Hickie v Land Enviro Corp Pty Ltd

Judgment 1HER HONOUR: Land Enviro Corp Pty Limited and three other parties brought proceedings in the Equity Division of this Court arising out of a dispute concerning the development of a disused coal mine on the South Coast of New South Wales. In those proceedings, the plaintiffs sought to have agreements entered into in respect of the development set aside. They also sought to have set aside orders made by consent dismissing earlier proceedings brought in 2001. 2Mr David Hickie was the third defendant to those proceedings and a director of the sixth defendant, Vocifa Pty Limited. The proceedings were heard by Stevenson J during February and March 2012. On 20 April 2012, his Honour dismissed the plaintiffs' claims: Land Enviro Corp Pty Ltd v HTT Huntley Heritage Pty Ltd [2012] NSWSC 382. His Honour dealt with costs in a separate judgment given on 7 May 2012: Land Envirocorp Pty Ltd v HTT Huntley Heritage Pty Ltd [2012] NSWSC 446. As to Mr Hickie and Vocifa, his Honour ordered the plaintiffs to pay their costs on the indemnity basis from 2 September 2011. 3The plaintiffs sought to appeal against the decisions of Stevenson J but did not bring their appeal within time. A notice of intention to appeal was filed on 18 May 2012. However, no notice of appeal was filed within the time allowed under the rules. The last day for filing a notice of appeal was 27 July 2012, the order dismissing the claim having been made on 27 April 2012. A notice of appeal was filed (irregularly) on 8 November 2012 together with a notice of motion seeking an extension of the time within which to file and serve that notice. 4On 21 February 2013, Allsop P (as his Honour then was) dismissed the application for an extension of time: see Land Enviro Corp Pty Ltd v HTT Huntley Heritage Pty Ltd [2013] NSWCA 35. The plaintiffs then brought an application under s 46(4) of the Supreme Court Act 1970, which allows the Court of Appeal to discharge or vary an order made by a Judge of Appeal. Such an application may be made as of right. That application is listed for hearing in the Court of Appeal on 18 September 2013. 5In the meantime, Mr Hickie and Vocifa had their costs of the proceedings before Stevenson J assessed under the Legal Profession Act 2004. They obtained four certificates of determination of costs in the total amount of $358,588.89. Those certificates have been filed in the registry of this Court and are accordingly taken to be a judgment of the Curt for unpaid costs in the sum of $358,588.89: see s 369(7) of the Legal Profession Act 2004. Such judgments, arising from claims in debt, are entered as judgments of the Common Law Division. That curious combination of events brought an application before me as duty judge for a stay of execution of the costs judgment pending the determination by the Court of Appeal of the application to have the order of Allsop P discharged. 6I heard the application on 6 May 2013. On 10 May 2013, I granted a stay of enforcement of the costs judgments until 3 June 2013, noting that if the defendants had not by then paid the sum of $15,000 into Court by way of security for the costs of the hearing of the application in the Court of Appeal to have the order of Allsop P discharged, the stay would not be extended beyond that date. The applicants paid that sum into Court on 28 May 2013. On 3 June 2013, I extended the stay up to and including 18 September 2013, being the date on which the application is listed for hearing. These are my reasons for making those orders. 7The present application invokes s 135 of the Civil Procedure Act 2005, which confers power on the Court to make orders with respect to the enforcement of its judgments. The power is a discretion to be exercised in accordance with the dictates of justice: s 58 of the Civil Procedure Act. 8Mr Lever SC, who appeared for Mr Hickie and Vocifa, relied on the decision of the Court of Appeal in Alexander v Cambridge Credit Corp Ltd (1985) 10 ACLR 42; (1985) 2 NSWLR 685, where the principles governing the exercise of the Court of Appeal's discretion to grant a stay of execution on judgment pending an appeal were considered. 9Strictly speaking, the present application does not seek a stay pending appeal. Land Enviro Corp seeks to prosecute an appeal against the judgments of Stevenson J. The judgment now sought to be stayed is a discrete judgment obtained upon the assessment of Mr Hickie's costs and the filing of the costs certificates in the registry of this Court. As emphasised on behalf of Mr Hickie, Land Enviro Corp has not sought to challenge the costs judgment. 10That, however, is more a matter of form than substance. The principal judgment given by Stevenson J on 20 April 2012 was the source of Mr Hickie's entitlement to costs. If Land Enviro Corp were successful in its challenge to the order of Allsop P and in the appeal, it would at least be arguable that the costs judgment entered in this Division was liable to be disturbed. The mechanism by which that might occur was not the subject of any attention at the hearing before me, the argument having proceeded on the implicit premise that the application for a stay was, for all intents and purposes, in the nature of a stay pending appeal. 11A number of more significant points of difference may be noted between the application determined in Cambridge Credit and the present application. First, that was a case in which a stay had been granted by a judge of the division in which the judgment was entered. At issue in the Court of Appeal was the Court's authority to exercise its own discretion to continue or dissolve the stay pending the appeal to the Court. As explained below, I am in a different position. 