The Cleaning Doctor NSW Pty Ltd v Fonseca

[2022] NSWCA 157

Court of Appeal

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

The Cleaning Doctor NSW Pty Ltd v Fonseca [2022] NSWCA 157

Hearing dates:

09 August 2022

Decision date:

09 August 2022

Before:

Leeming JA

Decision:

1. Noting the provision of the usual undertaking by each of the appellants, I further vary order 7(a) made in the Equity Division on 5 April 2022 by deleting “9am on 11/08/2022” and substituting “until further order” so that the result relevantly is:

“(7) Orders that the operation of orders 4, 5 and 6 above are stayed until and including (a) until further order if a notice of appeal is filed by the plaintiffs on or before 8 April 2022…”.

2. I direct the appellants or either of them to pay into court the sum of $55,000 within 14 days of today as security for the respondents’ costs of the appeal.

3. I order that the appeal be stayed in the event that order 2 is not complied with, and in such circumstance I grant liberty to apply on 3 business days’ notice.

4. I otherwise dismiss the notice of motion filed 29 April 2022.

5. I direct the respondents to file and serve their written submissions on the appeal by Friday 19 August 2022.

6. I stand the appeal into the Registrar’s List on Wednesday 24 August 2022 with a view to its being allocated a hearing date and on the basis of my tentative view that it is a 1 day appeal but leaving it to the parties to contend if so advised in light of the respondents’ submissions that it is a 2 day appeal.

7. The appellants to have costs of both motions on an ordinary basis up to 22 June 2022 and on an indemnity basis thereafter.

Catchwords:

PRACTICE – appeals – stay of execution – whether appropriate case made out – where undertaking and security provided – where appeal to be heard in near future – where respondents had failed to apply over previous two years to vary interlocutory regime based on changed circumstances – stay continued

PRACTICE – appeals – security for costs – respondents sought substantial security – respondents claim to have spent more costs on opposing stay of execution and in support of application for security for costs than in defending the appeal – respondents sought to divide appeal into that brought by first appellant and that brought by second appellant – respondents’ submission misconceived – respondents substantially unsuccessful in opposition – security ordered in amount proffered by appellants

Legislation Cited:

Supreme Court Act 1970 (NSW), s 46

Cheques Act 1986 (Cth)

Cases Cited:

Alexander v Cambridge Credit Corporation Ltd (Receivers appointed) (1985) 2 NSWLR 685

Kalifair Pty Ltd v Digi-Tech (Australia) Ltd (2002) 55 NSWLR 737; [2002] NSWCA 383

Murray Darling Basin Authority v Doyle’s Farm Produce Pty Ltd [2021] NSWCA 191

The Cleaning Doctor NSW Pty Ltd v Fonseca [2022] NSWSC 253

The Cleaning Doctor NSW Pty Ltd v Fonseca (No 2) [2022] NSWSC 389

Yeshiva Synagogue Inc v Karimbla Properties (No 10) Pty Ltd [2017] NSWCA 331

Category:

Procedural rulings

Parties:

The Cleaning Doctor NSW Pty Ltd (ACN 139 483 926) (First Appellant)
Ali Itawi (Second Appellant)
Jeffrey Fonseca (First Respondent)
Orlando Fonseca (Second Respondent)
Vilma Fonseca (Third Respondent)
Joselyn Fonseca (Fourth Respondent)
7/49-51 Stanley Street Pty Ltd (Fifth Respondent)
147 Holt Road Pty Ltd (ACN 602 121 404) (Sixth Respondent)

Representation:

Counsel:
M Ashurst SC, Q Rares (Appellants)
F Carnovale (Respondents)

Solicitors:
McEvoy Legal (Appellants)
Antunes Lawyers (Respondents)

File Number(s):

2022/00092292

Publication restriction:

Nil

 Decision under appeal 

Court or tribunal:

Supreme Court of New South Wales

Jurisdiction:

Equity

Citation:

[2022] NSWSC 253, [2022] NSWSC 389

Date of Decision:

11 March 2022

Before:

Williams J

File Number(s):

2015/158796

EX TEMPORE Judgment

1. LEEMING JA: Pending in this Court is an appeal, filed on 7 April 2022, by The Cleaning Doctor NSW Pty Ltd and Mr Ali Itawi. The appeal was filed promptly after final orders were made on 5 April 2022 following a debate resolved on the papers as to relief: The Cleaning Doctor NSW Pty Ltd v Fonseca (No 2) [2022] NSWSC 389. The primary judge delivered a substantial judgment resolving the parties’ claims on 11 March 2022 following a trial of slightly more than ten days: The Cleaning Doctor NSW Pty Ltd v Fonseca [2022] NSWSC 253.

