Pravenkav Group Pty Ltd v Diploma Construction (WA) Pty Ltd [No 2]
[2014] WASCA 106
•16 MAY 2014
PRAVENKAV GROUP PTY LTD -v- DIPLOMA CONSTRUCTION (WA) PTY LTD [No 2] [2014] WASCA 106
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2014] WASCA 106 | |
| THE COURT OF APPEAL (WA) | 16/05/2014 | ||
| Case No: | CACV:45/2013 | 12 MAY 2014 | |
| Coram: | MURPHY JA | 16/05/14 | |
| 15 | Judgment Part: | 1 of 1 | |
| Result: | Application allowed | ||
| B | |||
| PDF Version |
| Parties: | PRAVENKAV GROUP PTY LTD DIPLOMA CONSTRUCTION (WA) PTY LTD |
Catchwords: | Security for costs Application by respondent in an appeal Section 1335 Corporations Act 2001 (WA) Whether the appellant would be unable to pay the costs of the respondent Other factors relevant to the exercise of discretion Turns on own facts |
Legislation: | Corporations Act 2001 (Cth), s 459G(3), s 459H, s 601AH(3), s 1335(1) Personal Property Securities Act 2009 (WA), s 174 Supreme Court (Court of Appeal) Rules 2005 (WA), r 44(1) |
Case References: | Ailakis v Olivero [2013] WASCA 91 Apex Minerals NL v Ashley [2013] WASCA 176 BBC Nominees (WA) Pty Ltd v Yangebup Developments Pty Ltd [2008] WASC 81 BPM Pty Ltd v HPM Pty Ltd (1996) 14 ACLC 857 Brundza v Robbie & Co (No 2) [1952] HCA 49; (1952) 88 CLR 171 Dagenham Nominees Pty Ltd (t/as Banwell Marine Services) v Shanks (2011) 110 SASR 577 Diploma Construction (WA) Pty Ltd v KPA Architects Pty Ltd [2014] WASCA 91 Diploma Construction (WA) Pty Ltd v Pravenkav Group Pty Ltd [2013] WASC 138 Dodds v Kennedy [2011] WASCA 32 FFE Minerals Australia Pty Ltd v Mining Australia Pty Ltd [2000] WASCA 69; (2000) 22 WAR 241 Financial Solutions Australasia Pty Ltd v Predella Pty Ltd [2002] WASCA 51; (2002) 26 WAR 306 Green v CGU Insurance Ltd [2008] NSWCA 148 Infratel Networks Pty Ltd v Gundry's Telco & Rigging Pty Ltd [2012] NSWCA 365; (2012) 297 ALR 372 Infratel Networks Pty Ltd v Gundry's Telco & Rigging Pty Ltd [2012] NSWSC 943 Kerslake Superannuation Pty Ltd v C and L Building Pty Ltd [2010] NSWSC 424 Pioneer Park Pty Ltd (in liq) v Australia and New Zealand Banking Group Ltd (2007) 2 BFRA 753 Pravenkav Group Pty Ltd v Diploma Construction (WA) Pty Ltd [2013] WASCA 271 Sent v Jet Corporation of Australia Pty Ltd (1984) 2 FCR 201 Willoughby v Clayton Utz [2008] WASCA 93 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA TITLE OF COURT : THE COURT OF APPEAL (WA) CITATION : PRAVENKAV GROUP PTY LTD -v- DIPLOMA CONSTRUCTION (WA) PTY LTD [No 2] [2014] WASCA 106 CORAM : MURPHY JA HEARD : 12 MAY 2014 DELIVERED : 16 MAY 2014 PUBLISHED : 16 MAY 2014 FILE NO/S : CACV 45 of 2013 BETWEEN : PRAVENKAV GROUP PTY LTD
- Appellant
AND
DIPLOMA CONSTRUCTION (WA) PTY LTD
Respondent
ON APPEAL FROM:
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram : MASTER SANDERSON
Citation : DIPLOMA CONSTRUCTION (WA) PTY LTD -v- PRAVENKAV GROUP PTY LTD [2013] WASC 138
File No : COR 204 of 2012
Catchwords:
Security for costs - Application by respondent in an appeal - Section 1335 Corporations Act 2001 (WA) - Whether the appellant would be unable to pay the costs of the respondent - Other factors relevant to the exercise of discretion - Turns on own facts
Legislation:
Corporations Act 2001 (Cth), s 459G(3), s 459H, s 601AH(3), s 1335(1)
Personal Property Securities Act 2009 (WA), s 174
Supreme Court (Court of Appeal) Rules 2005 (WA), r 44(1)
Result:
Application allowed
Category: B
Representation:
Counsel:
