Court of Appeal (Qld)|2001-11-21|Before: Copas Newnham P, Williams JA, MacKenzie J, Mullins J

Banks & Anor v Copas Newnham P/L & Anor [2001] QCA 526 (21 November 2001)

COPAS NEWNHAM PTY LTD Second Appellant (First Defendant?

His Honour further adjudged that each of the three defendants was liable to contribute equally to the amount of the judgment. Subsequent thereto Wonderley and Hall paid the full amount of the judgment to the plaintiffs.

Copas Newnham Pty Ltd and Graham Newnham have now appealed to this Court against the judgment. The applications now before this Court are three in number. Firstly, an application by Rodney Roy and Jeanette Ellen Banks for security for costs against the appellants Copas Newnham Pty Ltd and Graham Newnham. Secondly, an application by Wonderley and Hall for security for costs against those appellants. Thirdly, an application by the appellants Copas Newnham Pty Ltd and Graham Newnham for an order staying the judgment pending the hearing of the appeal.

I would note, with respect to the application for a stay, that it primarily is concerned with the issue of contribution being enforced as between the defendants and the order for costs in the original action.

Material has been filed by all parties relating to the applications for security for costs. Of particular significance is the affidavit of Graham Newnham who is, of course, the first appellant and was until a date late in 2000 a director of the second appellant, Copas Newnham Pty Ltd.

That is the only affidavit filed in response to the applications for security for costs. In my view, the affidavit is singularly deficient in a number of respects. The deponent described himself as a real estate agent but there is nothing in the affidavit to indicate his earnings or his general asset and liability position.

In paragraph 4 there is reference to the fact that he owns two properties, a residence jointly with his wife and also an investment property. He asserts that both are mortgaged to the National Australia Bank and that would appear to be supported by searches carried out by the applicants for security for costs.

The searches by those applicants have revealed that the Titles Office shows Newnham and his wife as the owner of two properties in Toowoomba, that is, two properties other than the investment property in Brisbane. There is no mention of what I will refer to as the third property in the affidavit.

Counsel for Newnham informed the Court that he had reason to believe that a property had recently been sold and the proceeds used to pay out some debts but there is just no reference at all to that in the affidavit. Clearly, those matters should have been detailed and there should have been a more accurate assessment made of Newnham's asset and liability position.

Paragraph 4 of his affidavit indicates that he has an equity in the properties therein mentioned of somewhere in the vicinity of $40,000 and he probably has other property totalling about $20,000 in addition to that.

In his affidavit he refers to the fact that there are a number of other people who are making claims against him similar to those made in this action by the Banks. One claim would be for the order of $60,000, another for about $40,000 and another for about $40,000. In addition, there are other people who have indicated that they have incurred losses in similar circumstances but are not at this stage intending to sue to recover those losses.

Against that background Newnham has sworn that if he was unsuccessful in the appeal he would hold a creditors' meeting pursuant to Part X of the Bankruptcy Act; it is his view that, if the other claims were successful, creditors would receive approximately five cents in the dollar.

So far as Copas Newnham Pty Ltd is concerned, it appears from company searches carried out by the applicants for security for costs that it is still registered, that it has an issued capital of $103 and that the National Australia Bank has a charge over its assets.

All that Newnham says in his affidavit is that he can say from his knowledge, and he is still a shareholder in the company, that there is no way the company can pay the judgment against it. It appears that HIH was the professional indemnity insurer and in consequence of its collapse there can be no recourse to any insurance fund.

Again, I make the point that the affidavit material is deficient with respect to the asset and liability position of the company. One would ordinarily infer from the fact that a bank has a charge over its assets that it does own some property and that ought to have been particularised. The position seems to be that if the appeal was unsuccessful then the company would go into liquidation.

The inference to be drawn from the affidavit of Graham Newnham is that it is he who would be funding the appeal.

Each of the applicants for security for costs has referred to the costs likely to be incurred in responding to the appeal. The Banks have sought the sum of $6,000 by way of security and that, to my mind, is a reasonable figure in the circumstances. Initially Wonderley and Hall sought security in the sum of $10,000 but counsel indicated that an amount similar to that claimed by the Banks would be acceptable.

In the circumstances, I am satisfied that each applicant for security for costs has made out a case for such an order. In so deciding I have had regard to the prospects of the appellants succeeding on the appeal. In that regard it has to be said that the judgment of Judge Robin is extensive and detailed but counsel for the appellants has indicated to this Court that there are, at least, some areas with respect to which the appellants could be said to have an arguable case.

I have also had regard, in particular, to what I consider to be the evasiveness of the appellants in detailing their asset and liability position and the stated intention of the appellant, Graham Newnham, to have recourse to a Part X arrangement if the appeals are unsuccessful. I can see no reason why the Court, in all the circumstances, ought not exercise its discretion in favour of awarding security for costs.

There will be an order on each of the applications for security for costs that the appellants give security for the costs of the appeal in the sum of $6,000 by payment of that sum into Court or in a form approved by the Registrar. I will hear submissions as to the time within which that payment should be made and also as to the costs of those applications.

So far as the application for a stay is concerned the onus is on the applicants for a stay to show that the case was an appropriate one in which a stay should be granted. That was the test enunciated by this Court in Croney v. Nand [1998] QCA 367; (1999) 2 Queensland Reports 342. I have taken into account, on the application for a stay, the factors which have induced me to conclude that it is appropriate to order security for costs in this matter; those considerations, to my mind, demonstrate that the applicant for a stay has not discharged the onus of establishing that the case is an appropriate one in which to grant a stay. In the circumstances, I would order that the application for a stay be dismissed with costs.