2. The appeal has, as yet, not been allocated a hearing date, but the directions which I will in due course make and which I have already indicated to the parties, will have the matter before the Registrar with the parties’ written submissions having been filed on Wednesday fortnight 24 August 2022 and in all likelihood it will be allocated a date on that occasion at the end of this year.

3. Before me today, and they have occupied some two and a half hours of hearing time, are two notices of motion. That filed by the appellants was dated 7 April 2022 and it seeks to continue in place an existing stay of an interlocutory regime all aspects of which have remained in place between the parties since at least 2019. The primary judge continued that stay until 22 April 2022, and varied it by orders made on 13 April 2022 until 9 am on 27 April 2022. The Registrar of this Court, apparently by consent, further varied the stay so that it applies until this coming Thursday 11 August 2022.

4. The second motion is filed by the respondents to the appeal who are described as Mr Jeffrey Alexis Fonseca, Orlando Fonseca, Vilma Fonseca, Joselyn Fonseca and two companies, 7/49-51 Stanley Street Pty Ltd and 147 Holt Road Pty Ltd. The substance of that motion is that it seeks an order for the provision of security for costs of the appeal.

5. The hearing today has been burdened by very substantial submissions and materials supplied by both sides. I am not expressing a view as to whether the blame lies more on the appellants or upon the respondents; it may indeed be attributable to both of them. The court book exceeded 1300 pages.

6. Testament to the enthusiasm which the parties have directed to the interlocutory motions to be resolved by me is the fact that the respondents’ solicitor has given evidence that her estimate of the costs of dealing with the motions for a stay of the interlocutory regime and the order for security for costs substantially exceeds the costs of dealing with an appeal. The fact that the respondents could spend more money fighting over the motions than they anticipate spending defending the judgment they have obtained is something that is, to say the very least, difficult to reconcile with the obligations in s 56 of the Civil Procedure Act 2005 (NSW) to which counsel, solicitors and litigants are bound. I shall return to this point.

7. However, despite the volume of material, the issues before me have been somewhat simplified in at least the following three ways.

8. First, the respondents have abandoned a claim set forth twice in their written submissions that I should strike out the Notice of Appeal or alternatively make a direction that the appellants provide particulars of the Notice of Appeal. That concession was wisely made, when at the outset of the hearing I raised this with their counsel.

9. It is to misconceive a notice of appeal to proceed as if requests for particulars are appropriate. It is to be borne in mind that in the ordinary course, the grounds of appeal will be supplemented and elaborated by written submissions provided well in advance of the hearing and well in advance of when the respondent needs to respond to the case.

10. It is difficult to contemplate any case where a request for particulars could be appropriate. The notion that a single judge might strike out a notice of appeal likewise is a power that would be exercised only in a most unusual case. One can contemplate prolix notices of appeal with dozens or perhaps hundreds of grounds where such an order might be appropriate. That is not this case. This notice of appeal is concise. It contains seven grounds over a page and it has been articulated by senior counsel who appeared before me today, who also appeared at trial.

11. Further, the application is, if one pauses for a moment, futile. Were I to accede to a motion to strike out the notice of appeal, the appellant would have a right of review under s 46 of the Supreme Court Act 1970 (NSW) and then the decision for the Court of Appeal constituted by three judges would be whether in the exercise of my discretion I had erred in concluding to the requisite high threshold that the notice of appeal was so hopeless that it warranted striking out. A complete answer to that application would be to find that the grounds of appeal had substance and so the result of success would merely be an expansion of the issues, but an expansion which would include the success or otherwise of the original grounds of appeal. Considerations not dissimilar to this may be seen in Murray Darling Basin Authority v Doyle’s Farm Produce Pty Ltd [2021] NSWCA 191 at [3]-[4].

12. The second way in which, constructively, the parties have reduced the differences before me is that I have been spared resolving debate about numerous – as far as I can see some of them very lengthy – notices to produce which the respondents have caused to be issued in support of their application for security for costs.

13. Those notices have been withdrawn, on the basis that the appellants will not contend that the respondent’s conduct caused or contributed to their present impecuniosity and they will not contend that an order that they provide security for the respondents’ costs of the appeal will or might stultify or stifle the appeal.

