McMillan v Coolah Home Base Pty Ltd

Court of Appeal (NSW)|2023-07-04|Before: Mitchelmore JA, Ms P

Background to the applications

The primary judge produced a comprehensive judgment comprising 664 paragraphs. The following summary of the background to the proceedings and his Honour's conclusions is taken from his Honour's reasons.
The third and fourth respondents had control over the management of CHB, as the holders respectively of the two ordinary shares that were issued: [34]. The appellants subscribed for 16 A-class shares between them, giving each the exclusive use of one of the long-term sites (LTS) within the Park as well as the right to use common amenities. (There were also short-term sites (STS), some of the shares with respect to which took on some significance in the proceedings.) The third and fourth respondents also purchased A-class shares through HBS, which were subsequently transferred to Residential Cluster Pty Ltd (RCPL), another company they controlled which was not a party to the proceedings: [38]-[39]. There were other purchasers of A-class shares who were also not parties to the proceedings.

Procedural history of the disposition of the proceedings below

Following his Honour's delivery of his judgment on 13 May 2022, the appellants promptly filed a Notice of Intention to Appeal (First NIA) on 8 June 2022. The First NIA stated that the appellants intended to commence appeal proceedings "within 3 months after the material date, that is on or before 15th August 2022".
On 23 June 2022, the primary judge made an order dismissing the appellants' claims against the Administrators. On 8 July 2022, his Honour made an order winding up CHB and an order otherwise dismissing the appellants' claims against the Kelly-Booker parties. On that occasion, his Honour declined to grant further relief that the appellants sought in relation to oppression, stating that he would provide his reasons subsequently.
On 22 November 2022, his Honour published a further judgment: McMillan v Coolah Home Base Pty Ltd (No 5) [2022] NSWSC 1589. In this judgment, his Honour addressed the costs between the appellants and the Kelly-Booker parties, and made an order that the appellants pay the Administrators indemnity costs on and from 14 August 2021. His Honour also provided reasons for his earlier refusal to make further orders that the appellants had sought in relation to the conduct of the Directors that his Honour had found to be oppressive: [26]-[32].
On 19 December 2022, the appellants filed a further Notice of Intention to Appeal (Second NIA). The Second NIA was premised on 22 November 2022 being the "material date" as defined in UCPR r 51.2. The Second NIA stated that the appellants intended to commence appeal proceedings "within 3 months after the material date, that is on or before 22 February 2023".
Following receipt of the Second NIA, the solicitors for the Kelly-Booker parties sent a letter to the appellants' solicitors, dated 23 December 2022, in which they advised that they did not accept that the Second NIA was valid or that the material date was 22 November 2022. After setting out the dates to which I have referred above, the letter stated that the material date in so far as the Kelly-Booker parties were concerned was 8 July 2022; and gave notice that if the appellants sought to rely on the Second NIA, the Kelly-Booker parties would oppose the filing of an appeal on grounds including that it was out of time.
The appellants did not respond to the letter from the solicitor for the Kelly-Booker parties. On 22 February 2023, the appellants' solicitor sent an email to the Registry attaching a copy of a Notice of Appeal. The Notice of Appeal was not sealed until 28 February 2023 (due to a request to postpone payment of the filing fee) but the respondents did not take any point about in relation to that delay. An Amended Notice of Appeal was filed on 21 March 2023.

The appeal was filed out of time

As noted above, the appellants' primary position was that the material date was 22 November 2022, on the basis that before then they had no way of knowing what the primary judge's reasons were for rejecting the orders they had sought. Additionally, they submitted that where there were multiple judgments over a period of time, the material date would "logically" be the date of the last decision.
Assuming for present purposes that the appeal is brought as of right, the Amended Notice of Appeal refers to the primary judge's order of 8 July 2022 dismissing the claims against the Kelly-Booker parties, and his Honour's costs orders of 8 July 2022 and 22 November 2022. Although no reference is made in the Amended Notice of Appeal to the order of 23 June 2022 dismissing the claims against the Administrators, the grounds of appeal take issue with his Honour's conclusions on those claims; if any were to be upheld that order would also need to be set aside.
I do not accept the appellants' submission that the material date was 22 November 2022. For the purposes of an appeal regarding the Administrators, the material date was 23 June 2022, when the primary judge made the order dismissing the proceedings as against them. The material date for the Kelly-Booker parties was 8 July 2022, when the primary judge made the orders dismissing the proceedings as against them.
On the most favourable view to the appellants, which involves treating the First NIA as accompanying the making of the dispositive orders against the respective respondents, the time by which an appeal should have been commenced was 23 September 2022 in the case of the Administrators, and 8 October 2022 in the case of the Kelly-Booker parties. The appellants' next step in the proceedings, which was to file and serve the Second NIA on 22 December 2022, was not a valid invocation of UCPR r 51.8. The appeal filed on 22 February 2023 was outside the time permitted by UCPR r 51.10 by some five months in the case of the Administrators, and over four months in the case of the Kelly-Booker parties.

Application for an extension of time

The principles governing an extension of time are not in doubt and are relevantly summarised in Jackamarra v Krakouer (1998) 195 CLR 516; [1998] HCA 27 at [4] (Brennan CJ and McHugh J). The discretion to extend time is given for the sole purpose of enabling the court to do justice between the parties, bearing in mind that upon the expiry of the time for appealing a respondent has "a vested right to retain the judgment": Gallo v Dawson [1990] HCA 30; (1990) 64 ALJR 458 at 459 (McHugh J). As McHugh J further stated, the discretion can only be exercised upon proof that strict compliance with the rules will work an injustice upon the applicant, which requires consideration of the history of the proceedings, the conduct of the parties, the nature of the litigation, and the consequences for the parties of the grant or refusal of the application for extension of time: Gallo v Dawson at 459 (McHugh J).
In Tomko v Palasty (No 2) (2007) 71 NSWLR 61; [2007] NSWCA 369 Basten JA (Hodgson and Ipp JJA agreeing) identified four factors of general relevance: (1) the length of the delay; (2) the reason for the delay; (3) whether the applicant has a fairly arguable case; and (4) the extent of any prejudice suffered by the respondent to the application. In respect of the third factor, Basten JA stated in Tomko at [58]: "There is a danger in placing too much emphasis on the prospects of success: to do so invites the parties to treat the application as a dress rehearsal for the full appeal: see Jackamarra at (at 521 [9]). In my view, it is not necessary, or appropriate, for the applicant to do more than demonstrate a fairly arguable case: it was not necessary nor appropriate to demonstrate in any detail the prospects of success. For present purposes it is sufficient to say that a number of grounds are fairly arguable and one at least has reasonable prospects of success."
In the same case, Hodgson JA remarked at [14] that "there may be circumstances where it is appropriate to go further into the merits of the case of a person seeking an indulgence such as this, than to ask whether or not the case is fairly arguable". His Honour went on to observe that "if the explanation for the delay is less than satisfactory, or if the opponent has a substantial case of prejudice, then it may be relevant that the person seeking the indulgence shows that his or her case has more substantial merit than merely being fairly arguable". Hodgson JA's additional observations have subsequently been adopted, for example in Blackmore v Browne; Kara Kar Holdings Pty Ltd v Blackmore [2011] NSWCA 114 ("Blackmore") at [18]-[19] (Campbell JA); Asuzu v Council of the New South Wales Bar Association [2012] NSWCA 406 ("Asuzu") at [42] (Ward JA); and O'Hare v Bradfield Bentley Pty Ltd (in liq) [2019] NSWCA 122 at [43] (Gleeson JA).
The applicant bears the burden of persuading the Court that there are proper grounds to grant an application for an extension of time: Nanschild v Pratt [2011] NSWCA 85 at [44].

The length of the delay and the explanation for it

I have referred in [21] to the length of the delay. The explanation for the delay was limited. Mr Vogel asserted in his May affidavit, and repeated in his oral submissions, that it was only from the point of Parker J's judgment of 22 November 2022 that the appellants could know the final disposition of their case and consider their grounds of appeal in all of the circumstances. Specifically in relation to the Administrators, Mr Vogel submitted that although the claims against them were dismissed on 23 June 2022, as a number of the claims were in the nature of accessorial liability it was not possible to know until the final disposition of the proceedings against the Kelly-Booker parties whether or not the appellants would want to appeal against the decision in so far as it concerned the Administrators.
In the alternative, Mr Vogel submitted that in cases where multiple judgments were given over a period of time that should be a consideration in favour of some "leniency" in terms of the speed with which the appellants should have been expected to move. In his submission, any other approach was inconsistent with the principles in s 56 of the Civil Procedure Act 2005 (NSW). He referred, for example, to the possibility of the appellants needing to file separate notices of appeal in relation to different parties.
The respondents relied on the fact that the appellants filed and served the First NIA in June 2022, which stated an intention to appeal as at that time. Counsel for the Kelly-Booker parties submitted that the statement of intention in the First NIA sat uncomfortably with the submission that the appellants could only have known as at 22 November 2022 whether or not they would want to appeal. That submission has force, noting that there was nothing to preclude the appellants from commencing an appeal and seeking to amend the Notice of Appeal in the event that there were aspects of the reasons of 22 November 2022 that they sought to challenge.
On the other hand, filing and serving the First NIA provides some support for the appellants' submission that while they foreshadowed an intention to appeal, they were waiting for the proceedings to be finalised before commencing an appeal that would cover all grounds. Such support as that may provide is weakened by the fact that the November 2022 judgment was directed to limited questions of relief, the substantive reasons having been given in May 2022, and yet the appellants filed the Second NIA on 22 December 2022 rather than a Notice of Appeal. Nonetheless, I find that some explanation has been provided for the delay, although it is not particularly satisfactory.

Prejudice to the respondent

Counsel appearing for both the Kelly-Booker parties and the Administrators accepted that the respondents did not suffer any prejudice from the delay in commencing the appeal "besides the ordinary prejudice of having to defend the appeal". Counsel for the Kelly-Booker parties also submitted, however, that prejudice lay in the form of increased costs as a result of the appeal not having been brought expeditiously. I understood this submission to be directed predominantly to the time that had elapsed since counsel and solicitors had engaged with the substantive matter, which ran for 14 days with what was described as a significant (and disorganised) documentary tender. The Kelly-Booker parties accepted that these matters were not determinative but submitted that they were relevant to consideration of the Court's discretion in circumstances where the delay was not explained and the merits were poor. I have taken them into account.