Appellant : Mr R M Watson-Jones
Respondent : Mr J D MacLaurin
Solicitors:
Appellant : Snowton Saje
Respondent : HopgoodGanim
Case(s) referred to in judgment(s):
Ailakis v Olivero [2013] WASCA 91
Apex Minerals NL v Ashley [2013] WASCA 176
BBC Nominees (WA) Pty Ltd v Yangebup Developments Pty Ltd [2008] WASC 81
BPM Pty Ltd v HPM Pty Ltd (1996) 14 ACLC 857
Brundza v Robbie & Co (No 2) [1952] HCA 49; (1952) 88 CLR 171
Dagenham Nominees Pty Ltd (t/as Banwell Marine Services) v Shanks (2011) 110 SASR 577
Diploma Construction (WA) Pty Ltd v KPA Architects Pty Ltd [2014] WASCA 91
Diploma Construction (WA) Pty Ltd v Pravenkav Group Pty Ltd [2013] WASC 138
Dodds v Kennedy [2011] WASCA 32
FFE Minerals Australia Pty Ltd v Mining Australia Pty Ltd [2000] WASCA 69; (2000) 22 WAR 241
Financial Solutions Australasia Pty Ltd v Predella Pty Ltd [2002] WASCA 51; (2002) 26 WAR 306
Green v CGU Insurance Ltd [2008] NSWCA 148
Infratel Networks Pty Ltd v Gundry's Telco & Rigging Pty Ltd [2012] NSWCA 365; (2012) 297 ALR 372
Infratel Networks Pty Ltd v Gundry's Telco & Rigging Pty Ltd [2012] NSWSC 943
Kerslake Superannuation Pty Ltd v C and L Building Pty Ltd [2010] NSWSC 424
Pioneer Park Pty Ltd (in liq) v Australia and New Zealand Banking Group Ltd (2007) 2 BFRA 753
Pravenkav Group Pty Ltd v Diploma Construction (WA) Pty Ltd [2013] WASCA 271
Sent v Jet Corporation of Australia Pty Ltd (1984) 2 FCR 201
Willoughby v Clayton Utz [2008] WASCA 93
- MURPHY JA:
Introduction
1 This is an application for security for costs pursuant to s 1335(1) of the Corporations Act 2001 (Cth) (the Act) and r 44(1) of the Supreme Court (Court of Appeal) Rules 2005 (WA).
Background
2 The appellant (PG), served a statutory demand on the respondent (Diploma) on 7 December 2012 in respect of an alleged debt of $113,807.24. Diploma applied to set aside the demand. Diploma's first affidavit in support of this application was sworn 20 December 2012 by Mr Bishop. The matter came on for hearing before the learned master on 15 April 2013. At the hearing, Diploma also relied on an affidavit by Mr Farrelly, sworn 17 January 2013.
3 On 23 April 2013, the master delivered reasons. He found that there was no genuine dispute as to the debt, but that there was a genuine offsetting claim. He set aside the statutory demand and ordered PG to pay Diploma's costs.
4 There is an application by PG for leave to appeal and, if leave is granted, to appeal the master's decision. The grounds of appeal essentially challenge the master's findings in his reasons in Diploma Construction (WA) Pty Ltd v Pravenkav Group Pty Ltd [2013] WASC 138 to the effect that Mr Bishop's affidavit was an affidavit 'supporting the application' within the meaning of s 459G(3) of the Act and that there was sufficient evidence as to the existence and quantum of an offsetting claim. Before the master, PG had contended that Mr Bishop's affidavit was not an affidavit 'supporting the application' within the meaning of s 459G(3) and that, in any event, the evidence was insufficient to establish a genuine offsetting claim. The master said:
On behalf of the defendant it was submitted the affidavit of Mr Bishop founding the application did not quantify the amount of the rectification works and therefore the subsequent evidence of Mr Farrelly was inadmissible on what is generally referred to as the 'Graywinter principle': see Graywinter Properties Pty Ltd v Gas & Fuel Corp Superannuation Fund (1996) 70 FCR 452.