12Secondly, the parties opposing the continuation of the stay in Cambridge Credit conceded both at first instance and in the Court of Appeal that there were arguable matters for consideration in the appeal. 13A further difference is that the judgment appealed from in Cambridge Credit was a judgment "of unprecedented size" against the defendants ($145 million) whereas the judgment sought to be appealed from in the present case is the dismissal of a plaintiff's claim. 14One of the propositions for which Cambridge Credit stands as authority is that, in order to obtain a stay, it is not necessary to establish "special" or "exceptional" circumstances. The requirement is to demonstrate a reason or an appropriate case to warrant the exercise of the Court's discretion in favour of the applicant for a stay. In reaching that conclusion, apart from noting that the historical requirement for the establishment of special or exceptional circumstances found no support in the words of the rule there under consideration (part 51 r 10 of the Supreme Court Rules), the Court had regard to the consideration that, whereas the facility of an appeal was relatively novel when that requirement evolved, appeals are now common, particularly in commercial matters. It was noted in that context that appeal courts are frequently enjoined to determine the proper inferences to be drawn from undisputed or established facts. 15I accordingly approached the present application on the basis that the proper approach is to acknowledge that, prima facie, Mr Hickie and Vocifa are entitled to the benefit of the judgment of Stevenson J at first instance and that the applicant had to demonstrate a reason or an appropriate case for staying the execution of the costs judgment (which sprang from that judgment). 16The applicants must demonstrate a proper basis for a stay that will be fair to all parties: Cambridge Credit at 694F. One of the fairness considerations referred to in Cambridge Credit is the risk that assets will be disposed of. In the present case, since the plaintiffs were unsuccessful at first instance, that issue does not arise quite in the way it did in Cambridge Credit, where the "fruit" of the judgment was that the plaintiffs were owed a debt in the sum of $145 million. 17The financial position of the parties applying for the stay arises in a different way in the present case. The plaintiffs in the proceedings below were two companies (Land Enviro Corp Pty Ltd and Amy Holdings Pty Ltd) and two individuals (Mr Sam Zdrilic and Mrs Amy Zdrilic). The costs judgment was entered against each of those parties on 14 March 2013. 18On 18 March 2013, Mr Hickie served statutory demands on each of the two companies. On 8 April 2013, the companies filed applications to have those demands set aside on the basis of a genuine dispute about the existence of the debt to which the demand related. 19On 5 April 2013, a bankruptcy notice was served on each of Sam and Amy Zdrilic. On 17 April 2013, they each made an application to the Federal Circuit Court to have the bankruptcy notices set aside. 20Mr Zdrilic, who appeared for all of the applicants for the stay (appearing for the two companies without any opposition on the part of Mr Hickie) stated that there is no prospect of Mr Hickie's recovering the costs judgment. Mr Zdrilic contended that, if the winding up of the two companies and the bankruptcy proceedings against the two individuals proceed, that will in effect stymie the entitlement of the applicants to challenge the decision of Allsop P, which in turn will spell the end of the applicant's claim. I accept that is probably the case. 21Those circumstances give rise to competing considerations. On the one hand, Mr Hickie and Vocifa are entitled to the benefit of the judgment of Stevenson J and the costs judgment entered in their favour in this division. If the unsuccessful plaintiffs in the proceedings below are indeed unable to meet the costs judgment, that is a powerful consideration in favour of declining to grant the stay, since any further hearing in respect of the appeal will entail the incurring of further legal costs. That is clearly a source of prejudice to Mr Hickie and Vocifa. 22Conversely, however, to refuse to grant the stay would have the practical effect of pre-empting the determination of the application currently listed for hearing in the Court of Appeal. As discussed in Cambridge Credit, the task of the court asked to grant a stay is to weigh such considerations in a manner that is fair to all parties: at 694F to 695C. Thus the Court noted that "it is not at all unusual for the Court, in the exercise of its discretion, to grant a stay on terms that the appellant give to the judgment creditor security in terms defined by the Court as appropriate to the fair adjustment of the rights of the parties": 695A. 23Two further principles are stated in Cambridge Credit which should be considered in the present case. The first (at 695D) is that where there is a risk that the appeal will prove abortive if the appeal succeeds and a stay is not granted, courts will normally exercise their discretion in favour of granting a stay. In the present case, whilst it cannot be said that the appeal will prove abortive if the applicants succeed and a stay is not granted, it can be said that if the stay is not granted, that decision will for all practical purposes stymie the prosecution of the appeal. The prospect of a liquidator or trustee in bankruptcy determining to prosecute the application in place of the indefatigable Mr Zdrilic is fanciful in my view. 24Counsel for Mr Hickie relied on that consideration as a factor in favour of refusing the stay. He submitted that the decision whether to prosecute the appeal ought more properly be made by an objective third party. The difficulty with that submission is that it entails an element of question-begging, implicitly assuming that the appeal is without merit. The practical reality is that any administrator appointed at this stage is unlikely to be in a position to proceed with the application in the Court of Appeal. 