Merits of the appeal

The circumstances demonstrate a failure to attend diligently to the requirements of the UCPR. The explanation that has been proffered for that failure is not particularly satisfactory, but the prejudice to the respondents does not extend beyond defence of the appeal. It is not my function on this application to determine whether the appeal will succeed. Rather, it is necessary for me to form a view as to whether it could possibly succeed: Cook v Chesterton International Pty Ltd [2015] NSWCA 306 ("Cook") at [50] (Emmett JA). The merits of the appeal are, of course, also relevant to the respondents' respective applications for security for costs.
The Amended Notice of Appeal contains 41 grounds, some of which contain multiple allegations of error. Viewed collectively, they take issue with his Honour's conclusions on each of the issues I have set out above (at [10]). In relation to the Kelly-Booker parties, the grounds cover: 1. the primary judge's conclusion that the third and fourth respondents were reliable witnesses (ANOA [8]-[9]); 2. the finding that the appellants were not promised ownership of their respective allotments "as land as well as shares" (ANOA [10], which includes 16 allegations of error, in (a) to (p)); 3. the primary judge's alleged failure to consider certain conduct pleaded as part of the oppression, and to make orders to remedy the oppression (ANOA [11]-[12], with [12] advancing 13 separate errors, in (a) to (m)); 4. the findings his Honour made in relation to particular transactions on which the appellants relied as oppressive, including the April 2014 share issue (ANOA [13]), the Directors' defence of the 247A proceedings (ANOA [14]), the appointment of the Administrators (ANOA [15]-[19]), and the sale of the Park to CTP pursuant to the DOCA (ANOA [20]-[23]); 5. his Honour's refusal to make declarations confirming that the appellants owned their cabins (ANOA [25]); 6. the dismissal of the appellants' claims for misleading or deceptive conduct (ANOA [26]), unconscionable conduct (ANOA [28]-29]) and harassment and coercion (ANOA [30]); and 7. the conclusion that specific performance was not available as a remedy (ANOA [27]), and that compensation was not available (ANOA [31]-[33]).
In relation to the Administrators, the grounds cover his Honour's dismissal of the appellants' claims for accessorial liability (ANOA [34]-[35]); his Honour's finding that the Administrators did not owe the appellants a duty of care (ANOA [36]-[38]); his Honour's dismissal of the claim for unconscionable conduct (ANOA [41]-[42]); and the claim under s 90-15 of Schedule 2 to the Corporations Act (the Insolvency Practice Schedule) (ANOA [43]).
Additionally, the appellants allege that they were denied procedural fairness in so far as his Honour confined his consideration to the case they pleaded, when other issues were raised in the submissions and the parties had a sufficient opportunity to meet them (ANOA [24]; [44]-[45]). The appellants also contend that his Honour unreasonably refused particular relief sought (ANOA [46]-[48]).
The appellants filed their written submissions in support of the appeal on 12 April 2023. When read against the Amended Notice of Appeal, the submissions do little more than reproduce the grounds of appeal, largely verbatim albeit with minor variations in the order and wording, as well as some limited additional material on certain issues. The grounds of appeal have not been developed in any meaningful way, for example, by referring to the evidence before his Honour supporting the contrary findings for which they contend (save for cross-references to their submissions below, non-acceptance of which forms the basis of many complaints). Nor do the appellants explain in the submissions how the alleged errors would, if established, impact upon the primary judge's disposition of the matter.
In their written submissions in support of the extension of time the appellants asserted that "all of [the grounds of appeal] have merit" (at [23]). They then emphasised a number of "key findings" that the trial judge made on the issue of oppression (in light of which the appellants submitted that the result should have been different) (at [24]), together with a number of issues on which, in their submission, they have "good prospects of success": 1. For the Kelly-Booker parties, the appellants emphasised the primary judge's dismissal of the misleading and deceptive conduct and unconscionable conduct claims (ANOA [26], [28]-[29]), and his Honour's conclusion that the Directors did not misappropriate income of CHB (ANOA [11(a)]) (at [25]); and 2. As to the Administrators, the appellants emphasised the alleged errors in rejecting their claim for damages in negligence (ANOA [36]), and for the Administrators' knowing involvement in the Directors' abuse of the process of administration (ANOA [34]) and unconscionable conduct (ANOA [41]-[42]) (at [26]).
The prospects of the appellants' succeeding on the above cannot fairly be described as "good". Starting with the issues concerning the Kelly-Booker parties, the third issue relates to an alleged misappropriation of shares and other income. The appellants relied on ASIC filings between 2012 and 2017 which recorded that the share capital for CHB was $1,117,000, while later ASIC filings recorded CHB's share capital as $742,000. The appellants further alleged that other specified sums of money had been paid for shares and never deposited in CHB's account. The appellants submitted that it followed that the Directors had stolen large sums of CHB's money for themselves.
In rejecting this claim, his Honour accepted the submission of the Kelly-Booker parties that early ASIC filings had wrongly included the amounts that purchasers had paid for cabins in the share capital figure, with the lower figure in later filings being the corrected (and correct) figure: [511], [513]. The primary judge described the appellants' counsel as having made no reply to the submissions of the Kelly-Booker parties in this respect. Nor did counsel for the appellant reply to the submission made in response to alleged misappropriation of other sums of money, namely, that those allegations were neither pleaded nor put to the third respondent in cross-examination. In any event, his Honour concluded that the evidence did not permit making an order for compensation or an account in CHB's favour [512]-[513]. In the absence of all of the material before the primary judge, I am unable to say that the appeal on this issue cannot possibly succeed, although there are obstacles in the way of the appellants' success.
The allegation of misleading or deceptive conduct against the Kelly-Booker parties related to the appellants' entry into the share purchase transactions, and rested on a pleaded representation that the purchase would confer an interest in land as well as the corresponding share in CHB: [187], [566]-[568]. His Honour considered that the question posed by the pleading was whether the appellants were promised ownership of the sites themselves, as land, on top of the shares: [187]. In answering that question "no" (at [188]), his Honour considered that the promotional materials on which the appellants relied, when read as a whole, indicated that the appellants were to receive shares and no more: [189]. His Honour reached the same conclusion in relation to the various forms of purchase agreement that the appellants signed.
As to the oral representations of which the appellants gave evidence, his Honour concluded that they would not have gone further than the promotional materials; and his Honour was not satisfied that the appellants "in fact believed that they would be receiving ownership of their sites as land": [190]. If they did hold that belief, it was not reasonably based on any promises or representations of the third or fourth respondents: [190]. The Kelly-Booker parties had provided detailed submissions in relation to each of the appellants which the primary judge described as a "withering analysis" to which the appellants made no reply below. The appellants' grounds of appeal and written submissions also make no reference to what was put against them in this regard.
Mr Vogel spent some time on this issue in his oral submissions, arguing that the primary judge did not consider the material in terms of how it would be perceived by persons in the position of the appellants. I accept that the question of whether the representation was made is one that is fairly arguable. I note that the appellants' proprietary estoppel claim rested on the same alleged representation. That said, on the misleading and deceptive conduct claim, the appellants will also need to establish that they relied on the representations in proceeding with the purchase (determined adversely to them: [571]); and that they suffered economic and non-economic loss, in circumstances where: 1. they led no evidence of economic loss (at [573]-[574]); and 2. in relation to their claim for disappointment, distress and anxiety, which was of the nature dealt with in Baltic Shipping Co Ltd v Dillon (1993) 176 CLR 344; [1993] HCA 4: [578], his Honour rejected the claim on the basis that it was too remote, there being no obvious link between the state of affairs which had resulted in their disappointment, distress and anxiety and any falsity of the representation that they would receive an interest in land as well as the shares they were buying: [581].
Difficulties regarding loss and damage also arise in relation to the final issue that the appellants emphasised on the extension of time application for the Kelly-Booker parties, being the claim for unconscionable conduct pursuant to s 21 of the Australian Consumer Law (ACL). Mr Vogel submitted orally that even if all other aspects of the appeal "may seem tenuous", the appeal on the unconscionability claim was "extremely strong". He referred in this context to the "key findings" in 24, (d) and (e) of his written submissions on the subject of oppression, and contended that against the background of those findings and the conduct of the Directors there was a "very strong case that this conduct adds up to unconscionable conduct within the meaning of s 21 of the ACL and that that claim was not properly addressed". He also referred to the representations that were made in advance of the appellants' respective purchase of their shares in the CHB and contended that the circumstance that the appellants did not have a share in the land was "unconscionable". The primary judge did not, Mr Vogel contended, properly address the unconscionability claim, either against the Directors or the Administrators (who, in the appellants' submission, assisted the Directors in their conduct).