In my view that submission is without merit. It is the case that Mr Bishop's affidavit is cryptic. Mr Bishop does not specify how it is the plaintiff could have, on 27 September 2012, required rectification of the works. Further he does not specify the cost of the rectification works. But what is important is Mr Bishop does indicate there is an offsetting claim and he does indicate how in contractual terms that offsetting claim arises. The affidavit of Mr Farrelly fleshes out the claim. But Mr Farrelly is not raising a matter which is new and which was not flagged in the affidavit of Mr Bishop. It is permissible for Mr Farrelly to give evidence and quantify the offsetting claim.
Having reached that point it is only necessary to decide whether or not the offsetting claim is genuine. That is what is required by the terms of the legislation. There is also authority to suggest there is a requirement of good faith in determining the genuineness of an offsetting claim: see Macleay Nominees Pty Ltd v Belle Property East Pty Ltd [2001] NSWSC 743 [18] (Palmer J). Applying these criteria it is apparent the offsetting claim is genuine and made in good faith. It is unnecessary for me to examine the position in detail. Clearly the defendant does not accept the plaintiff is entitled to make any offsetting claim. But that is not the test. Any dispute between the parties on this issue must be resolved in a different forum [12], [13] - [14].
5 On 7 May 2013, PG filed (or purported to file) a notice of appeal. At that time, PG had been deregistered. In fact, it appears to have been deregistered on 15 April 2013, the day of the hearing before Master Sanderson. On 15 May 2013, PG filed (or purported to file) its appellant's case. On 18 June 2013, the white appeal book index was approved. For the reasons indicated later, Diploma's management did not become aware of the existence of the appeal until 2 August 2013. On 5 August 2013, Diploma filed its notice of respondent's intention. By notice dated 13 August 2013, the appeal was listed for hearing on 14 October 2013.
6 Because PG had been deregistered when the appeal was commenced, this court, in an earlier interlocutory application, found that the appeal was not 'back in existence' until PG was reinstated as a company, and an order was made by the master on 8 October 2013 validating retrospectively the commencement of the appeal and the steps taken in the appeal to that date, pursuant to s 601AH(3) of the Act: Pravenkav Group Pty Ltd v Diploma Construction (WA) Pty Ltd [2013] WASCA 271 [1]. Diploma also sought leave, with retrospective effect, to extend the time to file its notice of intention to 5 August 2013. That application was opposed by PG. PG's arguments were rejected and the extension was granted: Pravenkav Group Pty Ltd v Diploma Construction (WA) Pty Ltd [2013] WASCA 271.
7 On 19 November 2013, Diploma applied for an extension of time to file its answer and to include a cross-appeal. An affidavit (by Ms Tan dated 19 November 2013) referred to an earlier affidavit of Mr Di Latte dated 26 August 2013 in support, which indicated that Diploma had, in effect, misplaced the 'notice of appeal' which had been served on it in May 2013.
8 On 26 November 2013, Diploma filed the respondent's answer. It included a notice of contention to the effect that the master's decision to set aside the statutory demand should be upheld on the basis that the master should have found that there was a genuine dispute as to the claimed debt.
9 On 30 January 2014, it was ordered that Diploma's application for leave to cross-appeal and the question of an extension of time in which to cross-appeal, be referred to the hearing of the appeal. The proposed cross-appeal raised the same contention as did the notice of contention.
10 On 25 March 2014, Diploma filed its application for security for costs.
Evidence on the application for security
11 Diploma relied on two affidavits, one sworn by Mr Di Latte, dated 24 March 2014, and the other sworn by Ms Smith on 29 April 2014. Ms Smith is a solicitor in the employ of the firm acting for Diploma. She prepared the draft bill of costs in Mr Di Latte's affidavit.
12 Mr Di Latte deposed that Diploma's taxed costs from the primary court were in the sum of $17,841, and that they had not been paid despite demands. He said that there had been no application by PG for a stay of the costs order. He also said that on 6 March 2014, Diploma's solicitors wrote to PG's solicitors informing them that unless costs in the proceedings below were paid by 11 March 2014, Diploma would seek security for costs in the appeal.
13 Mr Di Latte also referred to the deregistration of PG. He annexed correspondence from PG's solicitors with attachments which indicate that on 6 December 2012, PG's director was aware that the Australian Securities and Investments Commission (ASIC) had commenced a strike-off action against PG, and that the strike-off application was in respect of non-payment of fees, and that no documents had been lodged by PG with ASIC since March 2011.