14. Thirdly, but only relatively recently, by open letter dated 29 July 2022, The Cleaning Doctor offers to pay into Court $55,000 by way of security for costs in relation to the appeal.

15. That offer was made on the basis that the motion in relation to The Cleaning Doctor be dismissed with no order as to costs.

16. I treated the existence of that offer, without any protest from the appellants, as relieving the respondents of any obligation to show that this was an appropriate case for security and meaning that the only issue was whether the $55,000 offered was sufficient or whether it was appropriate for some larger amount of security to be provided.

17. All three of those reductions in the issues before me were welcome and I am grateful to the parties for them.

18. It is necessary to say something albeit only briefly about the underlying claims that give rise to this appeal. They are divided into two. I shall follow the approach taken by the primary judge at the outset of her judgment at [2]-[6] and refer to the parties, principally the second appellant and the first and second respondents, by their given names Ali, Jeffrey and Orlando.

19. Ali claimed an interest in property at Bardwell Valley in New South Wales of which he was registered proprietor from about November 2001 until about January 2003, after which Orlando became registered proprietor for many years thereafter. The first appellant, The Cleaning Doctor, makes a claim in relation to some $2.695 million which was transferred out of its bank account substantially if not wholly by the respondents or their agents. The sole director of The Cleaning Doctor is Ali.

20. The primary judge identified a number of unusual features of this litigation. One is that it was common ground that Ali gave both a card and a cheque book to Jeffrey with the cheque book having all of the cheques signed by Ali as the sole signatory of The Cleaning Doctor’s account and it was by that means as I understand it that the debit transfers occurred: see at [210]-[211].

21. There is a great deal of reference in the reasons of the primary judge to cash payments to either employees or sub-contractors of Ali and/or The Cleaning Doctor, to the bankruptcy of all four members of the Fonseca family who are parties to this appeal (at [316]-[319]), and to the unsatisfactory nature of the evidence of both of the principal witnesses, namely Ali, Orlando and Jeffrey.

22. In relation to The Cleaning Doctor’s claim on appeal, its claims were addressed at paragraphs [531] to [553] of the reasons at first instance. The critical issue was as to the entitlement of Orlando and Jeffrey to withdraw funds from The Cleaning Doctor’s accounts.

23. As noted above, her Honour regarded each of Ali, Orlando and Jeffrey as unsatisfactory witnesses and found them to have lied in material respects of their evidence. Her Honour said at [552]-[553] the following:

“This is a most unusual case. The parties’ competing claims about the scope of the authority conferred on Orlando and Jeffrey were based on the uncorroborated evidence of Ali on the one hand and Orlando and Jeffrey on the other hand. The evidence of each witness suffers from the difficulties referred to at [414]-[437] above. The defendants’ failure to prove the authority on which they relied for most of the withdrawals and which they claimed in their evidence was expressly conferred on them in conversations between Orlando and Ali does not result in Cleaning Doctor’s claims succeeding. The Court is not constrained to accept either Cleaning Doctor’s evidence or the defendants’ evidence where both parties’ evidence is inherently implausible and the objective evidence referred to at [550] above points to a conclusion that is contrary to both parties’ contentions.

For those reasons, Cleaning Doctor has failed to discharge its onus of proving that the withdrawals from the CD Account were made without the authority of Cleaning Doctor. It follows that all of Cleaning Doctor’s claims fail.”

24. On appeal, Mr Ashhurst who with Mr Rares appeared today before me as they had at trial, said that this case was unusual as her Honour observed and turned on a question of onus. His submission was that her Honour had misapprehended the legal test and that it fell upon the respondents to establish positively that they were authorised to withdraw the funds from The Cleaning Doctor’s account in the way that they did. It was also said that no allegation of general authority had been pleaded and that while there was apprehended to be a dispute about whether there had been a finding of authority, it had not been found.

25. Opposing this, Mr Carnovale who appeared before me as he also had done at trial, said that general authority had been pleaded and found and was sufficient, and that it lay upon the appellants to establish a basis to vitiate the withdrawals that they had made pursuant to the possession of the card and the signed cheque book which Mr Ali had given to them.