The primary judge referred to the appellants having made a claim, in their closing submissions, for monetary compensation against the Directors for unconscionable conduct which was "in substance the same as, or a subset of, the conduct upon which the plaintiffs relied for their oppression claim": [584]. In rejecting the claim, his Honour stated at [585]-[586]: "But breach of duty by the directors of a company, or other oppressive corporate conduct, cannot simply be equated with unconscionable conduct for the purposes of the ACL. In particular, for conduct to contravene the ACL, it must have a trading or commercial character: see Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594 at 603-604. I do not think the present complaints satisfy that requirement. They concern the exercise of corporate powers of CHB, rather than commercial dealings between CHB and its shareholders. Even if I had been satisfied that a claim was available, there is no satisfactory evidence that the price paid by CTP was less than the Park was in fact worth. Even if there had been, there would have been a question as to how, if at all, this translated into recoverable individual losses for the plaintiffs. But in the circumstances that question does not arise."
Whether the conduct of the Directors on behalf of CHB fell within the scope of s 21 of the ACL involves questions of fact that are fairly arguable. That said, the pleaded claim for statutory unconscionability against the Kelly-Booker parties "relevantly referred back to, and relied upon, the representations which were relied upon as misleading and deceptive conduct": [569]. His Honour noted that it did not add in any substantial way to the misleading and deceptive conduct allegation and failed on the same basis: [570]. His Honour also concluded that the appellants had not established reliance or causation (at [571]), thus raising the same obstacles as arose on the misleading and deceptive conduct claim.
In relation to damage, the Amended Notice of Appeal alleges that his Honour "unreasonably refused to make orders compensating the Plaintiffs or CHB on the ground that there was no evidence of the amounts concerned when it was open to him [to] make his best estimate based on the evidence and submissions" (ANOA [46]). The submissions do not engage with the deficiencies that the primary judge identified, not least the absence of evidence.
Apart from these issues, the appellants placed some emphasis on their oppression claim against the Kelly-Booker parties. His Honour found that the Directors' conduct of the affairs of CHB generally, at least from the time when serious issues about governance were raised in late 2016, was oppressive within the meaning of s 232 of the Corporations Act. His Honour also found that the Directors' engagement in particular transactions was oppressive. The difficulty that confronted the primary judge, and that confronts the appellants on the appeal, was the relief that the appellants sought. Ultimately, his Honour granted leave to the appellants to amend the Third Further Amended Statement of Claim to seek the appointment of a liquidator for CHB, and his Honour made an order to that effect on 8 July 2022. Mr Vogel submitted before me that the appointment of a liquidator was "not the remedy we wanted but the only one the judge offered". Accepting that submission for present purposes, in circumstances where the appellants sought and obtained that remedy the issue on the appeal is whether his Honour should also have granted the other relief they sought.
As with their other grounds, the appellants are likely to face hurdles in this regard. An example of the difficulty can be seen from one of the issues to which the appellants refer in their written submissions, which forms the basis of paragraph 13 of the Amended Notice of Appeal and relates to the 19 A-class STS shares that the Directors issued to HBS in April 2014, which were later transferred to RCPL. His Honour found that the Directors did this to cement their control of CHB, and in any event took this course without considering the interests of the other shareholders; and the conduct was oppressive whether or not it involved the improper use of the Directors' powers: [523]. However, the relief sought was an order setting aside the share transfer; that affected the interests of RCPL as the current owner of the relevant shares, and RCPL was not a party to the proceedings: [524]-[525]. His Honour also considered that the requirement to do equity would involve refunding the $10,000 that was paid for the shares and any site fees; CHB would not be able to fund those repayments and the appellants had not offered to do so: [526].
The appellants submit that his Honour should have made a declaration that the Directors breached their duty to the company in relation to this transaction. In the judgment delivered on 22 November 2022, his Honour observed that one of the problems with the declarations sought was that it "did not address my findings of oppression and were directed towards other causes of action that might be available against the Directors": [28]. The submissions do not engage with his Honour's conclusion that "[t]his would have been an inappropriate use of the declaratory power": [28].
The appellants submitted that they also have "good prospects" of success in relation to their unconscionability claim against the Administrators. The primary judge noted that this claim was pleaded in two ways: first, in recommending entry into the DOCA, "thereby stripping CHB of assets without adequate compensation, to the advantage of the Directors and to the disadvantage of CHB and the shareholders"; and, second, in selling the Park at an alleged undervalue: at [640]. His Honour observed that neither of the allegations sat comfortably within the concept of statutory unconscionability. In any event, when the gist of the cause of action was damage, the appellants had not established that they had an entitlement to damages: at [641].
In so far as the appellants seek to reagitate their claim against the Administrators for negligence, there is a question of whether a duty of care of the nature pleaded exists in relation to a company administrator. The existence of the duty was rejected by Full Court of the Supreme Court of South Australia, in Macks v Viscariello (2017) 130 SASR 1; [2017] SASCFC 172, but has not been the subject of consideration in this Court. The question of the existence of such a duty is fairly arguable. The appellants will also need successfully to attack his Honour's conclusion that the Administrators did not owe such a duty of care based on any proximate relationship, nor did the duty arise by reason of foreseeability of harm: [617], [626]. Additionally, his Honour held that the common law claim failed on breach and causation grounds. His Honour concluded by stating that even if he were wrong, "any entitlement to damages would be an entitlement of CHB's, not the plaintiffs'" (at [639]). The Amended Notice of Appeal challenges his Honour's conclusion on duty (ANOA [36]-[37]), but does not appear to challenge his Honour's findings on breach, causation or damages.
As for the Administrators' alleged knowing involvement in the Directors' abuse of the process of administration, of which there were four claims, the first two claims failed because the conduct of the Kelly-Booker parties on which the appellants relied pre-dated the appointment of the Administrators (at [596]). I do not see how there can be a realistic prospect of the appellants succeeding in the challenge to that conclusion (ANOA [34(a)-(b)]). The other two claims failed because they rested on the appellants having an equitable proprietary interest in their respective allotments and his Honour had rejected that claim: [597]. The claims of knowing involvement also need to contend with his Honour's finding that Mr Willocks, who was the administrator with primary carriage of CHB's administration, genuinely believed that CHB was insolvent and counsel for the appellants did not contend that he should have reached the contrary conclusion: at [628].
As I noted above, the Amended Notice of Appeal also contains grounds taking issue with the primary judge allegedly denying the appellants procedural fairness, including by "[r]efusing to consider any matters not explicitly pleaded even though these issues were clearly propounded in written submissions giving the defendants ample time and opportunity to know the case they had to answer" (ANOA [44(a)]). The terms of this ground of appeal implicitly acknowledge that there were matters that the appellants raised in the course of the proceedings that were not pleaded. The primary judge observed in this respect that "[c]ounsel for the plaintiffs manifested a determined refusal to limit the case to issues squarely raised by the pleadings": at [94]. It is apparent from the terms of the judgment that a number of issues were disposed of on the basis that they were not pleaded. It is not possible to form a view on the prospects of such arguments absent a better understanding of their bases. The appellants' written submissions do not assist the formation of such an understanding.
I have found this application difficult to resolve. The manner of the presentation of the appeal suggests a concern on the part of the appellants to preserve every issue in the hope that something may succeed, rather than reflecting a considered assessment of whether the issues the subject of the grounds of appeal have reasonable prospects. Success on any of the broad issues summarised by the primary judge will be difficult, noting the above difficulties by way of example. However, on the material that is before me at least some of the appellants' grounds of appeal are fairly arguable. Having regard to the circumstances in which the matter was finalised, the explanation for the delay and the absence of prejudice, on balance I consider that the appellants should be granted an extension of time.
The grant of leave is an indulgence: Cook at [52] (Emmett JA). In the circumstances outlined above the respondents were justified in resisting the application for an extension of time. The appellants should pay the costs of the application.