14 Mr Di Latte also deposed to certain searches being undertaken, including with Landgate, which indicate that there is no real property registered in the name of PG or either of its directors. He annexed a company search which indicated that PG has a paid up capital of $4, and that two shares are beneficially held by one director and that the other two shares are beneficially held by the other director. He also annexed certain searches under s 174 of the Personal Property Securities Act 2009 (WA) (PPSR), indicating that no assets of PG were disclosed as having security interests recorded against them.
15 PG did not file and serve an affidavit in response to the application for security.
Principles
16 It is sufficient for present purposes to confine my consideration to s 1335(1) of the Act. Section 1335(1) provides:
Where a corporation is plaintiff in any action or other legal proceeding, the court having jurisdiction in the matter may, if it appears by credible testimony that there is reason to believe that the corporation will be unable to pay the costs of the defendant if successful in his, her or its defence, require sufficient security to be given for those costs and stay all proceedings until the security is given.
17 There was no dispute that the word 'plaintiff' in s 1335 includes appellant, see, eg, Pioneer Park Pty Ltd (in liq)v Australia and New Zealand Banking Group Ltd (2007) 2 BFRA 753 [20]; Dagenham Nominees Pty Ltd (t/as Banwell Marine Services) v Shanks (2011) 110 SASR 577 [17] - [26].
18 The relevant principles are not in dispute. See generally FFE Minerals Australia Pty Ltd v Mining Australia Pty Ltd [2000] WASCA 69; (2000) 22 WAR 241; BBC Nominees (WA) Pty Ltd v Yangebup Developments Pty Ltd [2008] WASC 81.
19 In this context, it has been held that where the threshold jurisdiction to award security is made out, ie where the court is satisfied that there is reason to believe that the plaintiff (appellant) will be unable to pay the defendant's (respondent's) costs if it is unsuccessful, this in itself provides a substantial factor in the exercise of discretion in favour of the applicant: BPM Pty Ltd v HPM Pty Ltd (1996) 14 ACLC 857, 860; Sent v Jet Corporation of Australia Pty Ltd (1984) 2 FCR 201, 215 - 217.
20 Other factors relevant to the exercise of discretion include, relevantly for present purposes:
(a) the respondent to an appeal who applies for security is in a stronger position than a defendant at first instance, to the extent that the respondent has a judgment in his or her favour which is presumed to be correct until displaced;
(b) the appellant's non-compliance with an earlier relevant cost order in favour of the respondent, at least to the extent that the non-compliance is not adequately explained; and
(c) any delay in bringing the application for security.
21 See generally Ailakis v Olivero [2013] WASCA 91 [12]; Willoughby v Clayton Utz [2008] WASCA 93 [13] - [16]; Dodds v Kennedy [2011] WASCA 32 [7] - [8].
The parties' arguments
22 Diploma contended that the evidence of Mr Di Latte satisfied the threshold question of whether there was reason to believe that PG would be unable to pay the costs of the appeal if unsuccessful. Diploma also relied on that matter in relation to the exercise of the court's discretion. It also referred to the non-payment of the earlier costs order and relied on the proposition that a respondent in an appeal seeking security is in a stronger position than a defendant at first instance. It also said that PG has not particularly strong prospects of success.
23 That contention includes the contention that in relation to the question of leave to appeal, there is no 'substantial injustice' if the decision were to remain unreversed. It points out that the effect of the master's decision is to leave PG to pursue its claim against Diploma in proceedings at law, and that this is not a case such as Apex Minerals NL v Ashley [2013] WASCA 176 [34], where a corporation appeals from a decision erroneously dismissing an application to set aside the statutory demand and where, absent leave, the corporation becomes subject to the statutory presumption of insolvency unless the disputed debt is paid.
24 As to delay, Diploma contended that in the unusual circumstances of this appeal, it is to be inferred that the majority of the work done by PG, including preparation of the appeal books, was undertaken prior to Diploma becoming a party to the appeal. It also said that it was not until 3 December 2013 that PG failed or refused to pay the costs, which had been taxed, in the proceedings below.