MACKENZIE J: Yes, I agree with what the presiding Judge has said. It may be that it is not entirely helpful to speak of the present appeal as a test case. The approach of the District Court Judge will, no doubt, receive attention in so far as it concerns propositions of law but the individual facts of cases will, no doubt, influence their outcome.

Determination of the appeal adverse to the appellants would, however, in all probability, have a significant influence on future events with respect to other potential claims. I note that paragraph 8 of Mr Newnham's affidavit appears not to make the contemplation of an application under Part X contingent on the disposal of the appeal but on the refusal of an application for a stay. In the circumstances, for the reasons given by the presiding Judge, I agree with what he proposes.

WILLIAMS JA: All right. Well, now, Mr Hassett, under Rule 772 the Court's got to specify a time within which the security is to be given and then under 774 if security isn't given within that time, then there's a stay. So what time are you asking for?

WILLIAMS JA: Twenty-eight days. What do you say to that, Mr Forde?

MR FORDE: Your Honour, we'd be submitting that a much shorter time would be appropriate. At the next stage of - the steps in this were to be taken in early December, submissions in response to the appellant's submissions. We'd be submitting seven days be appropriate. The matter was first raised with the solicitors for the appellant by letter dated 29 October and they were advised at that time that an application for the security of costs would be made.

MR FORDE: So it had essentially slightly over three weeks-----

MR FORDE: -----to be considering this and then the letter was met with a "It doesn't matter, don't worry about it. We'll go bankrupt or we'll go Part X".

MR FORDE: If they're going to go Part X as they have been threatening, then let them do it sooner rather than later and save everybody time and costs.

MR FORDE: So we'd be submitting seven days and also submitting that if they fail to make the payment then rather than just stay the proceedings, the proceedings ought be dismissed.

WILLIAMS JA: Well, under Rule 774, you may make application for dismissal on that. I think that's the way it should remain, 774B.

MACKENZIE J: It seems to be a structured sort of process, doesn't it, under the new rules.

MR CLOTHIER: Your Honour, I don't quibble with the amount of time that's proposed.

MR CLOTHIER: There's one rider to that; the respondent's outlines are due on 3 December to avoid the further incurring of costs until such time as the security's provided, I'd ask for a stay of the entire proceedings so that we're not placed in the position that we have to incur costs with respect to an outline if, in the event, that a stay is not - in the event the security is not provided.

Under Rule 774 the appeal is only stayed in so far as it concerns steps to be taken by the appellant unless the Court otherwise orders and it would be appropriate, in my submission-----

WILLIAMS JA: I'd be prepared to give a direction that the time for the respondents to the appeal to lodge an outline of argument be extended until, say, seven days after the-----

MR CLOTHIER: I'd be content with that, thank you, your Honour.

WILLIAMS JA: Mr Hassett, I am not minded to give really 28 days. Fourteen days, I think, would be - fourteen, yes. Now, Mr Forde and Mr Clothier, costs?

MR FORDE: Your Honour, we'd be seeking costs. The respondent has been given every opportunity to provide information which would have - if they could provide it - mean that this application wouldn't have been necessary. The application was made and then today my learned friend, Mr Hassett, says to the Court that he has no real objection to making the payment of $12,000 for security for costs. If that attitude had been expressed earlier, then hopefully the application wouldn't have been necessary, and 12,000 could have been paid into a solicitor's trust account but that attitude was only revealed today. So it really was appropriate for us to make the application and we'd be seeking our costs.

MR CLOTHIER: I rely on the same facts, your Honour. Costs follow the event. There was a strong case for a security given the evasiveness of the appellants and also an appropriate case given the concession late in the piece that security would not affect the prosecution of the appeal.

MR HASSETT: I think costs should follow the events but, as far as the last comment, of course, we only got served with this yesterday.

MR FORDE: Your Honours, sorry to interrupt, but my learned friend, Mr Hassett, made the comment that hew as only served with these proceedings yesterday.

MULLINS J: I think that was in relation to the second respondent's application.

MR FORDE: That is correct. Certainly not in relation to our application.

The Court is of the view that the appropriate order to make for costs is that the costs of each of the applicants be that party's costs in the appeal, so they will follow the event of the appeal. The orders of the Court will therefore be:

On the application of Rodney Roy and Jeanette Ellen Banks, order that Graham Newnham and Copas Newnham Pty Ltd, the appellants, give security for the costs of the appeal of the first respondents, Rodney Roy Banks and Jeanette Ellen Banks in the sum of $6,000 by payment of that sum into Court or in a form approved by the Registrar within 14 days.

Order that the time for delivery by the first respondents of outline of argument be extended to seven days after security is given.

Further order that the costs of Rodney Roy Banks and Jeanette Ellen Banks of and incidental to the application be their costs in the appeal.

On the application of Wonderley and Hall, order that Graham Newnham and Copas Newnham Pty Ltd, the appellants, give security for the costs of the appeal of the second respondent, Wonderley and Hall, in the sum of $6,000 by payment of that sum into Court or in a form approved by the Registrar within 14 days.

Order that the time for the second respondent to deliver outline of argument be extended to seven days after security is given.

Order that the costs of and incidental to the application by Wonderley and Hall be that party's costs in the appeal.

On the application by Graham Newnham and Copas Newnham Pty Ltd, order that the application for stay be dismissed with costs.

Banks & Anor v Copas Newnham P/L & Anor [2001] QCA 526

At a glance

Court

Decision date

Before

Source

Judgment (55 paragraphs)

Banks & Anor v Copas Newnham P/L & Anor [2001] QCA 526 (21 November 2001)

Parties