The competency of the appeal against the Administrators

As part of their notice of motion, the Administrators sought an order striking out the Notice of Appeal as against them, on the basis that leave is required. They relied on s 101(2) of the Supreme Court Act 1970 (NSW), which provides that "[a]n appeal shall not lie to the Court of Appeal, except by leave of the Court of Appeal, from", relevantly: (r) a final judgment or order in proceedings of the Court, other than an appeal - (i) that involves a matter at issue amounting to or of the value of $100,000 or more, or (ii) that involves (directly or indirectly) any claim, demand or question to or respecting any property or civil right amounting to or of the value of $100,000 or more.
The Kelly-Booker parties ultimately did not join in this application. As I noted above, the appeal against them includes a claim for proprietary estoppel. Combined with the appellants' claim for damages, the Kelly-Booker parties accepted that the appeal as against them involved "a matter at issue amounting to or of the value of $100,000 or more".
The claim against the Administrators was limited to damages. In submissions on this application, the appellants confirmed that they maintained their claim for damages for disappointment and distress. The Administrators submitted that the separate claims of the 18 appellants should not be accumulated for the purposes of s 101(2)(r) (cf Lan v Kaymet Corporation Pty Ltd [2017] NSWCA 52 at [1], [6]), but submitted that in any event there was no prospect that any of the appellants would be awarded any monetary sum against the Administrators as a result of the absence of evidence before the primary judge.
The focus of the Administrators' written and oral submissions on competency was the merits of the appellants' grounds of appeal against them. Senior Counsel for the Administrators relied upon authority to the effect that a "matter at issue" has been said to involve "a realistic prospect that the appeal would change the wealth of the appealing party by more than $100,000… rather than the property the subject of the claim": Jabulani Pty Ltd v Walkabout II Pty Ltd [2016] NSWCA 267 at [80(4)]. The Administrators contended that there was no realistic prospect that the appeal would change the appellants' collective wealth by that amount, because they had no reasonable prospect of overturning the primary judge's finding on the duty of care. Further, even if the appeal succeeded, the nature of the evidence on disappointment and distress, which was led from only some of the appellants, would not amount to an award of damages against the Administrators that exceeded $100,000. The Administrators also relied on the fact that the appellants did not file an application for leave to appeal in the face of the challenge to competency, referring to what they described as the established practice of the Court to receive an application for leave to appeal before any contested competency application but not after: see for example Asuzu at [40]-[41] and the cases there cited.
Whether leave is required pursuant to s 101(2)(r) does not depend on the prospects of the appeal succeeding. Senior Counsel for the Administrators frankly accepted that there was no case to which he could point that was authority for that proposition. In Gaynor v Attorney General for New South Wales (2020) 102 NSWLR 123; [2020] NSWCA 48, Bell P (Basten and Leeming JJA agreeing) stated that the party seeking to appeal needs to establish "that the amount in issue meets the $100,000 threshold under the Supreme Court Act, s 101(2)(r) by demonstrating that a successful appeal would improve its entitlement by at least that amount": at [16] (emphasis added). In Chandrasekaran v Western Sydney Local Health District [2022] NSWCA 274 ("Chandrasekaran"), to which Senior Counsel for the Administrators properly drew my attention, Brereton JA stated that the test does "not otherwise involve any evaluation of the appellant's prospects of success, whether on liability or on quantum": at [22].
The Amended Notice of Appeal includes an order for compensation from the Administrators in the amount of "$200,000 or such other amount as the Court deems appropriate for loss of value of their shares, disappointment and distress": see proposed order 29. There is no indication in Mr Vogel's affidavits as to the basis for that figure. In his oral submissions, Mr Vogel asserted that the amount was reasonable because the alleged conduct of the Directors (allegedly aided by the Administrators) was "at the extreme end of the scale".
On the evidence filed on behalf of the appellants, I am not satisfied that a successful appeal against the Administrators alone would improve the position of the appellants by $100,000. That said, as I noted above, the appeal against the Kelly-Booker parties is accepted to be as of right. In Chandrasekaran, Brereton JA stated at [23]: "The provision directs attention to 'an appeal', not to a cause of action within an appeal. It therefore contemplates the amount in issue on the appeal as a whole, and not the amount in issue on each ground. A number of cases have held that where there are multiple claims, the threshold may be satisfied by their combined effect. While, where a proposed appeal and a cross-appeal involve distinct issues, their value is separately assessed, that is in the context that a cross-appeal is distinct from an appeal. As it seems to me, if on the appeal as a whole, the threshold is surmounted, the fact that some grounds of appeal taken alone would not do so is beside the point. Likewise, where there are multiple respondents, the circumstance that success against one alone could not surmount the threshold does not matter, if success against all might. The issue is the amount genuinely in issue on the appeal as a whole." (Emphasis added; footnotes omitted)
Senior Counsel for the Administrators submitted that by contrast with some of the other sentences, the sentence I have emphasised in the above extract did not include a footnote that referenced previous authority. I note that Leeming JA expressed the same view in relation to the equivalently-worded s 127(2)(c) of the District Court Act 1973 (NSW), in Massoud v Nationwide News Pty Ltd; Massoud v Fox Sports Australia Pty Ltd (2022) 109 NSWLR 468; [2022] NSWCA 150, at [31] (Mitchelmore JA and Simpson AJA agreeing). The approach reflects the language of s 101(2)(r), the focus of which, as Campbell JA noted in Blackmore at [32], is what is involved in "the appeal", for the purpose of valuing it. As his Honour further stated in Blackmore at [35]: "An appeal is a single proceeding in the court that is instituted by the filing of a Notice of Appeal. UCPR 51.4 provides that each person who is directly affected by the relief sought or is interested in maintaining the decision of the court below must be joined as a respondent. UCPR 51.16(1) requires that 'A notice of appeal must be filed and served on each necessary party' within certain stipulated times. What is relevant for present purposes is that there is just one Notice of Appeal that is filed, even though it is then served on more than one respondent. Though I doubt that this factor is critical, I also observe that the outcome, so far as both Respondents are concerned, depends on a single question…."
In any event, I would not be minded to require the appellants to bring, and run, a separate leave application in relation to the Administrators. In all likelihood any such application for leave to appeal would be heard at the same time as the appeal against the Kelly-Booker parties. The duplication involved would not be consistent with the overriding purpose of the Civil Procedure Act in s 56(1) and the objects of case management in s 57.

