Tradesman Technologies Pty Ltd v Ameduri - [2012] WASCA 168

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT : THE COURT OF APPEAL (WA)

CITATION: TRADESMAN TECHNOLOGIES PTY LTD -v- AMEDURI [2012] WASCA 168

CORAM: PULLIN JA

HEARD: 7 AUGUST 2012

DELIVERED : 7 AUGUST 2012

PUBLISHED : 24 AUGUST 2012

FILE NO/S: CACV 64 of 2012

BETWEEN: TRADESMAN TECHNOLOGIES PTY LTD
Appellant
AND
JOHN AMEDURI
Respondent

FILE NO/S :CACV 65 of 2012

BETWEEN :SERGIO COTELLESSA
Appellant
AND
JOHN AMEDURI
First Respondent
KAREN AMEDURI
Second Respondent

ON APPEAL FROM:
Jurisdiction              :  DISTRICT COURT OF WESTERN AUSTRALIA
Coram  :STONE DCJ
Citation  :TRADESMAN TECHNOLOGIES PTY LTD -v- AMEDURI [No 2] [2012] WADC 85
File No  :CIV 294 of 2011
Jurisdiction              :  DISTRICT COURT OF WESTERN AUSTRALIA
Coram  :STONE DCJ
Citation  :AMEDURI -v- COTELLESSA [2012] WADC 86
File No  :CIV 3751 of 2009

Catchwords:

Appeal - Application for a suspension order - Turns on own facts

Legislation:

Civil Judgments Enforcement Act 2004 (WA)
Fair Trading Act 1987 (WA)
Trade Practices Act 1974 (Cth)

Result:

Applications dismissed

Category: B

Representation:

CACV 64 of 2012

Counsel:

Appellant: Mr P J Hannan
Respondent: Mr N D C Dillon

Solicitors:

Appellant: De Vita & Dixon
Respondent: Andrew James Foster

CACV 65 of 2012

Counsel:

Appellant:     Mr P J Hannan
First Respondent           :     Mr N D C Dillon
Second Respondent      :     Mr N D C Dillon

Solicitors:

Appellant:     De Vita & Dixon
First Respondent           :     Andrew James Foster
Second Respondent      :     Andrew James Foster

Case(s) referred to in judgment(s):

Eastland Technology Australia Pty Ltd v Whisson [2003] WASCA 307; (2003) 28 WAR 308
Li v Herald and Weekly Times Pty Ltd [2008] VSCA 201
McMahon v National Foods Milk Ltd [2008] VSCA 237
Narain v Euroasia (Pacific) Pty Ltd [2008] VSCA 195
Orrong Strategies Pty Ltd v Village Roadshow Ltd [2007] VSCA 320
Perdaman Chemicals and Fertilisers Pty Ltd v The Griffin Coal Mining Company Pty Ltd [2011] WASCA 188
Sami v Roads Corporation [2009] VSCA 44
Sopov v Kane Constructions Pty Ltd [2009] VSCA 216

PULLIN JA: There are two applications before the court. They are applications for a suspension or a stay of enforcement of judgments in two District Court actions pending an appeal against each of those judgments in this court. At the conclusion of the hearing, I made orders dismissing the applications, granting liberty to the appellants to make further applications and granting costs to the respondents. These are the reasons for those orders.

Cotellessa v Ameduri - CACV 65 of 2012 (appeal against judgment in CIV 3751 of 2009)

