R V Investments Pty Ltd v ACN 110 769 929 Pty Ltd & Ors [2014] VSCA 210

The application to dismiss the appeal for want of prosecution

2 The applicants, Rent and Buy Pty Ltd (ACN 110 769 929) and its liquidator, Glenn Crisp, (collectively 'R&B') brought proceedings below to recover money allegedly owed to R & B by R V Investments (Aust) Pty Ltd (ACN 133 961 707), the respondent to this application ('RV').

3 On 11 April 2014, Judge Anderson of the County Court entered judgment in favour of R&B in the sum of $242,000 plus interest and ordered that RV pay R&B's costs of the proceeding.[1] The sum of $242,000 was the amount of an invoice dated 10 September 2009 issued by R&B to RV Investments for the sale of a quantity of motor vehicle parts and products. The claim was for goods sold and delivered.

4 On 5 May 2014, RV filed a notice of appeal against Judge Anderson's decision and, on 27 May 2014, Judicial Registrar Pedley made orders establishing a timetable for the Court proceedings.

5 On 26 June 2014, Ashley and Santamaria JJA ordered RV to provide security for costs up to and including the first day of the appeal in the amount of $52,000 and ordered that if security was not paid by 4:00pm on 11 July 2014 the appeal be stayed. RV did not provide the security for costs and, as a result, the appeal has been stayed.

6 By summons dated 23 July 2014, R&B seek orders that the appeal be dismissed for want of prosecution and that RV pay R&B's costs of the appeal, including costs incidental to the application.

7 The parties agree that the Court has an inherent jurisdiction to dismiss the appeal for want of prosecution: Muto v Faul.[2]

8 The Court's inherent jurisdiction to dismiss any proceeding for want of prosecution or upon the failure to do any act required by the Rules or to comply with an order is preserved in r 24.05 of the Supreme Court (General Civil Procedure) Rules 2005 (Vic) ('the Rules').

9 The principles relevant to the question of whether an appeal should be dismissed for want of prosecution under r 24.05 are: (1) whether there has been an 'inordinate and inexcusable delay by the plaintiff' and (2) whether this 'is likely to have caused serious prejudice to the defendants' or whether there is 'a substantial risk that the defendants will be unable to obtain a fair [hearing] in the circumstances of the case'. These longstanding principles are drawn from Allen v Sir Alfred McAlpine & Sons Ltd[3] and were approved by the House of Lords in Birkett v James[4] and recently applied by Ashley JA in Re an Appln by Velissaris[5] and Maxwell P and Neave JA in AMP General Insurance Ltd v Victoria Workcover Authority.[6]

10 In Farnell v Penhalluriack,[7] Mandie JA (with whom Harper JA agreed) held that although there is no express power in the Rules to dismiss an appeal for failure to provide security for costs, the Court would have the power to dismiss a proceeding for want of prosecution in such circumstances, pursuant to its inherent power to regulate its own procedure.[8] With respect to the applicable factors to be taken into consideration, Mandie JA said the following:

Failure to provide security for costs may be regarded as a species of 'want of prosecution' or equally as an independent ground for dismissal of an appeal. Either way, the court's discretion must be exercised guardedly, having regard to the interests of justice generally, although it may be appropriate to have regard to particular criteria, as appears from recent decisions in the Supreme Court of New South Wales.

In Porter v Gordian Runoff Ltd (No 3) an order for security for costs of an appeal had been made and the appeal had been stayed until such security was provided. The security was not provided and eventually the respondents made applications for the appeal to be dismissed for failure to comply with the order to provide security, alternatively for want of prosecution. The applications for dismissal were made pursuant to express provisions contained in the applicable Rules operative in New South Wales. The New South Wales Court of Appeal referred with approval to what had been said in Idoport Pty Ltd v National Australia Bank Ltd both by Einstein J at first instance and the Court of Appeal as relevant factors to be taken into account on such an application, namely:

(a) the period that has elapsed since security was ordered;

(b) the fact that the [appellant] has been on notice of the application for dismissal;

(c) the seeming inability of the [appellant] to further fund the [appeal]

(d) the prejudice to the [respondent];

(e) the position of the court.

The New South Wales Court of Appeal in Porter also adopted what had been said about the above list of matters by Einstein J in Idoport, namely, that the list was by no means exhaustive and that all the relevant circumstances were required to be taken into account including the court's straining wherever practicable consistently with the interests of justice to avoid taking the radical step of denying a party its day in court - all relevant matters had to be weighed in balance, the ultimate decision reflecting the interests of justice.[9]

11 R&B submit that RV has, without explanation, failed to comply with the procedural orders establishing the timetable of the appeal set out in Registrar Pedley's orders of 27 May 2014 (except Orders 2-4 which relate to the required summary), therefore making it impossible for R&B to comply with their obligations under the timetable.

12 Further, R&B submit that RV has, without explanation, failed to provide security for costs of the appeal and that the appeal has been stayed since 11 July 2014.

13 R&B submit that the interests of the parties to the appeal, including the legitimate interest of the applicants to insist on adherence to the rules and orders of the Court, and the interests of the Court in controlling the business of the Court, are factors to be taken into account when determining whether to exercise the discretion to dismiss the appeal.

14 In response, RV submits that it has now sourced the funds required for the appeal as well as the security for costs. RV submits that where an appellant has failed to comply with orders for a short period of time due to its lack of funds, and subsequently obtains the funds, the Court can determine 'on balance of justice' to allow the appeal to continue.

15 RV relies on an affidavit of its solicitor, Paul Bradley, sworn 14 August 2014 who deposes that on the day the security for costs was due, 11 July 2014, RV communicated with the Prothonotary of the Supreme Court and offered a charge over real property as security for the Order directing that security for costs be given. RV relied on a valuation that the property concerned had a market value in the range of $2,800,000 to $3,200,000. The Prothonotary advised RV by letter dated 11 July 2014 that the only security acceptable to the Court was an unconditional bank guarantee in a form approved by the Solicitor to the Senior Master or cheque.

16 Mr Bradley also deposed that since the appeal was commenced, RV has been negotiating for the sale of its business, namely, car rentals and service and rent and buy. He deposed that since the rejection of the proposed security on 11 July 2014, RV has sourced funding via the sale of its business and by reason of the personal assistance of the sole director and shareholder of RV, Ms Villella. Mr Bradley exhibited to his affidavit an executed contract of sale for RV's business and a copy of a letter from FinStra Pty Ltd, dated 11 August 2014, in relation to Ms Villela's refinance. The letter seeks to confirm that Rosa Villella has approached Finstra for a new facility of $350,000 'secured against her existing property portfolio'. The letter then sets out several pre-conditions:

Rosa has been a client of Finstra since 2009 and based on her equity available and repayment conduct a new loan should be considered for approval subject to:

• New valuations for all security properties
• Copies of company and individual financials and tax returns confirming serviceability is evident
• Subject to formal approval from the lending institution

If these items can be satisfied then the loan facility could be available within one month.

17 Mr Bradley further deposed that RV is 'expected to settle the sale and the refinance within the next 60 days and will have funds available to produce to the court to allow the appeal to move forward'. It became apparent during the course of the hearing this morning that the 60 days referred to was 60 days from the date of swearing his affidavit, ultimately being early November.

18 The executed contract of sale is dated 14 July 2014. It lists RV Investments as only one of the vendors, the others being Foton Dandenong Pty Ltd; Rosa Rentals Pty Ltd and All Loan R Us Pty Ltd. The Price identified is $8,500,000 with a deposit of $85,000 payable on signing and a residue of $8,415,000. The date for settlement is stipulated to be 120 days from signing or earlier by mutual agreement. The stock value was included in the price.

19 Significantly, there is no indication of the overall financial position of RV. In particular, there is no statement from an accountant setting out, for example, the debts it owes or are owed to it, even taking into account what money might be forthcoming from the settlement of the sale of the business. This was emphasised this morning by counsel for the applicant.

20 There is no evidence that Rosa Villella will be able to meet the pre-conditions necessary to receive the loan facility she seeks. The letter from Finstra goes no further than demonstrating that Rosa Villella is seeking re-financing; it does not go to prove that the loan facility will ultimately be provided. It was effectively conceded by Mr Bradley this morning that the availability of the new finance was uncertain.

21 There is no evidence of any other financial interest RV could have called on, or absence of such an interest.

22 In my view, the evidence relied on by RV is insufficient to establish the proposition for which RV argues, namely, that although it was unable to provide security for costs by the due date it is now in a position to provide that security, or will be in early November. It has not been established that RV now has an ability to further fund the appeal. No more has been established than that there is an 'expectation' that RV might obtain funds.

23 Furthermore, it has become apparent that an order has been made against Rosa Villella for substantial costs in another proceeding. R&B has filed a supplementary affidavit sworn by Michael Jack Herman on 4 September 2014 which exhibits an order made by her Honour Judge Lewitan of the County Court on 1 September 2014 in proceedings between Telstra Corporation Ltd and Rosa Villella whereby her Honour, having dismissed Ms Villella's claim against Telstra, ordered Ms Villella to pay Telstra's costs on a party/party basis up to 11 am on 9 May 2013 and thereafter on an indemnity basis, with a stay of 60 days. Mr Herman estimates that Telstra's costs in that proceeding may amount to a sum in the vicinity of $457,000. The trial commenced on 27 May 2013 and comprised a total of 46 days.

24 Mr Bradley accepted this morning that, while his calculation of the cost was more in the vicinity of $350,000, the estimate of $457,000 was not untenable.

25 RV has not formally applied for an extension of time to provide the security either before or after the due date. It is now more than 49 days since the date on which security was ordered to be provided.

26 This morning Mr Bradley made, in effect, an oral application for an extension of time in which to pay the security by early November. However, this was not supported by any evidence from Ms Villella or otherwise.

27 Judgment was delivered below in this matter, and orders made, on 11 April 2014. The appeal has not been properly prosecuted and the evidence adduced provides no confidence that it would be properly prosecuted in the future if the orders sought in the summons were not made. R & B continue to suffer prejudice while the appeal remains on foot with no realistic prospect of it being properly prosecuted.

28 I note also that in the reasons for judgment below, Judge Anderson made some critical observations of the manner in which RV's case was run, including the absence of any explanation for the absence at trial of Ms Villella. He also pointed to an inconsistency in RV's conduct saying:

RV Investments has, by the continued pursuit of input credits in respect of the invoice [for $242,000] and its assertions that it has paid the whole amount of the invoice by making payments to creditors on behalf of Rent & Buy, acted contrary to its assertion that it did not accept delivery of the goods, or of some of them, and that it was only obliged to pay the sum of $30,000 to satisfy debts of Rent & Buy's creditors.

29 This inconsistent conduct suggests that the prospects of success on the appeal are weak.

30 Taking all these matters into account, in my view, the appeal should be dismissed for want of prosecution, with costs.

31 I agree for the reasons given by Tate JA that the appeal should be dismissed

32 The order of the Court is that the appeal is dismissed with costs.

[1] ACN 110 769 929 (formerly known as Rent & Buy Pty Ltd (in liq)) v RV Investments (Aust) Pty Ltd [2014] VCC 436 ('Reasons'). The order was made in the name of the company in liquidation (the plaintiff) and not in the name of the liquidator (the second plaintiff).

[2] [1980] VicRp 3; [1980] VR 26.

[3] [1968] 2 QB 229.

[4] [1978] AC 297.

[5] [2014] VSCA 153 [13].

[6] [2006] VSCA 236; (2006) 60 ACSR 199, 208 [40]. See also Spitfire Nominees Pty Ltd v Hall & Thompson [2001] VSCA 245 [10]; Spitfire Nominees Pty Ltd v Ducco [1998] 1 VR 242, 246; La Trobe Country Credit v Smith [1998] VSCA 74; Masel v Transport Industries Ins Co Ltd [1995] VicRp 59; [1995] 2 VR 328; Department of Transport v Chris Smaller (Transport) Ltd [1989] 1 AC 1197.

[7] (2010) 29 VR 727.