The applications for security for costs

Rule 51.50(1) of the UCPR provides: In special circumstances, the Court may order that such security as the Court thinks fit be given for costs of an appeal.
The principles regarding security for costs under the rule are well-settled. In Preston v Harbour Pacific Underwriting Management Pty Ltd [2007] NSWCA 247 at [18], Basten JA identified a number of factors as applicable to applications of this kind. Of the factors his Honour identified, which have since been applied in many cases, Basten JA noted at [19] that some of them, and in particular the last two, "may better be seen as influencing the exercise of the discretion, rather than as potential 'special circumstances' engaging the power": 1. no order for security should be made in the absence of "special circumstances"; 2. consideration of what may constitute special circumstances should not be fettered by some general rule of practice; 3. impecuniosity, without more, will usually be insufficient; 4. an order may be appropriate if the appeal is shown to be hopeless, unreasonable or of an harassing nature; 5. where a bona fide and reasonably arguable appeal would be stifled by an order for security, such an order should usually not be made, and 6. the subject matter of the appeal, including an issue as to the liberty of the individual, or a public interest may provide a reason for not imposing a security order which would stifle the continuation of the appeal.
In Brown v King [2022] NSWCA 75 at [8]-[10], Kirk JA helpfully expanded upon the factors identified by Basten JA in Preston as follows: "…The existence of 'special circumstances' is a necessary, but not necessarily sufficient, condition of the exercise of the power. When such circumstances exist, the Court then has a discretion to order security for costs, in such sum as it sees fit, taking account of all relevant matters. As to the exercise of the discretion, McHugh J said the following of such a power in P S Chellaram & Co Ltd v China Ocean Shipping Co (1991) 102 ALR 321; [1991] HCA 36, at 323: To make or refuse to make an order for security for costs involves the exercise of a discretionary judgment. That means that the court exercising the discretion must weigh all the circumstances of the case. The weight to be given to any circumstance depends not only upon its intrinsic persuasiveness but upon the impact of the other circumstances which have to be weighed. A circumstance which may have very great weight when only two or three circumstances have to be weighed may be of minor significance when many circumstances have to be weighed. Matters established to be 'special circumstances' are likely to weigh in favour of the application when considering the exercise of the discretion. Matters militating against ordering security might not be relevant to assessing whether or not special circumstances exist, but will be taken into account in exercising the discretion. Thus, for example, special circumstances may be shown to exist but the Court might decline to order security because, for example, to do so would unduly stultify the appeal, taking account of the nature of the issues at stake (as raised by the fifth and sixth factors identified above)."
I consider that the requirement of special circumstances is satisfied in the present case. First, the appeal was filed out of time. Second, noting that impecuniosity is not sufficient, it was conceded on these applications. Specifically, Mr Vogel stated in correspondence dated 13 June 2023: "The Appellants instruct me that their only significant assets are their cabins. You question the value of those and it is true that if my clients lose the appeal these could have little value. Accordingly the Appellants do not claim that they would be able to meet an adverse costs order. They will resist your client's application for security on other discretionary grounds."
It is thus fair to say that the respondents have no realistic prospect of recovering their costs if the appeal is dismissed, which is a consideration in favour of special circumstances: Khattar v Khattar; Fayad v Khatter [2022] NSWCA 189 at [24] (Gleeson JA). The Administrators have the benefit of costs orders made by Parker J, with their costs on and after 14 August 2021 to be paid on an indemnity basis. The Kelly-Booker parties also have the benefit of a costs order, but there is a competing order that they pay the appellants' costs of that part of the proceedings relating to the allegations of oppression. No process of assessment has yet been commenced.
Third, in terms of the prospects of the appeal, I have referred above to the scope of the Amended Notice of Appeal, which seeks to reagitate every issue on which the appellants did not succeed below. I have referred to the written submissions that the appellants have filed, which largely reproduce the grounds of appeal and thus provide no assistance, to the respondents, or the Court, as to how the appellants propose to make good their grounds, including the grounds alleging procedural unfairness. I have also referred to a number of obstacles that attend even the grounds that the appellants identified as having "good prospects" of success.
The respondents undertook a detailed review, in both written and oral submissions, of the merits of the grounds of appeal and submissions that respectively concern them. Without seeking to be exhaustive, the Kelly-Booker parties raised the following difficulties with the appellants' written submissions: "(a) as below (J [180]-[183]), there is no rejoinder to the detailed, individualised analysis pertaining to each appellant and what representations were made to him/her, and what their state of mind was, regarding acquiring an interest in land. What is at AS [41]-[50] is just a summary of what the learned trial judge found, coupled with asserted errors. The same is true of the submissions as to misleading and deceptive conduct, which are predicated on the same evidence: see AS [67]; (b) the complaints about the failure of the learned trial judge to award further relief for shareholder oppression, are, again, just a catalogue of assertions of error: AS [53]; (c) there is no principled articulation as to how the issue of 19 A-Class shares to HBS, now held by Residential Cluster Pty Ltd (a non-party), can possibly be set aside: see AS [54]; (d) the appellants do not explain how the sale of the Park can be rescinded in circumstances where no attack is made to set aside the DOCA, nor can CHB repay the sale proceeds received: see AS [61]; (e) the appellants refer to no evidence as would allow the Court to make any declarations as to whether the cabins were or were not fixtures: AS [66]. As the learned trial judge noted, no evidence as to affixation was adduced (J [450]); and (f) there is no reference to any evidence that would allow the Court to make compensation orders in favour of CHB (cf. AS [80]), nor explanation as to how or why such orders would be appropriate in circumstances where the appellants sought and obtained the appointment of an independent liquidator to CHB for the precise purpose of investigating and pursuing any claims that CHB might have."
