Ranclose Investments Pty Ltd v Leda Management Services Pty Ltd

Court of Appeal (NSW)|2022-09-20|Before: Brereton JA, Mitchelmore JA

Background

The respondents are engaged in the business of property development, with Leda Holdings operating as the payroll company for Leda Management. In 2016, Leda Management engaged Mr Williamson, through his company, Ranclose, as the Chief Executive Officer of Northern Water Solutions Pty Ltd. The engagement was the subject of an agreement dated 28 April 2016, which Mr Williamson signed on behalf of Ranclose and Mr Robert (Bob) Ell signed on behalf of Leda Management ("Agreement").
Pursuant to the Agreement, Mr Williamson's role was to include procuring the licences for, and the commissioning of, water and sewerage services in respect of certain development sites. Clause 7 of the Agreement provided that Leda Management would pay Ranclose a monthly fee of $25,000, while cl 9 provided that the arrangements would apply for an initial period of 18 months and thereafter subject to agreement. According to Ranclose, the Agreement was rolled over in November 2017 for a further 18-month period.
On 7 May 2019, Ranclose commenced proceedings in the District Court, alleging that in early 2018, Leda Management purported to terminate the Agreement. Ranclose alleged that the purported termination was unlawful and constituted a repudiation. It claimed damages against Leda Management in the amount of $124,894.66, comprising unpaid invoices rendered between 30 November 2017 and 19 February 2018 and the monthly fee it would have received for the balance of the Agreement.
Leda Management defended the claim on the basis that its termination was lawful. It also filed a cross-claim against Ranclose alleging, inter alia, that Mr Williamson had misrepresented his capacity and competence to procure the relevant licences. Leda Management claimed that Mr Williamson's conduct had caused it loss and damage totalling $530,994.