26. It is inappropriate in an application such as this to express any concluded views as to the merits of the parties’ submissions which necessarily have been put more concisely than they might be at a final hearing and possibly without the benefit of much of the record of the trial. It suffices to say that I have concluded that The Cleaning Doctor’s appeal is at least reasonably arguable. That conclusion is informed by my apprehension from the way in which the grounds of appeal are cast and the way the submissions in support of them have been framed, that no attempt is sought to be made to interfere with the inevitably demeanour based findings of each of the principal witnesses being unsatisfactory and with their testimony not being accepted unless corroborated reliably by other evidence of documents.

27. Grounds 3 to 7 of the Notice of Appeal deal with The Cleaning Doctor’s appeal. Grounds 1 and 2 deal with the appeal brought by Ali in relation to the Bardwell Valley property. Those grounds challenge the rejection by the primary judge of the finding that the Bardwell property was held on trust for Ali by Orlando after title was transferred to his name.

28. The primary judge dealt with this issue very extensively in the judgment. As previously noted, her Honour rejected the evidence of each of Ali, Jeffrey and Orlando. Her Honour placed weight upon a contemporaneous document brought into existence shortly after the transaction, namely the statement of account from the conveyancing firm dated 22 January 2003. Regrettably as her Honour observed at [106], the letter did not include the settlement sheets.

29. However her Honour relied upon what it did include as tending against the contention that the property was held on trust for Ali. Mr Ashhurst’s simple point is that in circumstances where her Honour was unable to accept the testimonial evidence of the respondents, there was no sound basis for her Honour to accept what was stated in the letter prepared by the firm acting on the conveyance which they had retained.

30. My tentative view in relation to grounds 1 and 2 is that they are weaker than The Cleaning Doctor’s grounds but nonetheless they are reasonably arguable.

31. I turn to consideration of the continuation of the stay. I bear in mind the following matters.

32. First the stay is of orders 4, 5 and 6 made after delivery of the substantive judgment on 5 April 2022. Order 4 requires Ali to withdraw a caveat over land at Sylvania Waters. It is accepted that that relief is supported solely by grounds 1 and 2 relating to Ali’s claim in this Court. Order 5 concerns moneys paid into a controlled moneys account. Originally those moneys are referrable to the sale of certain property at Oatley which, as I understand it, was linked to the funds transferred by Jeffrey Fonseca from The Cleaning Doctor’s account. It is possible that that understanding on my part is incorrect but in any event it relates to property whose registered proprietor at one stage was Jeffrey. There is an issue before me as to whether that property ever was Jeffrey’s asset but instead was held on trust; it is said that no such claim was made at trial. Order 6 made on 5 April 2022 is a freezing order made originally in May 2019 relating to certain property owned by Jeffrey at Broadbeach. It is accepted that if I formed the view that The Cleaning Doctor’s case had reasonable prospects of success as regards a money judgment against Orlando and Jeffrey, then the stay insofar as it relates to that property may be properly extended.

33. The applicants have proffered the usual undertaking as to damages from both Ali and his company The Cleaning Doctor. There has also been paid as I understand it, into Court, the amount of $100,000 in support of the potential to call upon that undertaking. The stay is sought until the determination of the appeal. As I have said, the orders that I propose to make ought enable the parties to obtain a hearing date of the appeal later this month and that hearing date is likely to be in October or November this year.

34. Thus the time that is involved is relatively short compared to the time that has already elapsed with the caveat on the Sylvania Waters property, the moneys tied up in the controlled moneys account and the freezing orders made in 2019. The earlier of those two aspects of the orders was the subject of the stay date back to 2015 when the Oatley property was sold.

35. Much was made in submissions of the fact that in closing address at the trial, in late 2020, a tracing claim advanced by The Cleaning Doctor was abandoned thereby affecting the property potentially subject to a claim. That submission has force. The nature of litigation is that claims that commence to be pleaded and opened widely tend to be narrowed as the evidence unfolds and as submissions are made in closing address. Commensurate with this it is ordinarily incumbent upon parties faced with a shrinking of the other side’s case to revisit the appropriateness of such interlocutory relief as has been obtained.

36. In the present case, it would have been open to the respondents at the time when what I apprehend to have been a substantial part of The Cleaning Doctor’s claims were abandoned to have said that this amounted to a substantial change of circumstances and to review the interlocutory regime. That did not occur.