The Administrators also submitted that the appellants would need to overcome a series of factual and legal hurdles in order to succeed against them. To give but one further example, the appellants appeal from his Honour's dismissal of their claim for compensation against the Administrators under s 90-15 of the Insolvency Practice Schedule. The Administrators submitted that the prospects of success of that claim are poor in circumstances where the appellants, as members of CHB, did not have "a financial interest in the external administration of the company" within the meaning of s 90-10 of the Schedules, such as is required to seek relief under s 90-15. Without reaching any concluded view, there appears to be force in that submission.
It is not for me on this application finally to determine the merits, noting that I do not have all of the material that was before the primary judge and that will need to be considered (see for example [53] above). However, it is fair to say that the prospects of success of many of the grounds are not strong.
Fourth, the respondents submitted, and Mr Vogel did not dispute, that the appeal would take two days, and would involve a significant amount of material. The procedural fairness grounds alone will necessitate what the Administrators fairly described as "a large-scale review" of the pleadings, the transcript and the reasons of the primary judge.
Fifth, contrary to the appellants' submissions, I do not consider that the proceedings are of public importance, as that term is properly understood. The appellants submitted that the issues on the appeal are of public importance by reference to their particular circumstances, and that they approached the Court as a last resort having been "let down" by both the Australian Securities and Investments Commission and the Department of Fair Trading. I appreciate the importance of the proceedings to the appellants in terms of the impact of the events the subject of the proceedings, but it does not follow from the importance of the proceedings to the appellants that the proceedings are of public importance.
When it comes to considering whether to exercise the discretion to order security, my primary concern relates to whether an order would stultify proceedings, noting that considerations grounded in access to justice are attenuated where there has already been a hearing and reasons for decision: Partington v Pacific Link Housing Ltd [2013] NSWCA 259 at [68]. The respondents emphasised that the appellants did not lead any evidence of stultification, in circumstances where the appellants bear the onus. Notwithstanding the onus, the appellants did not answer the notices to produce that both sets of respondents respectively issued, which sought, inter alia, information going to the appellants' individual financial circumstances. Instead, Mr Vogel responded on their collective behalf in the terms I have extracted at [69] above. There is also no evidence in Mr Vogel's affidavits, on information and belief, as to the respective financial positions of the appellants: cf. Canty v PaperlinX Australia Pty Ltd [2014] NSWCA 18 at [13].
Instead, Mr Vogel relied on evidence that the respondents led on the question of stultification. He referred first to the evidence of national property searches undertaken by the Administrators. These searches did not reveal that the appellants held any property, which Mr Vogel submitted was "entirely to be expected of retirees receiving pensions who move to a caravan park to live within their means". Mr Vogel also referred to evidence that was tendered by the Administrators showing that the appellants had relied on crowdfunding to raise money for the proceedings. The documents showed the appellants had raised a total of $29,500 over a period of more than three years. Mr Vogel submitted that it was "extremely unlikely that that source could raise a significant amount to put up security if it were ordered".
In so far as the respondents relied on the evidence regarding crowd funding, while that evidence suggests an ability to raise funds, it also suggests that the appellants do not have access to significant financial resources, and thus need to resort to crowd funding. In the absence of any evidence from the appellants I am not able to reach a concluded view. On any view, however, there is a significant difference between the amount of funding that the appellants have been able to raise by that means and the amount of security that the respondents have sought. As I noted above, the Administrators have sought $126,000, while the Kelly-Booker parties have sought $107,000. Those amounts were supported by considered evidence of experienced solicitors; and the appellants did not dispute them. Nonetheless, the amounts are high, and include the costs of the applications the subject of this judgment.
The respondents submitted that there was no evidence that the solicitors would not be prepared to contribute to security, noting that they stood to gain from the proceedings in terms of their own costs. Counsel for the Kelly-Booker parties pointed in this regard to a letter from Mr Vogel to the Administrators' solicitors dated 16 August 2021, in which he stated that as at that date the appellants had incurred "more than $600,000 in legal costs". On the basis of Mr Vogel's admission for the purposes of the application that they acted at first instance on a speculative basis, the appellants' solicitors may "stand to benefit from the successful prosecution of the appeal beyond being paid their costs of the appeal incurred on a 'no win-no fee' basis": Murray John Carter v Ian Mehmet t/as ATF Ian G Mehmet Testamentary Trust [2021] NSWCA 32 at [32] (Meagher JA); cf. Anderson v Canaccord Genuity Financial Ltd [2022] NSWCA 168 at [80] (Basten AJA). However, having regard to the amount of security sought in the present case I am not prepared to draw the inference that the solicitors could reasonably be expected to provide it.
Even making some adjustments for the inclusion of the costs of the present applications, on the limited evidence before me an order for security in an amount approaching what is sought would likely stifle the appeal. However, in circumstances where the appellants declined to provide evidence of their respective financial positions, and having regard to the scope of the appeal, the inadequacy of the written submissions filed in support of it, my general assessment of the prospects of success, and the appellants' inability to satisfy any costs awarded in the event that the appeal is unsuccessful, I consider that some payment of security is required. Although I do not consider that it can be in the amounts that have been sought, the 18 appellants should provide some security for the appeal of significant scope that they have instructed be brought against all respondents, rather than a more focused appeal. The appeal will require significant work on the part of the respondents to respond, and the respondents have no real prospect of recovering their costs at its conclusion in the event that the appeal is dismissed. In the circumstances, I consider it appropriate for the appellants to pay $10,000 as security for the Kelly-Booker parties, and $15,000 security for the costs of the Administrators.
I will allow four weeks in which to provide the security, during which time the appeal will be stayed. Although the respondents sought an order for immediate dismissal in the event that the appellants do not pay in the time allowed, I do not consider it appropriate to make that order in this case.

