Palermo Seafoods Pty Ltd v Lunapas Pty Ltd

[2015] NSWCA 175

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation:	Palermo Seafoods Pty Ltd v Lunapas Pty Ltd [2015] NSWCA 175
Hearing dates:	27 April 2015
Date of orders:	27 April 2015
Decision date:	27 April 2015
Before:	JC Campbell AJA
Decision:	Appeal not dismissed as incompetent, but notice of motion seeking to have it dismissed as incompetent stood over for further hearing with the appeal
Catchwords:	PRACTICE AND PROCEDURE – appeal – application to have appeal declared incompetent pursuant to s 101(2)(r) of the Supreme Court Act 1970 (NSW) – whether realistic prospect of $100,000 or more being obtained on a successful appeal - application to strike out appeal declined
Legislation Cited:	Supreme Court Act 1970, s 101(2)(r)
Cases Cited:	Gillard v Hunter Wire Products Proprietary Limited [2001] NSWCA 450 Grygiel v Baine [2004] NSWCA 377 Jardin v Metcash Limited [2011] NSWCA 409 Nadgovski v Crnojlovic [2008] NSWCA 175 Palermo Seafoods Pty Ltd v Lunapas Pty Ltd [2014] NSWSC 792 Palermo Seafoods Pty Ltd v Lunapas Pty Ltd (No.2) [2014] NSWSC 1323 Pawlowska v Zajglic [2011] NSWCA 118
Category:	Principal judgment
Parties:	Palermo Seafoods Pty Ltd (Appellant) Lunapas Pty Ltd (First Respondent) Luciano Menniti (Second Respondent)
Representation:	Counsel: A Busby (Appellant) B Wright (First and Second Respondents) Solicitors: McLaughlins Lawyers (Appellant) Gregg Lawyers (First and Second Respondents)
File Number(s):	2014/313606
Decision under appeal	Court or tribunal: Supreme Court of New South Wales Jurisdiction: Equity Division Citation: [2014] NSWSC 792 [2014] NSWSC 1323 Date of Decision: 16 June 2014 26 September 2014 Before: Young AJA File Number(s): 2013/206954

Judgment

1. JC CAMPBELL AJA: There are two notices of motion that are listed for hearing before me today. The first is a notice of motion that the respondents to the appeal filed on 23 April seeking security for costs. It is supported by two affidavits of Mr Gregg, sworn 22 April 2015. An application is made for an adjournment of that notice of motion.

2. The solicitor who was formerly acting for the appellant in the proceedings, who was the respondent to the notice of motion, has ceased to act. He filed a notice of ceasing to act last week.

3. There has been no opportunity for the new affidavit material to be met. In my view it is appropriate for there to be an opportunity for that material to be met.

4. I stand the notice of motion seeking security for costs over to Monday 25 May 2015.

5. I direct the respondent to that notice of motion to file and serve any affidavit material on which he seeks to rely concerning it by 5.00 pm Monday 18 May 2015.

6. There is another notice of motion listed for hearing before me today which is an application made pursuant to a notice of motion filed on 9 February 2015. It seeks to have the appeal dismissed as incompetent. Because the notice of motion has been served for a longer period and the material was available at a time when the appellant had a solicitor acting for him I decline an application for adjournment of that notice of motion.

7. I note the notice of motion filed on 9 February 2015. I note the affidavits for Ian Kennedy, sworn 24 March 2015, of Luciano Menneti, sworn 2 April 2015 and of John Rossiter, sworn 2 April 2015.

8. The notice of motion seeks an order that the appeal be declared incompetent pursuant to s 101(2)(r) of the Supreme Court Act 1970 and that the appeal be dismissed, together with an order for costs.

9. The proceedings below arose when the respondent had terminated the lease of premises in Tweed Heads that it had leased to the appellant. The appellant had conducted a business of selling seafood, and a seafood restaurant, in those premises.

10. The decision in the matter was given by his Honour, Acting Justice Young. His Honour delivered two judgments.

11. In the first judgment (Palermo Seafoods Pty Ltd v Lunapas Pty Ltd [2014] NSWSC 792) his Honour held that the lease had been terminated invalidly because it had been terminated two weeks early but that the appellant had not proved it had suffered any loss as a consequence of that termination. However, his Honour was not satisfied that all the questions involved in the case had been properly argued and so stood the case over for further submissions.

12. The second judgment (Palermo Seafoods Pty Ltd v Lunapas Pty Ltd (No.2) [2014] NSWSC 1323) was given following those further submissions. The prayers for relief in the statement of claim included:

“7.   A declaration that on or about 8 May 2013 and the events that followed the first defendant and/or the second defendant held the assets of the business styled “Menniti Seafoods” conducted by the plaintiff at the premises, including plant, equipment and goodwill on constructive trust for the plaintiff.

8.   An order that the first defendant and/or the second defendant account to the plaintiff for the assets of the business styled “Menniti Seafoods”, and account to the plaintiff for any profit gained in consequence of the use of such assets.

9.   An order that there be an inquiry as to the damages suffered by the plaintiff.

10.   In the alternative Damages and/or Equitable damages.

11.   Interest on any such damages.”

13. The basis for that claim was that at the time that the lease was terminated the lessee still had plant and equipment in the premises. The statement of claim including the following allegations:

“54.   In consequence of such actions the first defendant repudiated the lease and option lease which repudiation was accepted by the plaintiff.

Particulars

On 10 May 2013 the plaintiff sought access to the premises to retrieve its plant and equipment specified in schedule B to this claim, which access was denied by the first defendant.

55.   In consequence of such repudiation the plaintiff suffered loss and damage

Particulars

(a)   The value of the business; and/or

(b)   Future profits; and/or

(c)   Plant and equipment as particularised in schedule B.”

