South Sky Investments P/L v Gough
[2012] QCA 11
•15 February 2012
SUPREME COURT OF QUEENSLAND
CITATION:
South Sky Investments P/L v Gough & Ors [2012] QCA 11
PARTIES:
SOUTH SKY INVESTMENTS PTY LTD
ACN 097 092 709
(applicant/defendant)
v
JOHN MACLAIN GOUGH
(respondent/plaintiff)
NORMA PATRICIA GROVES
(respondent/plaintiff)SOUTH SKY INVESTMENTS PTY LTD
ACN 097 092 709
(applicant/defendant)
v
LINEMINT PTY LTD
ACN 010 972 559
(respondent/plaintiff)
DERICK BRISLEY
(respondent/plaintiff)
DEBBIE BRISLEY
(respondent/plaintiff)SOUTH SKY INVESTMENTS PTY LTD
ACN 097 092 709
(applicant/defendant)
v
NOA 8338 PTY LTD
ACN 115 693 635
(respondent/plaintiff)
PAUL ANTHONY FORD
(respondent/plaintiff)SOUTH SKY INVESTMENTS PTY LTD
ACN 097 092 709
(applicant/defendant)
v
MICHAEL SHANE WALSH
(respondent/plaintiff)
DAMIAN ROBERT HUTCHINS
(respondent/plaintiff)SOUTH SKY INVESTMENTS PTY LTD
ACN 097 092 709
(applicant/defendant)
v
JEFFREY AIDEN WICKS
(respondent/plaintiff)
JULIE KATHRYN WICKS
(respondent/plaintiff)SOUTH SKY INVESTMENTS PTY LTD
ACN 097 092 709
(applicant/defendant)
v
PATRICIA GAYE RYAN
(respondent/plaintiff)SOUTH SKY INVESTMENTS PTY LTD
ACN 097 092 709
(applicant/defendant)
v
VICKI ANNE TAYLOR
(respondent/plaintiff)
JENNIFER MAY FERGUSON
(respondent/plaintiff)SOUTH SKY INVESTMENTS PTY LTD
ACN 097 092 709
(applicant/defendant)
v
JOHN CLIFTON PARSONS
(respondent/plaintiff)
DOROTHY ANNE PARSONS
(respondent/plaintiff)FILE NO/S:
Appeal No 11905 of 2011
Appeal No 11906 of 2011
Appeal No 11908 of 2011
Appeal No 11909 of 2011
Appeal No 11911 of 2011
Appeal No 11912 of 2011
Appeal No 11913 of 2011
Appeal No 11915 of 2011
SC No 12179 of 2010
SC No 13323 of 2010
SC No 13578 of 2010
SC No 13613 of 2010
SC No 13615 of 2010
SC No 13614 of 2010
SC No 3091 of 2011
SC No 3092 of 2011DIVISION:
Court of Appeal
PROCEEDING:
Application for Security for Costs
ORIGINATING COURT:
Supreme Court at Brisbane
DELIVERED EX TEMPORE ON:
15 February 2012DELIVERED AT:
Brisbane
HEARING DATE:
15 February 2012
JUDGES:
Muir JA
ORDERS:
1. The appellants in each appeals #11905/11, 11906/11, 11908/11, 11909/11, 11911/11, 11912/11, 11913/11, and 11915/11 provide security for the respondent’s costs of the appeal to the satisfaction of the registrar in the sum of $8,000 by 4.00 pm on 23 February 2012.
2. If the security required under order 1 is not provided in accordance with that order in respect of five appeals, the appeals of those appellants who have not provided such security be dismissed.
3. If no appeals are dismissed pursuant to order 2, the appeals of those appellants who have failed to pay security for costs in accordance with order 1 be stayed until further order.