The respondents, Mr and Mrs Ameduri, sued Mr Cotellessa for $150,000 which they had lent to Mr Cotellessa on 8 April 2009 and which was repayable on 30 November 2009. Mr Cotellessa's defence was that there was a more complex agreement than the simple loan agreement sued upon by Mr and Mrs Ameduri. Mr Cotellessa said that the more complex agreement was entered into in the following circumstances.
A company known as Tradesman Technologies Pty Ltd (Tradesman) was controlled by Mr Cotellessa as the sole director. Another company, Allpack Signs Pty Ltd (Allpack), was controlled by Mr Con Scrinis as the sole director. Mr Ameduri worked at Allpack.
In mid 2008, Mr Cotellessa sold Tradesman for a share in a combined group of companies called The Traffic Group. The Traffic Group, which included Allpack, was involved in selling traffic products. A few months later, Mr Cotellessa did not want to be a member of The Traffic Group and he wanted the return of Tradesman. Tradesman was subsequently transferred back to Mr Cotellessa and on 19 January 2009 an agreement (Restricted Supply Agreement) was entered into pursuant to which Tradesman would only supply The Traffic Group with traffic products.
From time to time, between July 2008 and April 2009, Tradesman supplied traffic products to Allpack in response to orders placed by Allpack. Tradesman rendered invoices to Allpack for the traffic products. The amount owed by Allpack to Tradesman as at 8 April 2009 was in dispute.
At all material times after October 2008, Mr Ameduri, who resided in Western Australia, held a supervisory role with Allpack and he reported to Mr Scrinis, who resided in Victoria. Mr Ameduri was authorised by Mr Scrinis to place orders on behalf of Mr Scrinis and Allpack for the purchase of traffic products from Tradesman. Mr Ameduri was an authorised signatory on cheques drawn by Allpack. On occasions, Mr Ameduri was authorised by Mr Scrinis to sign documents on behalf of Allpack as the state manager, director or director/secretary.
Mr Cotellessa and Mr Ameduri had been friends as teenagers. They crossed paths again during business dealings several years before the events of the actions in the District Court.
On 8 April 2009, Mr Cotellessa had a meeting with Mr Ameduri and his wife at their home. There was no dispute that at that meeting Mr Ameduri and Mrs Ameduri agreed to lend Mr Cotellessa $150,000 to be paid by Mr Cotellessa by 30 November 2009 and that they did so. However, what was also agreed at that meeting was the subject of a dispute.
Mr Cotellessa claimed that at the meeting an oral agreement was made between himself, Tradesman, Mr Ameduri (on behalf of Allpack) and Mrs Ameduri which is described by the trial judge as the 'Continuing Supply Agreement'.
Mr Cotellessa claimed in both sets of proceedings that the terms were:
1.Subject to the term in sub-paragraph 3, Mrs Ameduri promised to advance $150,000 to Tradesman.
2.Subject to the terms in sub-paragraphs 4 and 5, Mr Cotellessa would be responsible for the repayment to Mrs Ameduri of the $150,000 to be advanced by Mrs Ameduri to Tradesman.
3.Mrs Ameduri was not obliged to make the advance in sub‑paragraph 1 unless and until Mr Cotellessa had signed a document to the effect that $150,000 would be lent by Mrs Ameduri to Mr Cotellessa and repaid by 30 November 2009.
4.Subject to the term in sub-paragraph 5, Mr Cotellessa was obliged to pay Mrs Ameduri the advance in sub-paragraph 1 by 30 November 2009.
5.The obligation in sub-paragraph 4 was conditional upon Allpack:
(a)paying all invoices rendered by Tradesman to Allpack, within 30 days of the date of each such invoice, in respect of all supplies of traffic products to Allpack, made during the period from April 2009 to November 2009; and
(b)having paid by 30 November 2009 all outstanding invoices in respect of supplies of traffic products by Tradesman to Allpack made prior to 8 April 2009.
6.Subject to Allpack complying with the term in sub-paragraph 7, Tradesman promised to continue supplying Allpack with traffic products in accordance with the Restricted Supply Agreement.
7.The obligation in sub-paragraph 6 was conditional upon Allpack:
(a)paying all invoices rendered by Tradesman to Allpack, within 30 days of the date of each such invoice, in respect of all supplies of traffic products to Allpack, made during the period from April 2009 to November 2009; and
(b)having paid by 30 November 2009 all outstanding invoices in respect of supplies of traffic products by Tradesman to Allpack made prior to 8 April 2009.
8.In the event that Allpack did not comply with the conditions in sub-paragraph 5, then Mr Cotellessa was not obliged to pay Mrs Ameduri the advance in sub-paragraph 1 unless and until:
(a)all of the invoices in sub-paragraph 5(a) were paid in full; and
(b)all of the invoices in sub-paragraph 5(b) were paid in full; and
(c)all invoices for any traffic products supplied by Tradesman to Allpack after 30 November 2009 were paid in full.
Mr and Mrs Ameduri denied there was discussion about a Continuing Supply Agreement. On 9 April 2009 Mr Cotellessa and Mr and Mrs Ameduri signed a document (the Loan Agreement). It was in the following terms:
This is an agreement between John Ameduri and Karen Ameduri and Sergio Cotellessa. Ameduri to lend $150,000 to Sergio Cotellessa. The following monies will be paid back to Ameduri by 30 November 2009 with part payments to be paid as Cotellessa receives payments from Allpack Signs.
On 30 November 2009, Mrs Ameduri requested Mr Cotellessa pay the $150,000 due under the Loan Agreement. Mr Cotellessa declined. Mr Cotellessa contended that the obligation to pay the Ameduris $150,000 was conditional upon compliance with the Continuing Supply Agreement, that there had not been compliance and that Mr Cotellessa's company Tradesman had not been paid money due to it by Allpack.
Tradesman claimed that, as at 30 November 2009, Allpack owed Tradesman over $500,000 for outstanding invoices during the period from April 2009 to November 2009.
In late April 2010 and early May 2010, Allpack sold its Western Australian and South Australian business operations. The National Australia Bank took the proceeds payable to Allpack for the sale of the businesses by virtue of the security held by the bank over the assets of Allpack. On 11 May 2010, liquidators were appointed to Allpack leaving Tradesman as an unsecured creditor.
The trial judge preferred the evidence of Mr and Mrs Ameduri for reasons he gave, found that there was a simple loan agreement, found that Mr Cotellessa had defaulted by not repaying the loan and found that there should be judgment for Mr and Mrs Ameduri for $150,000 plus interest and costs.

