Wagdy Hanna and Associates Pty Ltd v Gavagna

[2014] ACTCA 36

SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
COURT OF APPEAL

Case Title:

Wagdy Hanna and Associates Pty Ltd v Gavagna

Citation:

[2014] ACTCA 36

Hearing Date:

20 August 2014

DecisionDate:

21 August 2014

Before:

Robinson AJ

Decision:

Application granted (see [14])

Category:

Interlocutory application

Catchwords

PROCEDURE – COSTS – security for costs

Cases Cited:

Fox v Perry (2003) 214 CLR 118

Parties:

Wagdy Hanna and Associates Pty Ltd (First Applicant)

Steven Gavagna (First Respondent)

Representation:

Counsel

Mr W. Hanna (First Applicant)

Mr H. Kay (First Respondent)

File Number(s):

ACTCA 28 of 2014

Decision under appeal: 

Court/Tribunal:             ACTSC

Before:  Master Harper

Date of Decision:         21 May 2014

Case Title:  Wagdy Hanna and Associates Pty Limited v Gavagna

Citation: [2014] ACTSC 97

Court File Number:       SC 284 of 2007

Background

1. On 30 April 2007, Wadgy Hanna & Associates Pty Limited (the appellant) commenced an action against Steven Gavagna (the respondent). The allegation was that during the period April and May 2001 the appellant and the respondent entered into an agreement which was partly in writing and partly oral that the appellant would carry out architectural work for the respondent. The pleaded agreement was that the appellant would provide a concept plan for a residential building at Jiaxing, China and that the respondent would pay the appellant the sum of $250,000 for that work. The written part of the agreement was said to be a two-page “record of agreement” signed by Mr Hanna on 3 May 2001 and by the respondent on the following day. The oral part of the agreement was said to consist of a series of conversations occurring during April and May 2001 between Mr Hanna and the defendant.

1. At the time of the above events, Mr Gavagna was an employed solicitor. At trial he said that Scott Brothers Constructions P/L had retained his firm as it solicitors for the provision of legal advice regarding building contracts to be undertaken in China. Mr Gavagna, at trial, denied that he had ever entered into the alleged contract personally. It appears to have been his case that all times he was acting as agent and on instructions from Scott Bros Constructions P/L. On the first day of the trial before Master Harper, the appellant applied for leave to file an amended statement of claim and an amended reply. The application was to raise, for the first time, a fresh cause of action of breach of warranty of authority. Master Harper declined to give leave to amend the statement of claim.

1. The case was decided by Master Harper essentially having regard to the evidence of three main witnesses whose testimony needed to be carefully weighed and resolved to make findings of fact which were decisive in the result. The appeal process will involve a re-examination of all the conflicting evidence.  There will have to be some deference to the findings of the trial judge as part of the normal appeal process where credit issues are involved (Fox v Perry (2003) 214 CLR 118). There was no decisive point of law. The trial was conducted over four days.

1. By application dated 5 August 2014, the respondent moves for security for the costs of the appeal. He seeks the sum of $20,000. I gave leave to Mr Hanna to appear for the appellant on this application.

1. The Court of Appeal’s jurisdiction to order security for the costs of appeal is given by Rule 5302. A single judge can exercise the power under s 37J(1)(k) of the Act.

1. Rules 1900 to 1906 apply to this application with the necessary changes to reflect the fact that the matter is before the Court of Appeal.

1. On the hearing of the application, Mr Kay read an affidavit, as did Mr Hanna. I told Mr Hanna what parts of his affidavit I would take into account. This was a more expeditious process than ruling paragraph by paragraph on admissibility and also allowed Mr Hanna to understand, with more precision, the relevant aspects to be canvassed on the hearing.

1. I am satisfied of the following-

(a)Wagdy Hanna & Associates P/L (the company) is no longer trading.

(b)An ASIC search of the company indicates that it has not lodged an annual return since 8 January 2003.

(c)The sole director of the company has retired and no longer carries on his profession as an architect.

(d)By letter dated 19 June 2014 solicitors on behalf of the respondent wrote to the company and asked for details of the company’s assets and liabilities in order to assess the security for costs situation. No statement of those assets or liabilities was proffered by the company in response.

(e)No other statement of the financial position of the company was tendered. The company was in a position to do so if it chose to disclose to the Court its financial position. Nor was any financial information given concerning the persons standing behind the company.

(f)Under cover of a letter dated 27 June 2014 and marked “without prejudice- except as to costs” an offer of the sum of $10,000 for security for costs in the form of a bank guarantee was made by the company.

(g)In unrelated litigation the company has a contingent liability for a sum which may amount to approximately $176,298.

(h)If the company was to be unsuccessful on the pending appeal it is probable that at least the sum of $20,000 would be awarded in costs against the company.

1. I make no finding on the merits of the appeal, save as to say no attempt was made by the respondent on the hearing of the application to demonstrate a weak case for appeal. However, as I observed previously, credit issues are involved.

1. I conclude that there is reason to believe that the appellant will not be able to pay the respondent’s costs if ordered to pay them.

1. Two matters need further attention. The first is that Mr Hanna had a concern that a bank guarantee made in favour of the respondent may be misused by the respondent. I need not go into this. Mr Hanna’s concern can be accommodated by the simple procedure of directing that the original of the bank guarantee be lodged with the Registrar of this Court pending further order of the Court.

1. Secondly, in coming to my finding that it is probable that at least $20,000 would be incurred in the appeal, I have done the best I can on the materials. After coming to this finding I have also had regard to like cases where security was ordered in order to determine whether the figure of $20,000 was comparable to those cases. Obviously, each case will be different but they are of some assistance in providing a measure of confirmation that the figure arrived at on the evidence in this case was not inappropriate.

1. I am of the view that, taking into account the factors in Rule 1902, it is appropriate to order security for costs on the appeal.

Orders

1. The court orders that:

(a)    The appellant give security in the amount of $20,000 for the respondent’s costs of the appeal by lodging $20,000 cash or the provision of a bank guarantee in the sum of $20,000 within 28 days from today, that is on or before 19 September 2014.

(b)    In the event that the appellant elects to deposit cash, the company shall pay that sum to the Registrar of the Court and in the event that the appellant elects to furnish a bank guarantee, that guarantee is to be made out in favour of the respondent and the original of that guarantee is to be lodged with the Registrar of the Court. In each case, the Registrar of the Court is to hold the cash or the original of the bank guarantee until further order of the Court.

(c)    The costs of this application for security for costs, such costs to be assessed on a party-party basis, be the respondent’s costs in the appeal.  

(d)    The appeal be stayed pending the appellant giving security in the amount of $20,000 for the respondent’s costs of the appeal.

(e)    If the appellant fails to give security in the amount of $20,000 for the respondent’s costs of the appeal within 28 days from today, that is, on or before 19 September 2014, the appeal be deemed to have been dismissed and the orders of Master Harper confirmed, in which event the appellant is to pay the respondent’s costs of the appeal to date, such costs to be assessed on a party-party basis.

I certify that the preceding fourteen [14] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Acting Justice Robinson

Associate:

Date: