying into court the sum of $20,000 or by otherwise providing security for that amount in a manner satisfactory to the respondents. Until that security is provided, the appeal will be stayed.

11. As indicated during argument, I do not propose to make an order that in the event that security is not provided the appeal be dismissed, in the circumstances where this application has been made ex parte and it has been said from the Bar table that a new solicitor has been or is about to be retained by the appellants.

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Decision last updated: 29 May 2015