Tradesman v John Ameduri - CACV 64 of 2012 (appeal against judgment in CIV 294 of 2011)

In this action which was heard with the other action, Tradesman sued Mr Ameduri for damages under s 82 and s 87 of the Trade Practices Act1974 (Cth) and s 77 and s 79 of the Fair Trading Act 1987 (WA) for breaches of s 52 and s 51AC of the Trade Practices Act and s 10 of the Fair Trading Act. In addition, Tradesman claimed a declaration that Mr Ameduri was 'obliged in equity to pay [Tradesman] the amount of all unpaid invoices rendered by [Tradesman] to [Allpack] for supplies of traffic products made by [Tradesman] to [Allpack] during and after May 2009, alternatively during and after July 2009'.
In essence, the complaint of Tradesman was that Mr Ameduri made representations that if Allpack did not pay Tradesman on invoices rendered by Tradesman, then Mr Ameduri would make payment, and that in reliance upon such representations Tradesman continued to supply goods. The claim in equity relied on proof of the representations pleaded in support of the Trade Practices Act and Fair Trading Act causes of action.
Tradesman's claim was dismissed inter alia because the trial judge made findings that the pleaded representations were not proved or not relied on. An order for costs was made against Tradesman.

The appellant's objective in both appeals

In each case, the appellant seeks to set aside the judgments which would relieve them of the liability which they now face to pay monies. The liability of Mr Cotellessa under the judgment against him is immediate in relation to the judgment for $150,000. Mr Cotellessa's liability for costs and Tradesman's liability for costs have not yet crystallised because no bills of costs have yet been filed or taxed. There is no information before the court about how long it will take to tax costs and so it is not possible to say whether Mr and Mrs Ameduri will be able to take steps in execution for costs before the appeal is determined.