25The second further principle stated in Cambridge Credit is that although the Court, when considering whether to grant a stay, will not generally speculate about the applicant's prospects of success, that does not preclude the Court from making some preliminary assessment about whether the appellant has an arguable case. That consideration weighed in favour of the applicant for a stay in Cambridge Credit where, as already noted, the respondents to the application had acknowledged (properly, as the Court held) that the appeal was arguable. No such concession is made in the present case. On the contrary, Mr Lever submitted that the case against Mr Hickie and Vocifa was doomed to fail at first instance and that the appeal as against them is hopeless. 26As already noted, it was sought in the proceedings below to have agreements and consent orders set aside. A critical issue in the proceedings was whether certain representations had been made to the plaintiffs. Mr Lever noted that the plaintiffs did not allege that Mr Hickie had made any representations whatsoever, either on his own behalf or on behalf of Vocifa. The claim against them was brought on the basis that actionable representations were made to the plaintiffs by Robert Renshall and that he was acting as agent for Mr Hickie and Vocifa. 27In that context, Mr Lever noted that, in five pages of grounds of appeal against the decision of Stevenson J, the notice of appeal, insofar as it concerns Mr Hickie, confines itself to a single ground alleging that the trial judge erred in not finding that Mr Renshall and HTT were the agent of Mr Hickie and Vocifa. 28As noted by Mr Lever, the case against Mr Hickie and Vocifa was disposed of briefly in the judgment of Stevenson J (at [982] to [999]). His Honour noted at [983] that, in view of his conclusions as to the substance of the plaintiffs' claim, it was not necessary for him to deal with the contention that HTT and Mr Renshall made the pleaded representations as agent for Mr Hickie and Vocifa. His Honour said (at [984]): However, and again in deference to the submissions made on this issue, I shall deal with it, although again, briefly. 29The particulars of the claim of agency included the contention that, during the course of the relevant negotiations, Mr Renshall represented that he represented Mr Hickie and his interests in the negotiations. At the hearing before Stevenson J Mr Jucovic QC, who then appeared for the plaintiffs, accepted that a representation by Mr Renshall of asserted authority would not be sufficient to establish agency and that any such representation would have had to come, expressly or implicitly, from Mr Hickie: at [987] of the judgment. 30After briefly considering the evidence on that issue, Stevenson J said at [995] of the judgment that he could see force in the submission that Mr Hickie put Mr Renshall in a position from which it was reasonable for Mr Zdrilic to infer that Mr Renshall had Mr Hickie's authority to negotiate the terms of the heads of agreement which the plaintiffs sought to have set aside in the proceedings. However, his Honour continued (at [996] to [999]): But there is no suggestion that Mr Hickie had any involvement in the dealings with any proposed funder. There is no evidence that Mr Hickie was involved in the negotiations between HTT and Mr Renshall and IBIS/IPC or that Mr Zdrilic thought Mr Hickie had any such involvement. In those circumstances, I cannot see how Mr Zdrilic could reasonably have inferred that the representations allegedly made to him by Mr Renshall concerning the availability of funds (as opposed to negotiation of the terms of the Heads of Agreement) were made on behalf of Mr Hickie. For that reason, my opinion is that HTT and Mr Renshall were not acting as Mr Hickie's agent for relevant purposes, that is to say for the purposes of making the representations as to the availability of funds. Certainly, so far as concerns the critical events of 25, 26 and 27 August 2004, apart from being present at the meeting of 27 August 2004 (although only for part of the meeting), there is no suggestion that Mr Hickie had the slightest involvement in HTT's discussions with potential funders or in the formulation of whatever opinions and representations were passed on to Mr Zdrilic during that period. 31It may be seen that his Honour's conclusion stemmed from an evaluative judgment, based on all the evidence, as to the reasonableness of Mr Zdrilic drawing an inference during the course of what were evidently lengthy and complex negotiations. The impossibility of my forming any confident view as to the hopelessness or otherwise of impugning that finding is manifest. 