25 As to the quantum of security, Diploma's solicitors prepared a draft bill of costs totalling approximately $47,000. The solicitor deposed to the fact that those costs did not include the costs of a cross-appeal. The draft costs included the application to extend time to file notice of respondent's intention and to file respondent's answer. Diploma also originally sought, in addition to the sum of $47,000, 'security' in the amount of approximately $18,000 for the unpaid costs in the court below. I was informed by counsel for Diploma that this additional sum was not pressed. That appeared to me to be an appropriate concession.
26 PG contended that the threshold for s 1335 had not been met. It said that the PPSR searches only indicated that PG had not granted any security interest over personal property owned by it, and that the land title searches only indicated that it was not the registered proprietor of any land in Western Australia. PG placed particular reliance on the observations of Pullin JA in Ailakis [14]. There his Honour said, in effect, that it will often not be clear whether an appellant is impoverished or unable to pay the costs ordered against him, and that proof that an appellant owns no land and has no assets, which can be identified by reference to public registers, does not itself prove that an appellant is impoverished. His Honour said that proof that a respondent cannot, after inquiry, find evidence that the appellant owned land or assets 'provides only some evidence that the appellant may be unable or may fail to pay costs ordered against him'. His Honour went on to take into account the evidence in that case of the Landgate search [20] and ultimately found that '[t]he appellants have no real estate assets or disclosed means of paying costs if they lose the appeal' [23].
27 PG said that the deregistration of the company was 'an administrative oversight'. It also said that it had informed Diploma, as set out in its solicitors' letter dated 14 March 2014 attached to Mr Di Latte's affidavit, that the 'sensible course is for the issue of payment of costs to be dealt with upon determination of the appeal', and that any order for security would be 'inappropriate' where there had been a cross-appeal from the master's decision. It also said, in effect, that the application had not been brought promptly, that Diploma had previously unsuccessfully sought an order, at the time that orders were made validating the commencement of the appeal, that the commencement of the appeal should have been conditional upon PG paying the costs of the court below. It also said that PG had expected payment in the amount of $113,807 in accordance with its statutory demand, that that amount had not been forthcoming, and there had been 'obvious detrimental effects on the Appellant's cash flow'. It said that '[t]he practical effect of an order for security of costs is that the Appellant's ability to prosecute the appeal will be frustrated'. It also said that whilst the appeal books were originally filed on 12 July 2013, a substituted white appeal book was filed by 12 March 2014 and that apart from attending the appeal, which is listed for 10 June 2014, there are no further interlocutory steps to be taken in the appeal. It also said that the timing of the application interfered with PG's 'preparation for trial [sic]'. It said that it was not necessary to show prejudice in the sense of what PG would have done differently if the application had been made earlier because, generally, prejudice will be regarded as inherent in substantial delay. Reference was made to Green v CGU Insurance Ltd [2008] NSWCA 148. It said that the application was 'thus oppressive and will cause real prejudice' to PG. Moreover, it contended, in effect, that the majority of its costs had been incurred before the application for security was made, in 'contesting not only the Appeal but also the Respondent's Cross-Appeal'.
28 In relation to prospects, PG contended, in effect, that it was bound to succeed in the appeal, at least in relation to ground 1, on the basis, in effect, that there is relevantly conclusive authority to the effect that Mr Bishop's affidavit was not an affidavit within the meaning of s 459G(3) of the Act. PG contended in this regard that there was:
[N]othing [in Mr Bishop's affidavit] about the quantum of [Diploma's] offsetting claim or the way in which it is calculated. It was silent and bereft of any evidence in that regard and did not enable the Court to determine whether the offsetting claim was equal to or exceeded the amount of the statutory demand (par 7, appellant's submission, white book).
29 Reference was made in this regard to Infratel Networks Pty Ltd v Gundry's Telco & Rigging Pty Ltd [2012] NSWSC 943, and on appeal, [2012] NSWCA 365; (2012) 297 ALR 372. Reference was also made to Diploma Construction (WA) Pty Ltd v KPA Architects Pty Ltd [2014] WASCA 91 [90], and to Financial Solutions Australasia Pty Ltd v Predella Pty Ltd [2002] WASCA 51; (2002) 26 WAR 306.
30 PG also contended that the court should, in effect, infer that PG has good prospects, otherwise there would have been no need for the cross-appeal.
31 PG also said that the court should have considerable doubt that Diploma is 'genuinely concerned' with its ability to recover costs in the event that the appeal fails.