Evidence of the ability of Mr Cotellessa to pay the $150,000 due under the judgment

Mr Cotellessa's counsel submits that Mr Cotellessa is not in a position to pay the $150,000 plus interest and costs and the evidence suggests that based on his present bank facilities, and his sources of income, that is so. However, Mr Cotellessa has taken no steps to ascertain whether the bank would lend him $150,000 to make the payment. He frankly conceded in evidence that he only contemplated victory in the proceedings. The possibility of failure and the liability to pay the $150,000 and costs had not entered his head.

Principles governing the application for a suspension order

The application for a suspension order is made under s 15 of the Civil Judgments Enforcement Act 2004 (WA). Alternatively, the court has power under its rules to grant an interim order in the form of a stay of execution pending the hearing of the appeal. The appellants submit there is inherent jurisdiction to grant a stay. This court being a statutory court has no inherent jurisdiction: see Perdaman Chemicals and Fertilisers Pty Ltd v The Griffin Coal Mining Company Pty Ltd [2011] WASCA 188 [4].
Both under s 15 and in an application for a stay, the principles are as follows:
(a)The successful litigant is ordinarily entitled to enforce a judgment pending the determination of any appeal.
(b)It is for the applicant for a stay to move the court to a favourable exercise of its discretion. Under s 15(3) this court may only make a suspension order if there are 'special circumstances' that justify doing so and in an application for a stay under the rules this is also a usual requirement.
(c)The central issue will be whether the grant of a stay is perceived to be necessary to preserve the subject matter or the integrity of the litigation or whether a refusal of a stay could create practical difficulties in respect of the relief which may be granted on appeal. This may shortly be described as requiring the court to consider whether the right of appeal will be rendered nugatory if a stay is not granted.
(d)If it can be demonstrated that the right of appeal will be rendered nugatory if a stay is not granted, the stay will generally still be refused unless it can be established that the appeal has ultimately reasonable prospects of success.
(e)Finally, the stay may still be refused where it appears that the balance of convenience does not lie in favour of the applicant where, for example, the grant of a stay will occasion hardship to the respondent which may not be alleviated by the terms upon which the stay may be granted: Eastland Technology Australia Pty Ltd v Whisson [2003] WASCA 307; (2003) 28 WAR 308.