32The task of making any preliminary assessment as to whether the applicants have an arguable case is complicated by the need to consider the judgment of Allsop P and the substantial hurdle faced by the applicants in seeking to have his Honour's order varied under s 46(4) of the Supreme Court Act. 33Mr Lever submitted that it is well-established that an application under that section requires the establishment of error of the kind referred to in House v The King. He relied upon the decision of the Court of Appeal in Patrick v Howorth [2002] NSWCA 285 where the Court's authority to review an order of a Judge of Appeal under s 46(4) was considered. Handley JA had made an order for security for costs. In determining whether to vary that order, the Court said (at [10] per Heydon JA; Hodgson JA and Young CJ in Eq agreeing at [25] and [26] respectively): It is not open to this Court to make, or to refuse to make, an order for security of the kind which it or its individual members would have made had it or any of them been sitting to determine the respondent's original application for security for costs. According to Mahoney JA in Wentworth v Wentworth (1994) 35 NSWLR 726 at 731, it is necessary to show that Handley JA misdirected himself in principle or that his order was plainly wrong. According to Handley JA in Wentworth v Wentworth at 733, the court's power of review is subject to the principles relevant to the review of interlocutory discretionary decisions on matters of practice and procedure. According to Powell JA in Wentworth v Wentworth at 737, the party seeking review must demonstrate that the discretion plainly miscarried. These tests overlap. A review of the decision to order an appellant to provide security for costs, like other s 46(4) reviews of procedural decisions, will ordinarily not succeed unless the decision turns on an error of law, a material error of fact, a failure to take into account some material consideration or the taking into account of an irrelevant consideration, or unless the decision is so unreasonable as to suggest that one of these types of error has been committed even though it does not appear on the face of the reasoning. 34Those principles pose a substantial burden for the applicants in the application listed for hearing in the Court of Appeal on 18 September 2013. After some deliberation, I formed the view that it was neither necessary nor appropriate for me, as a puisne judge sitting in a division of the Court, to venture a preliminary view as to whether the applicants have an arguable case that the decision of Allsop P entailed error of the kind required to be established. 35Leaving aside the inappropriateness of a judge in a division of the Court pre-empting what view the Court of Appeal may form in respect of a decision of a Judge of Appeal, the task is virtually impossible in any event. In his deliberately brief judgment (see [2] of the judgment), Allsop P noted three specific aspects of the rejection of the claim by the primary judge. First, his Honour observed that there had been "an apparently careful analysis of the objective evidence". 36It is plainly not possible on an application of the kind before me (heard in the duty list) to form any opinion as to the fairness of that observation. That is a matter for the Court of Appeal. 37Secondly, Allsop P noted that the credit and acceptability of the evidence of Mr Zdrilic was at the centre of the case (at [10]). At [13], his Honour observed "the complexity and subtlety of the findings of reliability are exceptionally difficult if not impossible to confidently review on appeal". His Honour's third observation raised a similar issue, emphasising the advantage of a trial judge over an appeal court in having the opportunity of "absorbing the evidence, thinking about the case and formulating over time the proper resolution of the human dispute before him or her". 38Thus Allsop P evidently placed considerable weight on the constraints on appellate courts in interfering with the assessment of a trial judge as to matters of credit and findings of fact. Few trial judges would commend any different approach, but it must be accepted that the force of those constraints is notoriously protean, according to the particular circumstances of individual cases. 39Otherwise, his Honour determined the application by reference to matters concerning the practice and procedure of the Court of Appeal as to which, again, it should be the exclusive province of the Court of Appeal to comment. 40In those circumstances, I felt compelled to determine the application for a stay on the premise that it was not possible for me to form a judgment as to the applicants' prospects of success in varying the order of Allsop P. I accordingly approached the application on the basis that there may well be very limited prospects of success but, conversely, that there may be some respectable point nestling within the complex and extensive material which will be put before the Court of Appeal. 41Against those considerations, I concluded that the most important factors in favour of granting a stay were the fact that, if the stay were not granted, that would in all probability stymie the application under s 46(4) of the Supreme Court Act; the fact that that application is ready for hearing and has a hearing date; the relatively narrow scope of that application and the impossibility of excluding the conclusion that the application has reasonable prospects of success. 42The most important factors against granting the stay were, in my consideration, the need to acknowledge that Mr Hickie and Vocifa are entitled to the benefit not only of the judgments of Stevenson J but of the costs judgment, which is not the subject of any appeal; the apparent risk that the applicants will not be able to satisfy that judgment and the plain prejudice of allowing further costs to be incurred in that circumstance. 43Weighing those competing considerations, I formed the view that there was an appropriate basis for granting a stay that would be fair to all parties if the applicants were able to provide security in a modest sum to meet Mr Hickie's legal costs of the hearing of the s 46(4) application in the Court of Appeal. For those reasons, I made the orders set out above.