32 In relation to the quantum of security, PG contended that insofar as Diploma seeks 'security' for the costs which remain unpaid from the proceedings below, the amount of those costs could not properly be included in an order for security in respect of the appeal. It also pointed out that in the proceedings below, although Diploma's costs had been submitted for taxation at $31,015.11, the certificate of taxation was for only $17,841.11.
33 PG also contended, with respect to the amounts referred to in the draft bill of costs:
(a) there is a claim for getting up an application to adjourn the hearing of the appeal listed for 14 October 2013, and that that application became unnecessary because the court had vacated the hearing in any event in light of the deregistration of PG;
(b) the draft includes a claim for getting up an application to extend the time to file the respondent's answer, which is an indulgence that Diploma should bear;
(c) there is a claim for 'other work' which is vague and not adequately particularised;
(d) in a claim for 'future costs' those costs are 'easily duplicable' over the appeal and cross-appeal;
(e) in relation to items for 'copying', 'other work' and 'disbursements', costs are claimed for work necessitated by Diploma's failure to respond to a notice of appeal in a timely way; and
(f) in relation to counsel's fee on hearing, it is not clear whether those costs relate to the appeal or the cross-appeal.
Disposition
34 I accept Diploma's submissions to the effect that Mr Di Latte's affidavit provides credible evidence that there is reason to believe, for the purposes of s 1335(1) of the Act, that PG will be unable to pay the costs of Diploma if Diploma is successful in resisting the appeal. The observations of Pullin JA in Ailakis (see [26] above) are consistent with this conclusion and do not provide any basis for concluding otherwise in the circumstances of this case.
35 That finding is also a very relevant consideration to the exercise of discretion. As to other discretionary matters, I would make the following observations. As to prospects, my observations are provisional and reflect no concluded views on these matters. They are based on the relatively truncated way in which these matters were presented and argued in this particular application.
36 The question of prospects was debated before me principally, if not exclusively, in relation to ground 1, which is to the effect that Mr Bishop's affidavit was not an affidavit 'supporting the application' within the meaning of s 459G(3) of the Act insofar as Diploma sought to raise an offsetting claim. Section 459H defines 'offsetting claim' to mean 'a genuine claim that the company has against the respondent by way of counterclaim, set-off or cross-demand (even if it does not arise out of the same transaction or circumstances as a debt to which the demand relates)'. In the New South Wales Court of Appeal, in Infratel, a decision on which PG relies, Young AJA (Hoeben JA and Ward J agreeing) said:
The most authoritative of these decisions is that of the Full Court of the Supreme Court of Western Australian in Financial Solutions Australasia Pty Ltd v Predella Pty Ltd [2002] WASCA 51; 167 FLR 106. In POS Media v B Family [2003] NSWSC 147; 21 ACLC 533 at [35] Austin J remarked, 'the Financial Solutions case has reduced the Graywinter "principle" to a more fact-specific inquiry'.
In the Financial Solutions case, Parker J (with whom Anderson and Scott JJ agreed) said at 115 that there was no
'settled and universal principle, which must be satisfied by an affidavit before it can be accepted as “supporting the application” within the meaning of s 459G(3)(a) and as satisfying the jurisdictional requirement being considered. The statutory yardstick remains that the affidavit should support the application. The precise nature of the application may well influence what this requires [29] - [30].
38 I was referred to, but not taken through, Mr Bishop's affidavit. It is a fairly lengthy one and I am, of course, in no position to reach any concluded view on the merits of ground 1. However, a necessarily brief perusal of the affidavit indicated that it annexed a number of documents, including, prima facie, the relevant contract between Diploma and PG under which PG agreed to do certain glazing works at certain premises. It contained terms including cl 4.18(d) and cl 4.18(e) concerning the rectification of defects by PG within a specified period in specified circumstances, and cl 8.2 concerning Diploma effecting things at PG's cost in specified circumstances. The affidavit also annexed progress claim number 3 in respect of glazing to the first and third floors in the premises. It also annexed apparently contemporaneous correspondence prior to the issue of the statutory demand of alleged defects in the works and allegations of non-completed work. The correspondence included a demand dated 27 September 2012 allegedly under cl 4.18(d) of the contract and a notice dated 2 October 2012 alleging that in the absence of PG having rectified certain works in accordance with the demand of 27 September 2012, Diploma would, in effect, have the alleged rectification works undertaken at the cost of PG. It appears from an email dated 16 November 2012, in annexure 'KB 11' of Mr Bishop's affidavit, that PG referred to there being 'a few panels incomplete' in level 3, and PG informed Diploma that '[y]ou can hold a small percentage of the amount due and should release the balance according to the Contract Clause'.