Balancing of the relevant factors

Whether the appeals will be rendered nugatory

When below I refer to an appeal being rendered nugatory, I use that expression in the sense of either indicating that the grant of a stay is necessary to preserve the subject matter or the integrity of the litigation or indicating that refusal of a stay could create practical difficulties in respect of the relief which may be granted on appeal.
Often an appellant will contend that an appeal will be rendered nugatory if it can be demonstrated that there is a real prospect that if the judgment sum is paid and yet the appeal succeeds, the respondent will not have the capacity to comply, or for some other reason might not comply, with an order requiring repayment of the judgment sum paid by the appellant. In this case, that has not been demonstrated. The combined assets of Mr and Mrs Ameduri lead me to conclude that they do have the capacity and that they could be compelled to repay either the $150,000 due under the judgment by Mr Cotellessa or any costs ordered.
Another way that an appeal might be rendered nugatory is if the respondent threatens enforcement of the judgment by sale of property owned by the appellant. If a sale occurs before the appeal is heard and the appeal succeeds, then it would be impossible for any order to be made restoring the property if it had already passed into the hands of a third party. Often the way of dealing with this situation is for the appellant to give security, either over the land which the respondent is threatening to sell or other property if there is sufficient equity to provide such security, to meet the judgment debt if the appeal is dismissed. In this case there is a threat by the respondent to sell real estate owned by Mr Cotellessa. On the values attributed to the properties by Mr Cotellessa there may not be sufficient equity to provide security to the respondent for payment of the judgment of $150,000. The situation might be otherwise if there was evidence from a valuer suggesting that there was greater equity in the properties owned by Mr Cotellessa in this case. There was no such evidence.
Yet another way of demonstrating that an appeal might be rendered nugatory is if the appellant does not have the ability to pay the judgment sum and may be rendered bankrupt or a company may be wound up before the appeal is heard: see for example Orrong Strategies Pty Ltd v Village Roadshow Ltd [2007] VSCA 320 (Maxwell P & Ashley JA); Narain v Euroasia (Pacific) Pty Ltd [2008] VSCA 195 (Maxwell P & Ashley JA); Li v Herald and Weekly Times Pty Ltd [2008] VSCA 201 (Maxwell P & Ashley JA) and McMahon v National Foods Milk Ltd [2008] VSCA 237 (Maxwell P & Buchanan JA).
However, the mere threat of service of a bankruptcy notice is not always, per se, sufficient to demonstrate special circumstances or that the appeal will be rendered nugatory: see Sami v Roads Corporation [2009] VSCA 44; Sopov v Kane Constructions Pty Ltd [2009] VSCA 216.
In relation to Mr Cotellessa in this case, counsel for Mr and Mrs Ameduri advised that a bankruptcy notice had issued although it had not yet been served. If the bankruptcy notice is served and time for compliance is not extended then that fact would have to be weighed in the balance with other factors in determining whether special circumstances were made out. Relevant to this assessment, is the fact that if the parties comply with the rules and proceed as quickly as possible to the hearing of an appeal, it is distinctly possible that the appeal could be heard in February 2013. This may still be so even though the appellant has failed to comply with the rules and had to seek an extension of time in which to file the appellant's case.
As to Tradesman, no steps could yet be taken to wind up the company because costs have not been taxed and so there is no present liability in Tradesman to pay any specified sum of money. As a result, there is as yet no circumstance which might render Tradesman's appeal nugatory.

Whether the appeals have a reasonable prospect of success

Because no appellant's case had been filed in either appeal, there were no grounds of appeal. Usually, if an application for a stay is made and there are no grounds of appeal, an appellant will proffer draft grounds of appeal so that some assessment can be made of the prospects of success.
It was not at all clear after hearing counsel for the appellants, what errors it is alleged that the trial judge made in his reasons for decision. Both cases failed because of findings made by the trial judge after hearing oral evidence on the critical issues. In the case of Tradesman, the trial judge said in certain respects there was a lack of any evidence in support of some of the representations which had been pleaded. Attempts were made by counsel for the appellants to formulate possible grounds of appeal, but there was a shifting of ground in the formulation of what might be the grounds of appeal. For example, in relation to the appeal by Mr Cotellessa (CACV 65 of 2012) counsel for the appellant contended that the trial judge erred in making a finding that there was no continuing supply agreement. However, later he contended that the complaint might be that the trial judge erred because the reasons were inadequate. The only concrete suggestion made by Tradesman in relation to its appeal, was that the trial judge had failed to deal with a live issue, namely that of estoppel. However, as mentioned above, the estoppel cause of action was entirely based on pleadings which were relied on to sustain the Trade Practices Act and Fair Trading Act causes of action. The appellant says that a 'word search' of the reasons for judgment reveals that the word 'estoppel' was 'not even mentioned'. That does not matter if the material facts relied upon to make out the cause of action had not been proved.

Until there are some grounds of appeal, draft grounds of appeal or some clear indication of what errors are alleged, it is impossible to determine whether or not there are reasonable prospects of success in relation to either appeal.

Balance of convenience

As it is not possible to determine whether or not there are any reasonable prospects of success in relation to the appeals because of the lack of appeal grounds or draft appeal grounds, it is not necessary to consider issues about the balance of convenience. Both sides were prepared to proffer undertakings which would be relevant in resolving the application, but in the absence of information making it possible to determine whether there are any reasonable prospects of success, it is not necessary to consider them further.
The result is that although at some time in the future it might be possible to contend that the appeals may be rendered nugatory, if certain steps are taken by the respondent to enforce the judgments, the point has not yet been reached where that can be said.