4. The respondent’s costs of and incidental to this application be the costs in the appeal.
5. The respondent have liberty to apply.
CATCHWORDS:
PROCEDURE – COSTS – SECURITY FOR COSTS – where the applicant was the respondent in eight related appeals brought against it – where the applicant entered into property purchase contracts with the respondents – where the respondents commenced proceedings against the applicant seeking a declaration that the contracts had been lawfully terminated – where the trial judge gave judgment for the applicant – where three of the respondents were unlikely to meet a security for costs order – whether the respondents that were able to meet security should bare the burden of costs– whether the respondents’ appeals were arguable
COUNSEL:
D G Clothier SC for the applicant
J Johnson (Sol) for the respondentsSOLICITORS:
Allens Arthur Robinson for the applicant
Johnsons Solicitors for the respondents
HIS HONOUR: The respondents, with two exceptions who were sued in their capacity as guarantors, entered into contracts for the purchase from the respondent defendant of apartments in the Oracle development at Broadbeach. The development comprised two residential towers and commercial and retail buildings. The subject contracts were in respect of Tower 1. The contracts did not settle, and each purchaser or guarantor applicant (using this description to encompass joint purchasers or guarantors) commenced a proceeding against the respondent seeking a declaration that the contract had been lawfully terminated and an order for the return of the deposit.
The respondent counter-claimed for specific performance and other orders. The eight proceedings thus commenced and were heard together. On 2 December 2011 the trial judge delivered reasons in which he intimated that there would be judgment for the respondent and a decree for specific performance and other orders on the respondent's counterclaim. Such orders were subsequently made.
The specific performance orders required the contracts to be settled on 20 December 2011. None of the applicant's settled his, her or its contract and the failure to do so is unexplained. On 22 December 2011 the trial judge vacated the specific performance orders, and made orders forfeiting the applicant's respective deposits and as to the future assessment of damages. Costs were ordered to be paid on the indemnity basis.
The basis for the costs order was a term in each contract which I will not repeat, but which is set out in paragraph 19 of the affidavit of Tracy Errol Alan Harrip filed on behalf of the applicant in this application.
On 1 February 2011 damages were assessed in amounts which the parties had agreed and another indemnity costs order was made. The Courts discretion to order security against an appellant in favour of a respondent under Rule 771 of the Uniform Civil Procedure Rules is unfettered. I will not attempt an exposition of those considerations which are relevant to the exercise of the discretion on applications such as this, beyond observing that:
(a)The object of such a costs order is to protect an applicant against the inability of a respondent to meet an order for costs should the respondent's appeal be unsuccessful. Consequently, an order will not normally, at least, be made unless it is shown by implication or otherwise that a respondent may be unable to meet a costs order.
(b)An argument that a respondent has a reasonable case on the merits is of less cogency than it would be in an application for security for costs before a trial. The observation extends also to the proposition that a security for costs order might stifle an appeal. The reason for this is that the respondent has already had a decision by the Court on the merits. I digress to observe that here there is no evidence, I should say persuasive evidence, before me that costs orders would stifle any appeal.
(c)An undertaking by a director or shareholder to stand behind an impecunious respondent will tend to count against the making of an order for security only to the extent that the undertaking has practical substance.
(d)An order for security for costs should be for a sum no greater than is necessary and such orders are not necessarily intended to provide a full indemnity.
Despite the solicitors for the applicant having raised concerns about the inability of the respondents to satisfy costs orders in a letter to the respondents' solicitors of 17 January 2012, the respondents have made no satisfactory reply. In an affidavit sworn on 14 February 2011 Mr Johnson, a principal of the firm of solicitors acting for the respondents, swore on information and believe that:
Three respondents were not likely to be able to meet an order to provide security for the costs of the appeal; and
Depending on the amount of the order five respondents would be able to provide such security.
The affidavit did not address the ability of the respondents to meet costs orders should they be unsuccessful; they have not sought to disclose their respective financial positions. Mr Johnson took issue with the applicant's estimate of the costs of the appeal contained in the affidavit of Ms Harrip. She estimated costs on the indemnity basis at $211,105 on the standard basis at $182,154. Mr Johnson made these points amongst others.