24. The primary judge as I have said produced a very large judgment following a lengthy trial at the end of a year. When judgment was delivered some 15 months after it was reserved, it would again have been open to the respondents to apply to vary the interlocutory regime given the abandonment of parts of the case. Once again that did not occur although as Mr Carnovale correctly observes, what seems to have been debated before her Honour at that stage was a short term stay pending the possibility of an appeal in this Court, although I would note that at the time that debate occurred a notice of intention to appeal had been filed and the unsuccessful plaintiffs plainly had every intention of commencing an appeal in this Court.

25. The ultimate exercise of discretion for the granting or continuing of interlocutory relief of the nature that is sought in this Court is different on an appeal than it is at trial. A successful litigant at trial is prima facie entitled to enjoy the fruits of its judgment. On the other hand, it is open to an appellant to make out that this is an appropriate case for the continuation of a stay. The authorities are uncontroversial and familiar: see Alexander v Cambridge Credit Corporation Ltd (Receivers appointed) (1985) 2 NSWLR 685 at 694 and 695, Kalifair Pty Ltd v Digi-Tech (Australia) Ltd (2002) 55 NSWLR 737; [2002] NSWCA 383 and Yeshiva Synagogue Inc v Karimbla Properties (No 10) Pty Ltd [2017] NSWCA 331 at [15]-[17].

26. A number of features some of which have already been mentioned make this litigation somewhat unusual. They are:

1. the findings that all of the witnesses are unsatisfactory which I have mentioned on a number of occasions;

2. the evidence that members of the Fonseca family have, notwithstanding their knowledge of the earlier incarnations of the interlocutory regime put in place, breached those orders; and

3. the fact that a great deal of the millions of dollars that have been deposited into The Cleaning Doctor’s account and withdrawn from that account which is central to grounds 3 to 7 of this appeal, is on my present understanding unsatisfactorily explained. It is perhaps not a coincidence that at least some of those transactions took place when all four Fonseca respondents were undischarged bankrupts.

40. In circumstances where I have concluded that the appeal is reasonably arguable, with the claims of The Cleaning Doctor which are substantially more valuable than those of Ali being somewhat stronger, where the usual undertaking as to damages is given and where a further amount of money has been provided in support of that undertaking, and where the appellants’ submissions in support of the appeal have (albeit only recently) been filed and where the appeal is prosecuted by highly competent senior and junior counsel, I think this is a case where it is appropriate to preserve the stay in the same terms as it has been in place for many, many months hitherto for the relatively short period of time between now and the hearing and determination of the appeal.

41. I am conscious that these parties have demonstrated a proven appetite to litigate over all aspects of a dispute including very small aspects of the interlocutory dispute. One of the reasons that persuades me that this is not a case where I should review and perhaps narrow the existing restrictive regime upon the properties and the controlled moneys account is that any alteration of that regime at this stage is apt to give rise to the potential at least if not the actuality of further disputation.

42. Another is the fact that if as was put by Mr Carnovale there was a material change of stance at the end of the trial when The Cleaning Doctor abandoned its tracing claim, then that is something that could have been taken into account in the previous almost two years hitherto and it has not been. I reiterate that I am conscious that in all likelihood the parties will have a hearing of their appeal in two or three months from today.

43. I turn to the question of security for costs. A great deal of the evidence and written and oral submissions proceeded on the basis that there were “really” two appeals, that brought by Ali and that brought by The Cleaning Doctor. It was sought to dissect the costs that the respondents would incur in fighting those appeals into half with the hope that there would be a different exercise of discretion as to security for each half.

44. It is possible that there might be cases in which such an approach were appropriate. I am very doubtful that anything other than the most exceptional case would be one in which it was appropriate to take that course. One only has to interrogate, as occurred during the hearing, the consequences of what is involved. First, if the costs of defending the appeal are severable how shall they be split? Should they be split 50/50 as the respondents contended because there happened to be two appellants? Or should they be split 2:5 counting the number of grounds relating to each appellant? Or should they be split having regard to the quantum that is involved in each appellant’s claims?

45. Secondly and more fundamentally, if there were a different exercise of discretion in relation to part of the appeal and not the other such that, as was positively propounded by the respondents, I should condition the prosecution of grounds 1 and 2 of the appeal, which relate to Ali, on terms that security be provided, was it to be suggested that if security were not provided or were to be provided only after delay that the entirety of the appeal should be delayed or should there be two separate hearings?

