Petty, J. v Penfolds Wines P/L

[1993] FCA 927

927  , 73

JUDGMENT NO. ........ ........ .. ......, .B, .

IN THE FEDERAL COURT OF AUSTRALIA	)
)
NEW SOUTH WALES DISTRICT REGISTRY )	No NG741 of 1993

)

GENERAL DIVISION )

BETWEEN:  JOHN PETTY
Appellant

m:  PENFOLDS WINES PTY LTD
Respondent

HILL J SYDNEY

28 OCTOBER 1993

EX TEMPORE REASONS FOR JUDGMENT '%!S

Penfolds Wines Pty Limited, the respondents to an appeal brought by Mr Petty ("the appellant") from a judgment of Lockhart J given on 3 September 1993, moves the Court for orders that the appeal be stayed and, in the alternative, that the appellant provide security for its costs.

The application for stay was based upon failure to comply with 0.52 r. 15(l) (a) of the Federal Court Rules in that, although the appellant had filed his notice of appeal on the last day for so doing, he had failed to serve it within time and indeed had only served it on 30 September 1993 after receipt of a letter from the respondent's solicitors advising of the default. No explanation had, prior to the hearing of the motion, been proffered for this failure and no application had been made to the Court to extend the time for serving the notice of appeal or for waiving the lack of compliance with

the Court's rules.

At the hearing of the motion counsel for the appellant advised the Court that the failure to serve the notice of appeal had resulted from the illness of the appellant's solicitor's father-in-law which had been terminal and which had required his attendance. This explanation was accepted by the respondent's solicitors who indicated that they did not wish to require the solicitor to give evidence on oath as to the explanation.

In these circumstances and on the application of the appellant's counsel, I would extend the time for service of the notice of appeal until 30 September 1993, being the date on which service was in fact effected. I did not understand the respondent's solicitor to oppose the making of this order once the explanation was proffered. Accordingly, the application for a stay would be dismissed. I will deal with the question of costs later.

The second matter was of more consequence. In support of the motion the respondent read parts of two affidavits sworn by the appellant for the purposes of the proceedings before Lockhart J, namely, the affidavits of 10 July 1992 and 27 August 1992. These affidavits, which at least in part appear to have been filed for the purposes of the computation of damages, lead to the conclusion that as at August 1992 the appellant, who by this time had sold the business at Belrose which was the subject of the proceedings before Lockhart J and a Neutral Bay unit which had been used as security for an overdraft account with Westpac, still owed something in the order of $500,000.

There had been no indication given that the

respondent in the appeal had intended to rely upon these

affidavits. Counsel for the appellant registered surprise

that the affidavits were being relied upon. I gave counsel the opportunity to make an application for an adjournment if he believed that he would be prejudiced by virtue of being taken by surprise at the reading of these affidavits. This opportunity was not, however, sought to be availed of by counsel and no evidence was led from the appellant as to his present financial situation. In these circumstances, as the appellant's counsel conceded, it is open to me to infer from the failure of the appellant to go into evidence that such evidence as would be led by the appellant would not assist his case.

In the traditional language it makes the inference already open on the evidence, namely, that Mr Petty is in a serious financial situation, more readily able to be drawn. The solicitor for the respondent took me to the judgment of Lockhart J in support of a submission that the chances of success in the appeal by the appellant were slight and that there was little in the way of merit in the appeal. I think it is always a matter of some difficulty in considering applications for security of costs, particularly where the costs concerned are costs of an appeal, to consider in detail whether the appeal is likely to succeed. It is difficult for a single judge to pre-empt a decision which ultimately will be a matter for the Full Court.

There were, in the case as argued below, three basic matters which were litigated. First, there was alleged a refusal on the part of the respondent to supply the appellant with goods in circumstances where the appellant owed money to the respondent. Second, it was alleged that there were representations made, effectively, that the appellant would be supplled with wines and other goods on terms equal to the best available to other customers. The third matter complained of breaches of Part IV of the Trade Practices Act 1974 and in particular, ss.46 and 49.

As to the first of these matters, it was resolved of fact as to a conversation which took place between the

against the appellant on grounds which depended upon findings

appellant and others on 23 November 1989. His Honour's findings in this respect depended upon an assessment of the credit of the witnesses. It is conceded by counsel for the appellant that to upset these findings will present some

difficulties.

Hls Honour did consider as well what would have been the result had he accepted the appellant's evldence and also found against the appellant. His findings involved largely matters of fact, although there are some matters which are questions of mixed fact and law. It cannot be said that the appellant's case is hopeless. Much will depend upon a review of all the evidence that was before his Honour and this is clearly not a matter which I am in a position to undertake and I certainly do not do so.