39 In what is necessarily a preliminary view of the material and the case law, I accept that PG is likely to have a good arguable case in relation to ground 1, but I have some preliminary reservation in accepting PG's proposition to the effect that the case law is necessarily conclusive in its favour in the particular circumstances of this matter. The other grounds were not argued and, for present purposes, I will assume that they are fairly arguable. I was not addressed, at least in any detail, on the notice of contention either, but having briefly reviewed it and the submissions in the white book in support, my preliminary view is that, at least in certain respects, the notice of contention could not be said to be unarguable.
40 On the question of PG's prospects in obtaining leave to appeal and whether it can show 'substantial injustice', it would appear that much of that debate will centre upon the merits of the appeal. However, the consideration that the respondent has a judgment in its favour which is presumed to be correct until displaced is underscored, in my view, where the appellant requires leave to appeal. I note that PG in this application did not respond in terms to Diploma's submissions referred to in [23] above.
41 Next, I am not satisfied, on the evidence, that an order for security would stifle the appeal. PG's contention to the contrary effect is no more than an assertion. I would not infer, in the absence of evidence, that PG will be unable to prosecute the appeal by borrowings or otherwise (including by shareholders' loans or the injection of capital).
42 On the question of the cross-appeal, it appears to me that it is, in substance, no more than a different procedural emanation of the notice of contention. I am satisfied that it is, in substance, merely responsive to the appeal by PG. Also, I accept Ms Smith's affidavit evidence to the effect that the costs of the cross-appeal are not included in the draft bill of costs that she prepared. I presume, nevertheless, that costs of the notice of contention are included in the draft bill.
43 I do not accept PG's submission that the evidence indicates that PG's deregistration was an 'administrative oversight'. I note that the directors of PG have not sworn an affidavit in this application to put on any direct evidence to that effect. Nor do I consider that PG has provided any reasonable explanation for the non-payment of the costs in the court below. Diploma's previous application to have costs paid as a condition of the orders validating the appeal is, in my view, irrelevant. Further, there is nothing to indicate that Diploma's concern that it will not have its costs paid if PG fails in this appeal is other than a genuine concern. Not only would I accept that the concern is a genuine one, but there would appear to me to be reasonable grounds for the concern.
44 Nor do I accept, in the absence of evidence from PG, that the majority of its costs were incurred after Diploma had raised the issue of security for costs, particularly when bearing in mind the unusual history of this appeal.
45 Having said that, I accept that there was some delay in bringing the application, but the delay is not, in the unusual circumstances of this case, egregious. I also accept that some prejudice will ordinarily arise from any failure to bring such an application promptly. In the circumstances of this case, I am not satisfied that the degree of delay precludes the making of any order at all. None of the other matters raised by PG seem to me to have any real weight in the exercise of discretion.
46 Taking everything into account, I am satisfied that PG should be ordered to give security.
47 As to the amount of security, I accept, at least in general terms, PG's submissions referred to in (c) of [33] above. I also accept, for present purposes, that in the event of taxation, PG may establish, at least to some extent, its complaints referred to in (b) and (e) of [33] above. My impression is that the complaints in par (a) of [33] above are not well-founded, in that I am not presently persuaded that it was unreasonable for Diploma to apply to vacate the scheduled date of the appeal on 14 October 2013, notwithstanding that, as it happened, the court vacated that date of its own volition. In relation to pars (d) and (f) of [33] above, I have indicated that I accept, for present purposes, Ms Smith's evidence on these points.
48 Furthermore, beyond these matters, I am not satisfied that the magnitude and scope of the appeal will be as great as the amounts in the draft bill would otherwise suggest. The potential for overstatement in this regard is illustrated by the respondent's costs below being claimed as approximately $31,000 and taxed at approximately $17,800. I also take into account that the court does not generally set out to give a complete indemnity to the respondent: Brundza v Robbie & Co (No 2) [1952] HCA 49; (1952) 88 CLR 171, 175.
49 Taking everything into account, and taking a broad view of the matter, I would grant security in the sum of $22,000.
131
21
3