46. These considerations only need, to my mind, to be enunciated to appreciate the fallacy inherent in this application.

47. There is a single appeal. The costs of that appeal do not neatly divide into the costs of responding to grounds 1 and 2 and the costs of responding to grounds 3 to 7. Unquestionably, some of the costs relate to the entirety of the appeal and cannot be dissected. Why it would ever be appropriate to produce what would be a very difficult and needlessly complex task on assessment is something that no attempt was made to answer during submissions.

48. There is a great deal of evidence before me about the costs of the appeal. That provided by the respondents proceeds on the basis that the length of the appeal will be two days. I am sceptical of this. I cannot be sure, without the advantage of seeing how the respondents put their case and they have not supplied submissions as of yet (to be clear I am in no way critical of their not having done so, the appellants were late and only did so last week). But my impression is first of all that the appeal is being competently advanced, secondly that no attempt is to be made to seek to revisit the credit based findings made of all of the principal witnesses, thirdly the most effective appeals tend to be those which are concisely put, and fourthly that is how the appellants have addressed the motions before me today.

49. If, as I apprehend, counsel for the appellants will before the Registrar say that the entirety of this appeal will be heard before lunch time on the day it is set down, then it strikes me as likely that this appeal is appropriately set down for a single day, although my apprehension is it would be a quite full single day. I say all of this, principally, to indicate that if as is my current albeit tentative view this is a one day appeal, then to that extent the estimates of the respondents as to the likely costs for which they seek security must be further diminished.

50. The evidence before me is that the respondents’ costs of preparing for the appeal – excluding the costs of the motions being determined by me today – will be slightly less than $90,000 including GST. Those costs are solicitor-client costs and the respondents concede that it is appropriate to reduce the amount recoverable as party-party costs – for that is all that there can be security for – by 25%. The result is an amount of $66,875. That, to be clear, is for the entirety of the appeal.

51. When reduction is made for my assessment that this is likely a one day appeal, I see no reason to depart from the $55,000 amount which is proffered by the appellants. Of course as I have previously mentioned, the respondents say that they have spent more – considerably more – on the motions which I have resolved today. Ms Antunes’ original estimate was that it would cost some $166,000 to hear and determine the motions that have been before me today. Later, she amended that assessment to $109,000. Those opinions were criticised by the appellants’ solicitor and it is not necessary for me to reach any firm view as to their accuracy.

52. The point of an application for security for costs in this Court is to place the appellant under a burden to provide security for costs into the future in the event that the appeal fails and the respondent gains a favourable costs order. In the ordinary course, applications for security for costs should be brought promptly. Indeed this one was brought promptly. However, for reasons that have not been explained to me, although filed in April it was set down in August of this year at a time when much of the preparation of the appeal has already been completed. It is a powerful factor against the ordering of security that the consequence may be that after the appellant has prepared the appeal books and the submissions and most of the time between commencement of the appeal and its allocation of a date have elapsed, only then should the appellant be faced with an obligation to pay an amount into Court lest the proceedings be stayed. That is one reason why applications are to be brought and heard and determined promptly.

53. A second reason is this. The point of security for costs is forward looking. It is most unusual for security to be given for costs that the respondent has already incurred.

54. Thirdly as mentioned more than once during the hearing, the parties and their lawyers are subject to a duty to assist the Court to further the overriding purpose of facilitating the just, quick and cheap resolution of the real issues in the proceedings. The fact that more costs are said to have been incurred in relation to the interlocutory dispute I have heard and determined today and the fact that the hearing of that interlocutory dispute will have taken perhaps almost as long as the hearing of the appeal itself strongly suggest that sight has been lost of the overriding purpose.

55. Section 60 of the Civil Procedure Act requires me to implement the practice and the procedure of this Court with the object of resolving the issues between the parties in such a way that the cost to the parties is proportionate to the importance and complexity of the subject matter in dispute. The subject matter of dispute in this appeal is the appellant’s challenge to the final orders made earlier this year. That subject matter will be resolved following the hearing of an appeal, my expectation is, later this year.

56. Section 60 also requires me to implement this Court’s practice and procedure in such a way that the costs of adjudicating an application for a stay and an application for security for costs are proportionate to the costs at stake in the appeal. The combination of the passage of time, the size of the costs incurred by the respondents and their disproportion to the costs of hearing the appeal persuade me that this is an appropriate case not to grant any security for costs which have already been incurred in relation to the applications which have been heard and determined by me.

57. It will have been obvious from the above that in substance the respondents to the appeal have been unsuccessful both in relation to their application for security for costs and in relation to their opposition to the continuation of the stay. That is a further reason informing the exercise of my discretion not to order more security than the $55,000 proffered.