The appellants' further application

The appellants also applied for an order under s 471B of the Corporations Act to proceed against CHB in the appeal in circumstances where it is in liquidation. The respondents did not oppose this application. Evidence from the appellants indicate that the liquidator is unfunded; and solicitors have filed an anticipatory submitting appearance on his behalf in the appeal. Having regard to the considerations affecting the grant of leave to proceed, which were summarised by Gleeson JA in Zervas v Burkitt [2019] NSWCA 112 ("Zervas") at [16], I consider that it is appropriate to grant leave in this case, noting in particular that the appellants brought the application without delay and having regard to the nature of the issues involving CHB that are raised on the appeal. In circumstances where the appeal was commenced after CHB was placed in liquidation, I will grant leave nunc pro tunc: see Zervas at [20].
The appellants also sought a stay of the costs orders made against them in the proceedings below. The respondents did not make submissions in opposition to a stay being granted. However, in oral submissions, Mr Vogel accepted that the costs from below had not yet been submitted for assessment. Mr Vogel submitted that the appellants were concerned about the costs orders "hanging over their head", but in circumstances where the respondents are not in a position to enforce the orders pending assessment, I am not satisfied that there is a basis for ordering a stay. Given their respective positions the parties should bear their own costs of this application.

Conclusion

I make the following orders: 1. Grant an extension of time to the appellants to file and serve their Amended Notice of Appeal to 28 February 2023. 2. Pursuant to UCPR r 51.50(1), the appellants are to provide within 28 days security: 1. in the sum of $10,000 for the second, third, fourth and seventh respondents' costs of the appeal; and 2. in the sum of $15,000 for the fifth and sixth respondents' costs of the appeal, 3. either by payment of those amounts into Court or in such other form as the appellants and the respective respondents may agree in writing before that time expires. 1. Stay these proceedings until the appellants have provided security in accordance with Order 2. 2. Subject to compliance with Order 2, leave is granted to the appellant under s 471B of the Corporations Act 2001 (Cth) nunc pro tunc to commence and proceed with the appeal against Coolah Home Base Pty Ltd (in liquidation) as the first respondent. 3. The notices of motion filed respectively by the fifth and sixth respondents and the second to fourth and seventh respondents are otherwise dismissed. 4. The appellants are to pay the respondents' costs of the application for the extension of time, and the costs of their respective applications for security for costs. 5. List the proceedings before the Registrar on 28 August 2023 for directions.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 27 July 2023

ariello (2017) 130 SASR 1; [2017] SASCFC 172 Massoud v Nationwide News Pty Ltd; Massoud v Fox Sports Australia Pty Ltd (2022) 109 NSWLR 468; [2022] NSWCA 150 McMillan v Coolah Home Base Pty Ltd (No 5) [2022] NSWSC 1589 Murray John Carter v Ian Mehmet t/as ATF Ian G Mehmet Testamentary Trust [2021] NSWCA 32 Mr D v Ms P [2020] NSWCA 174 Nanschild v Pratt [2011] NSWCA 85 O'Hare v Bradfield Bentley Pty Ltd (in liq) [2019] NSWCA 122 Partington v Pacific Link Housing Ltd [2013] NSWCA 259 Preston v Harbour Pacific Underwriting Management Pty Ltd [2007] NSWCA 247 Tomko v Palasty (No 2) (2007) 71 NSWLR 61; [2007] NSWCA 369 Zervas v Burkitt [2019] NSWCA 112 Category: Procedural rulings Parties: Geoffrey Ian McMillan (First Appellant) David Arthur Darch (Second Appellant) Helen Dawn Waugh (Third Appellant) Margaret Joy Vale (Fourth Appellant) Jill Cook (Fifth Appellant) Lee Marilyn Tait (Sixth Appellant) Jennifer Sue Axtel (Seventh Appellant) Sietske Elisabeth Brown (Eighth Appellant) James Terence James (Ninth Appellant) Neville John Kelly (Tenth Appellant) Susan Anne Kelly (Eleventh Appellant) Christine Margaret McMillan (Twelfth Appellant) Janne Marnie Robertson (Thirteenth Appellant) John Daniel Sheahan (Fourteenth Appellant) Richard Jim Squire (Fifteenth Appellant) Susan Janet Squire (Sixteenth Appellant) Leslie Townsend (Seventeenth Appellant) Allana Mary Townsend (Eighteenth Appellant)

Solicitors: The People's Solicitors (Appellants) Bridges Lawyers (Second to Fourth and Seventh Respondents) Brown Wright Stein Lawyers (Fifth and Sixth Respondents) File Number(s): 2022/00383423; 2023/119823 Publication restriction: Nil Decision under appeal Court or tribunal: Supreme Court of New South Wales Jurisdiction: Equity Citation: [2022] NSWSC 584 Date of Decision: 13 May 2022 Before: Parker J File Number(s): 2020/44327

(2020) 102 NSWLR 123

(2022) 109 NSWLR 468

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