14. Schedule B to the statement of claim was a detailed list of items which the appellant claims to have been deprived. The schedule had a heading which stated it was the replacement value of those items which was being itemised, but a column heading said that it was the costs of the items that was being itemised. The total amount appearing in schedule B was over $520,000.

15. The judge dealt with this issue at paragraphs [33] to [63] of his second judgment. Essentially he dismissed the claim because any such claim should have been brought in detinue or conversion, and the claim that the plaintiff had made in the statement of claim was that the items left in the premises were held by the respondent on a constructive trust.

16. All of the grounds of appeal relate to the primary judge’s dismissal of the claim concerning the items that remained in the premises. Those grounds all contend, in essence, that the judge should have dealt with the claim concerning the items that had been left in the premises and given judgment for the appellant concerning them.

17. There was evidence before the judge prepared by an accountant, Mr Joel Gargiulo, which estimated the value of certain fixed assets connected with the seafood business at $285,000 written down value, and that in addition there was approximately $60,000 worth of stock.

18. It appears - although this is not altogether clear - that the appellant also gave some evidence of the replacement value of the assets as being a little over $520,000 and that there was approximately $60,000 worth of stock.

19. There is evidence before me today, but which Mr Wright, counsel for the respondent, tells me was not before the judge, that the fair market value and continued use of the fixed-assets in October 2013 was a little over $184,000, but that their forced liquidation value was a little over $44,000.

20. In support of the notice of motion there is an affidavit of Mr Menniti, who appears to be the guiding spirit of the lessor, who gives some evidence that is not said to have been before the trial judge which concerns the likely cost the appellants would have incurred for reinstating the premises had they removed their plant and equipment from it.

21. Mr Menniti also gives some evidence – also apparently not before the primary judge - about what actually happened concerning the items that were in the premises. Mr Menniti’s affidavit also questions the impartiality of Mr Gargiulo because he is a relative of the men who stand behind the lessee.

22. Another affidavit in support of the notice of motion was sworn by Mr John Rossiter, accountant. It gives some evidence that was not said to have been before the trial judge about valuation of the items in question, and the circumstances in which they came to be left in the premises.

23. Section 101(2)(r) of the Supreme Court Act 1970 (NSW) requires leave to appeal from

“a final judgment or order in proceedings of the Court, other than an appeal:

(i) that involves a matter at issue amounting to or of the value of $100,000 or more, or

(ii) that involves (directly or indirectly) any claim, demand or question to or respecting any property or civil right amounting to or of the value of $100,000 or more.”

24. In Gillard v Hunter Wire Products Proprietary Limited [2001] NSWCA 450 Priestley JA said:

“[11]   What then is meant by “at issue” on appeal? The legislature cannot have meant whatever variation from the judgment below might be claimed on appeal. Were that so, an appellant appealing against quantum of damages would have an appeal as of right merely by claiming $100,000 more or less (as the case may be) than the damages assessed below, irrespective of merit. The phrase “at issue” must be construed as meaning truly at issue or, inversely, not unrealistically at issue.

[12]   It follows that an appellant, appealing against quantum of damages, has an appeal as of right if there is a realistic prospect of changing the result by $100,000 or more. Otherwise leave is required.”

That statement has been referred to with approval on many times, including in Grygiel v Baine [2004] NSWCA 377 at [30] and Nadgovski v Crnojlovic [2008] NSWCA 175 at [9].

25. There is authority in Pawlowska v Zajglic [2011] NSWCA 118 at [14] to [21] and Jardin v Metcash Limited [2011] NSWCA 409 at [21] that an appeal involves a claim demand or question concerning a civil right amounting to or of the value of $100,000 or more only if there is a realistic and credible prospect that success on the appeal would confer on the appellant a benefit worth $100,000 or more.

26. An order that strikes out an appeal on the ground that its incompetent, through not involving an amount of $100,000 or more, is not quite as severe as an order summarily dismissing an appeal. That is because even after the appeal was struck out as incompetent, it is possible for an application for leave to appeal to be brought.

27. However, an application for leave to appeal would be decided by a bench of two judges, or alternatively it would be listed for hearing concurrently with the appeal by a bench of three judges.

28. Sitting as a single judge it would be appropriate for me to strike out the appeal as incompetent only if it I was satisfied there was not a realistic prospect of $100,000 or more being obtained as a result of success in the appeal.

29. In my view there is scope for legitimate argument about whether the issues that were raised in the proceedings permitted the appellant to claim the value of the goods in the proceedings.

30. There are questions about whether the additional evidentiary material on which the respondent sought to rely before me would be admitted on the appeal. There are questions about the proper basis for valuation of any equipment that was left in the premises.

31. The evidence of Mr Gargiulo was admitted before the judge and his Honour has not, in his reasons for judgment, rejected it.

32. It may be that that evidence should not ultimately be accepted but that is not a matter that is capable of being decided by me on this sort of a hearing today. If the evidence were to be accepted, a value of more than $100,000 could result.

33. Success on the arguments that I have listed could result in the appellants receiving a benefit of more than $100,000 from the appeal. I express no view about those arguments save that they strike me as possible ones.

34. In the circumstances, I decline to strike-out the appeal as incompetent today. I stand the notice of motion over for further hearing with the appeal. I take that course, rather than simply dismissing the motion, because if on closer examination of the evidence than was possible today it becomes clear that less than $100,000 is involved, and if the prospects are as weak as Mr Wright submits, a course that the bench hearing the appeal might choose to adopt is to strike it out as incompetent, and decline to grant leave to appeal, rather than give full reasons concerning the entire appeal. The costs of today are reserved.

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Decision last updated: 30 June 2015