58. For those reasons I make the following orders – I’ll speak slowly, and please pull me up if I get any of these details wrong.

“1. Noting the provision of the usual undertaking by each of the appellants, I further vary order 7(a) made in the equity division on 5 April 2022 by deleting “9 am on 11/08/2022” and substituting “Until further order” so that the result relevantly is: “Orders that the operation of orders 4, 5 and 6 above are stayed until and including (a) until further order if a Notice of Appeal is filed by the plaintiffs on or before 8 April 2022…”

2. I direct the appellants, or either of them, to pay into Court the sum of $55,000 within 14 days of today as security for the respondents’ costs of the appeal.

3. I order that the appeal be stayed in the event that order two is not complied with, and in such circumstance, I grant liberty to apply on three business days’ notice.

4. Otherwise dismiss the Notice of Motion filed 29 April 2022.

5. I direct the respondents to file and serve their written submissions on the appeal by Friday 19 August 2022.

6. I stand the appeal into the registrar’s list on Wednesday 24 August 2022 with a view to its being allocated a hearing date and on the basis of my tentative view that it is a one day appeal, but leaving it to the parties to contend if so advised in light of the respondent’s submissions that it is a two day appeal.”

59. [Discussion concerning respondents’ submissions based on Cheques Act 1986 (Cth) and whether a cross-appeal was required.]

60. During the course of the hearing, there was debate concerning paras [10] to [15] of a notice of contention filed by the respondents on 5 May 2022. Paragraphs [10] to [14] articulated an argument which her Honour had flagged at paragraphs [554] to [560] of her judgment based on the Cheques Act. Paragraph 15 provided that:

“To the extent, if any, that the respondents need leave to amend their defence to rely upon the above contentions concerning the [Cheques Act 1986 (Cth)], the Court below erred in its decision, made as part of its final judgment dated 11 March 2022, to refuse leave (which the respondents sought) and therefore leave should now be granted.”

61. I raised with Mr Carnovale what appeared to me to be the consequence of that namely that he needed to file a cross-appeal, at least in relation to para 15, which maintains that the primary judge erred in declining to grant leave. He maintains, although, to be fair to him, he heard this for the first time today and it may perhaps not represent a concluded view, that it is not necessary to file a cross-appeal. It is no part of this judgment to determine that issue and I will assume that the respondents will review the position.

62. [Submissions on costs]

63. Application is made by the applicants for a special costs order in light of a letter dated 22 June 2022. The essence of the offer, which was expressed to be open for acceptance for 28 days after its receipt, corresponds with the orders that I have just made, namely, provision of security for costs in the sum of $55,000 to be paid into court and a continuation of the existing stay of execution made by the Registrar until the hearing and determination of the appeal.

64. Prima facie, the unaccepted offer, which was as favourable as that obtained following the hearing, which has occupied most of today, would entitle the applicants to a special order as to costs. Two things against that are put by Mr Carnovale. One is that the offer of 22 June 2022 was “superseded” by what subsequently occurred on 29 July 2022, to which I have referred, namely the open offer of security for $55,000. I do not accept that submission. By the time the open offer was made, the time for accepting the Calderbank offer had expired.

65. The other matter upon which Mr Carnovale relies is that in an email dated 6 July 2022, it was said that the respondents were unable to assess the reasonableness of the offers because of the lack of particulars sought in their letter of 27 April 2022 and the documents sought in various notices to produce and subpoenas issued by them.

66. The complaint about the lack of particulars is misconceived for the reasons I have attempted to convey earlier in this judgement. One does not seek particulars of notices of appeal. The documents sought in the various notices to produce and subpoenas issued by the respondents addresses a matter that was not live before me.

67. [Discussion concerning the email dated 6 July 2022.]

68. Mr Carnovale has, his attention having been directed to the exchange of emails immediately before and immediately after the document Exhibit C, which is the email dated 6 July 2022, withdraws reliance upon that document.

69. In those circumstances I see no reason to displace the order of operation of the rules. The consequence is that the successful appellants should have their costs of both motions on an ordinary basis up to and including 22 June 2022 and on an indemnity basis thereafter.

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Amendments

19 August 2022 - Spelling of "Fonesca" corrected to "Fonseca" throughout judgment

at [66]: "not" added into "One does not seek"

Decision last updated: 19 August 2022