The second matter depended less upon matters of credit and more upon his Honour's view of whether representations said to have been made were, in fact, such as to attract the provisions of s.52 of the Trade Practices Act. Clearly there are arguments that can be ralsed in respect of that matter.

The third and final part of the judgement concerning the Part IV matter, turns largely on lssue of fact, but not issues, really, which turn upon credit. Had they done so, a

finding by his Honour that a document put forward as a defence to any claim under s.49 as being a fabrication might no doubt have had great significance. Clearly, however, these are matters that are able to be reviewed by an appellate court in the light of the evidence and, not turning on credit, no doubt the appellate court would be in as good a position as his Honour was to assess the relevant market and the relevant effects on competition referred to, for example, in s.49.

In summary one would have to say, as counsel for the appellant conceded, that the case is not an easy one for the appellant. But one could certainly not say, in looking at the matter in the interlocutory way in which I do, that there is not an arguable issue which the appellant could put to a Full Court. However, bearing in mind the evidence as to impecuniosity of the appellant and the concession that the appeal is a difficult one and could last approximately two days, it seems to me that the justice of the case suggests that the appellant should provide security for the costs of the respondent in an appropriate amount.

Evidence was adduced from the respondent's
solicitors as to estimated costs. According to the estimate
provided, which estimate is detailed to some extent, the

figure is $20,042. That figure, however, includes the following amounts which clearly on review of the matter could

not be included, namely, taking instructions to oppose any interlocutory application by the appellant, $56; providing brief to two counsel for purposes of the motion, $500; attending in Court with counsel to hear the respondent's notice of motion for a stay and for security of costs, senior counsel's fees for appearance at hearing of respondent's notice of motion for a stay and for security costs, $2500; junlor counsel's fees for attending on the respondent's notice of motion for a stay and for security costs, $1000.

These items together amount to slightly under $4500. However, the respondents would be entitled to the costs of Mr Leopold arguing the present application, although without the assistance of an assistant attending in Court. There are other items about which there could be debate, for example, an item of $2000 for copying appeal books, that being presumably an amount of photocopying, when usually there are sufficient appeal books in any event prepared to obviate that need. There is also room for argument as to whether both senior and junior counsel's fees are appropriate on the appeal. Doing the best I can to determine an appropriate amount for security, it seems to me that security should be ordered in the amount of $12,000 to provide an appropriate amount for the costs of the respondent. Counsel for the appellant has indicated that if an order were made, the security would most

likely be provided by way of a bank bond for the amount.

Accordingly, I order that the appellant provide security in a form accepted and approved by the Court in the sum of $12,000 on or before 18 November, or pay into Court that amount on or before that date failing which further proceedings in the matter by the appellant would be stayed without prejudice to the right of the respondent in such event to move the Court to strike out the proceedings. I would direct that the matter be listed before the duty judge on 18 November in the event that there is any argument as to the form of the security, provided that if security be provided in the form of a bank bond and evidence be provided that that is acceptable to the respondents, that date will be vacated.

There remains only to be dealt with the question of costs. In the ordinary case the appropriate order in my opinion would have been that the costs of the motion be costs in the proceedings. However, the motion, so far as it concerns the ordering of a stay because of the failure to serve notice of appeal, has been dismissed and the appellant's counsel urges me to take this into account and to make an order in his client's favour or otherwise. I must say that the failure to serve while not rendering the appeal itself incompetent, was not one which could be said to have been a contumelious failure, even in the apsence of explanation. It

continued for but a relatively short time.

On the other hand, it is certainly true that no application had been made to remedy the default and perhaps because of a lack of communication between solicitors, there have been no discussions as to the circumstances in which that default continued. I must say I find that lack of communication lamentable and symptomatic of an increasing tendency on the part of solicitors involved in litigation not to communicate and thereby avoid, in many cases, the need for

interlocutory applications. It seems to me that in the circumstances the appropriate order is that each party should bear its own costs in respect of that part of the motion. To avoid difficulties in computation, the order will be that seven-eighths of the costs of the motion be costs in the appeal and in respect of the remaining costs of the motion, each party bear them as they fall.

I certify that this and the

preceding eight (8) pages
are a true copy of the Reasons
for Judgment herein of hls Honour
Mr Justlce H111.

Associate:  .Tc c4huY; h

Date  : I+ D ~ C F W \ ~ K l*3

Counsel and Solicitors	DH Murr instructed by
for Applicant:	Tony Giurissevich
Solicitors for	Allen Allen & Hemsley

Respondent:

Date of Hearing:  28 October 1993