[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
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Judgment
LEEMING JA: The appellants have filed an appeal in this Court, which is presently stayed in light of the appellants' non-compliance with orders for security for costs.
Following a hearing on 4 July 2022, I made the following orders:
"1. Order that the appellants provide security for the respondents' costs of the appeal in the amount of $25,000, in such form as may be agreed between them, or by way of payment to the Registrar of this Court.
2. The security be provided within 28 days of today, pending which the appeal is stayed.
3. Grant liberty to apply to me on three business days' notice by email to my associate.
4. Note the parties' agreement that the appeal be listed for a two day hearing, on the basis that Mr Smits' oral submissions be strictly confined to one day, and Mr Allen's be confined to no more than three and a half hours, leaving an hour for Mr Smits to reply.
5. The parties' costs of the notice of motion of 24 March 2022 be each parties' costs of the appeal."
It should be said that the notice of appeal is very long (it is 44 single-spaced pages with 106 paragraphs many of which have subparagraphs, and has been treated as amounting to the appellants' submissions), and there have been suggestions that the appeal be set down for four days, which struck me as excessive. The discipline imposed by order 4 reflected statements made by each of Mr Smits and Mr Allen, and seemed to me to reflect the fairest and most efficient way to manage an appeal which, subject perhaps to considerations of ill health, is to be argued personally by the second appellant, who is a solicitor practising in Queensland.
The orders made on 4 July 2022 were either consented to, or not opposed. They reflected something of a compromise by each side from the positions each had advanced prior to the hearing. Neither party sought reasons.
The appellants have not provided security in the amount of $25,000. Instead, they offered to pay $25,000 from the proceeds of sale of a certain lot in Yeppoon, Queensland. It is said that completion was to occur on 1 August 2022, but the contract has been terminated, and "Negotiations are pending for a re-sale". The respondents indicated that they were not agreeable to that form of security. Shortly before the expiry of the 28 day period, the appellants exercised the liberty to apply. The appeal came before the Registrar on 10 August 2022, at which time the present dispute about security was ventilated. The Registrar made directions for the exchange of submissions, with a view to the dispute being resolved on the papers. Submissions dated 15 and 17 August 2022 were filed in accordance with those directions.
The appellants contend that the respondents' refusal to accept different security did not assist the court, that the form of security they propose is adequate, and that the respondents' refusal is unreasonable and contrary to s 56 of the Civil Procedure Act 2005 (NSW). They identify eight reasons why that is said to be so, including that, so they say, security of that kind was provided in other aspects of the dispute between the same parties in 2018 and 2019. Much of the submissions is directed to the value of the property.
The appellants cite what was said in Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd (2013) 250 CLR 303; [2013] HCA 46 at [57] to the effect that "Unduly technical and costly disputes about non-essential issues are clearly to be avoided". Their submissions are accompanied by 121 pages of supporting material, mostly comprising correspondence, a contract for the sale of land and a partially redacted valuation.
The respondents oppose the application. Their submissions need not be summarised.
The application must be refused, for the following reasons.
First, there is nothing to suggest that the appellants cannot pay the amount to which they agreed.
Secondly, what is proposed by the appellants is not accompanied by any timeframe within which the security in a form which may readily be drawn upon by the respondents in the event that they obtain a favourable costs order will be provided. Security which is problematic to realise is of little comfort to the ostensibly secured party.
Thirdly, the allegations that the respondents have breached the duties imposed by the Civil Procedure Act misconceive the nature of the orders. The order is in a familiar form. The default position is for $25,000 to be paid into Court. The order permits the parties to agree to an alternative form of security. That recognises that paying money into Court may be less than optimal for both litigants. Both sides may prefer for funds to be paid into a joint bank account, which would earn interest. Both sides might prefer, alternatively, the provision of a bank guarantee, which would not involve the appellant parting with the whole of the funds for the period during which security is provided. There are other regimes to which the parties may agree. But there is nothing in an order of this nature which impliedly imposes an obligation upon a respondent to agree to a different form of security from that which has been ordered.
Fourthly, the appellants' reliance on what was said in Expense Reduction is unwarranted. The issue is the mode of provision of $25,000, a relatively trifling amount given the appeal is brought from a trial in the Equity Division lasting some 10 days, by way of security for the respondents' costs. Security for costs is a "non-essential issue" as that term is used in Expense Reduction, and the mode by which it is provided is a further dimension removed from the real issues in dispute in this appeal. It is trite but warrants reiteration that if as the appellants contend their appeal enjoys substantial prospects of success, the security will never be called upon. On the other hand, if the appeal fails and the respondents obtain an order for costs, then the appellants will be liable for that amount as agreed or assessed. All that was in issue on 4 July was whether the respondents should have the benefit of a partial security for the contingent liability the appellants will incur if and when an adverse costs order is made. All that is in issue in this application is the form which that security should take. It is very much to be doubted that the efforts which have been directed to a dispute about the form of security are warranted. The caution in Expense Reduction is apposite, but it is to be directed to the appellants, not the respondents.
Against the possibility that the Court might not accept the appellants' proposal, they seek an extension of time until 15 September 2022 and a vacation of the order staying the appeal. I see no reason to vary the orders.
The appeal is once again listed for directions before the Registrar on 24 August 2022. If security has not been provided by then, it will be a matter for the Registrar after hearing from the parties whether to tentatively allocate a date for the hearing. There is nothing in the stay which prevents that from occurring. However, the respondents should not be under any obligation to prepare submissions until the issue of security is resolved (that said, it may be that they desire to have the appeal heard and determined expeditiously, and there is no prohibition upon them providing their submissions before the issue of security is resolved). An appropriate course might be to tentatively set a date for hearing, well after 15 September 2022, on the basis that that date will not be confirmed until security is provided.
Thus it is not necessary to vary the orders to prevent at least some steps being taken to progress the appeal, contingently, against the possibility that security is provided. True it is that the appellants are in breach of the order and the appeal is stayed. The prospects of the respondents applying to have the appeal dismissed pursuant to UCPR r 51.50(2A) and having that application determined in the next four weeks are nil. Because nothing so far as I can see turns upon the variation which is sought, it should not be made.
If security is not provided within a reasonable time, it is a matter for the respondents to apply, if so advised, for the appeal to be dismissed.
There is no reason to depart from the usual rule that costs follow the event. The application to vary the orders made on 4 July 2022 is dismissed, with costs.
After preparing the above, and notifying the parties that the matter was listed for judgment, my Associate received submissions in reply from Mr Smits, annexing a further 93 pages of materials (although the number of pages exaggerates what is new, because 70 pages comprise an unredacted version of a valuation provided under cover of the submissions in chief). No direction was made for the provision of submissions in reply. Even so I have read the submissions. They respond to criticisms advanced by the respondents, and need not be summarised here. None impacts upon the result of this application.
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Decision last updated: 18 August 2022