- The applicants have had the same legal representation throughout;
- The grounds of appeal are confined and well defined; and
- The issues to be determined on appeal were argued and determined on trial.
I digress again to note that Mr Clothier SC took issue with the contention that the grounds of appeal were confined and well defined. He pointed out that no outline of submissions has been received and that the grounds of appeal are in fact in quite general terms.
Mr Johnson's estimate of costs is $85,000 on the basis of a one day appeal.
Ms Harrip's estimate was on the basis of one-and-a-half days of hearing.
I would require a fair degree of convincing to accept that more than one day is necessary. The same issues are involved in all eight appeals. For practical purposes there is but one appeal and it should not, I rather think, be beyond the capacity of the legal representatives, who are both experienced and highly competent, to do what is necessary to present the argument in one day.
I consider that there is a degree of overlap in the costs for record books, outline preparation and appeal preparation. Additionally, I notice that Ms Harrip's estimate is prepared on the basis that the two senior counsel will act.
Mr Johnson also submits that, based on his experience and the principles to which he refers, senior counsel's fees of $14,000 a day would not be recoverable even on the indemnity basis.
I do not propose to canvas the issues for determination on appeal; they are discussed in paragraphs 22 to 29 of the applicant's Outline of Argument and in paragraphs 6 to 16 of the respondent's outline. I will content myself with the observation that in as much as I have been able to form a view of the merits of the appeal, the respondent's case does not appear to be marginal or fanciful.
It is submitted on behalf of the respondents that it would be unfair to penalise the appellants who are unable to put up security (by effectively precluding them from the appeal) while at the same time requiring those respondents who are able to provide security to cover the share of the others, particularly as the applicant is in receivership and liquidation.
It is pointed out that in all cases the applicant will have recourse to natural person purchaser or guarantors. There is merit in these contentions or at least some of them. I do not consider, however, that the strong shouldering the burden of the weak argument is overwhelming.
As a result of the sensible decision to have all proceedings heard together at first instance and on appeal, the respondents, and also the applicant, have saved greatly in costs. Each respondent has had to pay only approximately one-eighth of the costs for which it would otherwise have been responsible.
The fact that some respondents may no longer be able to contribute to the costs burden is regrettable from the point of view of those who can contribute, but it is something of a loss of an advantage rather than, I think, a disadvantage. It arises from the nature of the parties contractual dealings.
The applicant also complains about having to pursue individual respondents for costs should it be successful on the appeal. It seeks an order that security be provided for each respondent in the amount of $20,000 or, alternatively, $10,000 based on costs on the standard basis. An award on the latter basis would, in my view, meet my concerns about the applicant's costs estimates and the principle that security is not intended to provide a full indemnity.
It would also recognise the impecuniosity of the applicant and the consequence that this entails for the respondents whilst taking into account the possibility that if the applicant is successful on the appeal an indemnity costs order will be made. I mention “possibility”. It is certainly arguable, perhaps highly arguable, that the applicant is entitled to such an order but for the moment I am not disposed to think that no argument can be advanced to the contrary.
Balancing all of those factors, it appears to me that the following order is the appropriate one in the circumstances.
- That the appellants in each of appeals numbered CA 11905/11, CA 11906/11, CA 11908/11, CA 11909/11, CA 11911/11, CA 11912/11, CA 11913/11 and CA 11915/11 provide security for the respondent’s costs of the appeal to the satisfaction of the Registrar in the sum of $8,000, on or before 4.00 pm on 23 February 2012.
- If the security required pursuant to paragraph 1 has not been provided in accordance with that paragraph in respect of five appeals by 4.00 pm on 23 February 2012 the appeals of those appellants who have not provided such security for costs be dismissed. If no appeals are dismissed pursuant to paragraph 2 the appeals of those appellants who have failed to pay security for costs in accordance with paragraph 1 hereof, be stayed until further order.
- The respondent’s costs of and incidental to this application be costs in the appeal.
The respondent have liberty to apply.
0
0
0