The proceedings before Abadee DCJ

On 20 May 2021, Abadee DCJ heard a number of interlocutory applications. Ranclose had applied to amend its pleading and to join Leda Holdings and Mr Ell as defendants. It also sought an order that Leda Management provide security for costs in relation to the cross-claim in the amount of $300,000. Leda Management, in turn, had applied for Ranclose to provide security for costs in the amount of $150,000, pending payment of which its claim should be stayed.
In his Honour's judgment, dated 28 May 2021, Abadee DCJ first addressed Ranclose's application to join Leda Holdings and Mr Ell. His Honour noted that on the evidence of the solicitor on the record for Ranclose, in March 2021 Leda Management had requested Ranclose to refine its pleading to address the circumstance that Leda Management had contracted in its capacity as trustee of the LEDA QLD Trust. This prompted Ranclose to make inquiries about Leda Management's financial position, and then to seek to join Leda Holdings (as a related corporate entity) and Mr Ell: at [20].
Abadee DCJ considered that there was evidence before the Court that prima facie suggested that Leda Management had contracted with Ranclose as an agent for an undisclosed principal, being Leda Holdings: at [34]. His Honour considered that on the basis of the relationship between Leda Management and Leda Holdings, the test for joinder in rule 6.24 of the UCPR was satisfied with respect to Leda Holdings: at [39]. However, his Honour was not satisfied that the test was satisfied in relation to Mr Ell, there being no substantive claim advanced against him: at [37].
His Honour turned next to Ranclose's application to amend its pleading. In dismissing Leda Management's arguments as to prejudice, Abadee DCJ noted that its concerns about not being able to recover past costs against an impecunious plaintiff were partly a consequence of its delay in bringing an application for security for costs: at [60]. His Honour continued at [61]: "The real prejudice, as I apprehend it, is not so much the prospect of wasted costs, but the possibility of the defendant (or defendants') incurring future costs for which they have no present entitlement for security." [Emphasis in original.]
After setting out what the plaintiff proposed by way of further evidence on the proposed amended statement of claim, to which "the defendant(s)" would be entitled to respond, his Honour continued at [62]: "The main point raised in opposition to the amendments is the impecuniosity of the plaintiff may render any work henceforth done by the defendant(s)' solicitors irrecoverable. That consideration is certainly relevant, indeed legitimate, as a term of the grant of leave to amend. I consider this particular matter in the context of the defendant's application for security, further below. However, the preponderance of the 'future' costs to be incurred by the defendant(s) will arise independently of any need to incur costs occasioned as a consequence of the amendments."
The reference in the above extract both to future costs being incurred by the "defendant(s)" and the "defendant's application for security" indicates an appreciation on his Honour's part that although granting the joinder application would lead to more than one defendant, Leda Management was the applicant for security for costs. That his Honour so understood was confirmed in the following paragraph, where his Honour observed that the prejudice about which "the defendant may reasonably complain - its future costs (as distinct from its past costs) - will, for reasons shortly to be considered, be addressed in its application for security": at [63].
His Honour next turned to the respective security for costs applications. His Honour set out the applicable principles regarding rule 42.21 (as to which there was no dispute) before turning, first, to "Leda Management's Application for Security for Costs". Ranclose accepted that the ground of impecuniosity in rule 41.21(1)(d) was made out at the time of the application: at [86]. His Honour accepted its submission that the ultimate test was whether impecuniosity would exist at the time the adverse costs order was made but noted that, in the face of Ranclose's existing impecuniosity, there was no evidence that the situation would change when judgment was made in the matter. His Honour continued at [88]: "It is notable that Ranclose Investments actually embraces its impecuniosity, in the sense of explaining that it is the conduct of the defendant that has contributed to that result and that this justified refusal of the order for discretionary reasons."
Abadee DCJ noted that "the question whether a defendant's conduct has contributed to impecuniosity is inextricably tied to consideration of whether the grant of security would stultify the litigation": J1 [100]. Accepting that demonstration of stultification would be "a powerful, if not determinative, factor against security", it was necessary to consider "the position of Mr Williamson and his personal capacity to fund the litigation, including his capacity to meet an adverse costs order against the plaintiff": J [100]. As his Honour noted, "very little was said on the issue in the evidence for Ranclose Investments": J [101]. His Honour continued: "In the second of three affidavits he relied upon in the applications (29 April 2021), after citing his client's argument that the defendant(s) had caused Ranclose Investments' impecuniosity, Mr Clancy (at paragraph 54) did no more than merely predict that a requirement to provide security would stifle proceedings. The basis for that prediction was not, however, disclosed."
His Honour found that Ranclose had failed to demonstrate, "either by direct evidence or, even (less satisfactorily) evidence on information and belief", that a requirement to provide security for costs would stifle the proceedings, stating at [102]: "Vague reference was made, from the Bar table, by plaintiff's Counsel that Mr Williamson recently sold real property, but that tells the Court nothing about what amount of proceeds he obtained or even what, if any other properties, he may resort to, if need arise, to provide security. It is not without significance that despite its 'impecuniosity', the plaintiff has already been able to fund, apparently without any reference to any litigation funder, its prosecution of the claim and defence of the Cross-Claim in a vast sum. Mr Williamson has not divulged to the Court how he did so."
Additionally, his Honour regarded Leda Management as being "assisted by its offering an undertaking not to pursue its Cross-Claim" in the event that the order it sought for security was made (unless and until such security was provided): at [103], [120], [133].
In circumstances where his Honour was not satisfied that the provision of security would stifle the proceedings, it was unnecessary for his Honour to consider whether Leda Management's conduct caused Ranclose's impecuniosity: at [104]. His Honour accepted that the delay in seeking security weighed against a grant, but noted also that a hearing was not imminent and that Leda Management sought security for its future costs only: at [107]. Ultimately, his Honour concluded that the preponderance of circumstances favoured the grant of security: at [112].
The applicants do not challenge the decision of Abadee DCJ to require security for costs in this Court. However, their application for leave to appeal extends to the order that his Honour made, which was in the following terms: "6. The Plaintiff give security for the Defendants' future costs of the proceedings in the amount of $150,000 in tranches, with such security to be provided by way of funds paid into Court or by bank guarantee in a form agreed between the parties or, absent any agreement, determined by the Judicial Registrar." [Emphasis added.]
On the hearing of the application for leave in this Court, Senior Counsel for the respondents accepted that the Court could infer that the placement of the apostrophe in "Defendants'" in Order 6 was a slip. It was otherwise apparent that Abadee DCJ understood that it was Leda Management's application for security for costs, both from his Honour's reasons (salient parts of which I have referred to above) and from the terms of Order 10 (made the same day), which related to the costs of that application: "10. The plaintiff is to pay the defendant's costs of its application for security for costs." [Emphasis added.]
Initially, his Honour structured the payment of the ordered security in two tranches, with $80,000 to be provided within 28 days of the date of the orders and $70,000 to be provided no less than 10 business days before the commencement of the hearing: Order 7. Pursuant to Order 8, the applicants' claim was "to be stayed if security [was] not provided in compliance with order 7(a) or (b) (whichever be applicable)". His Honour subsequently varied Orders 7 and 8 in response to a further notice of motion that Ranclose filed on 10 June 2021. In a judgment delivered on 30 June 2021, Abadee DCJ summarised that motion as seeking "the Court's reconsideration (to use a non-technical and neutral term) of every adverse order made against it on the interlocutory applications heard on 20 May 2021": Ranclose Investments Pty Ltd v Leda Management Services Pty Ltd (No.2) [2021] NSWDC 288 at [5].
Relevantly for present purposes, Ranclose sought to set aside the orders dismissing its security for costs application against Leda Management (which application it also renewed), and to set aside the orders requiring it to provide security. Ranclose did not apply specifically to correct the apparent slip in the placement of the apostrophe in Order 6.
Abadee DCJ was not persuaded to set aside the orders he had made for Ranclose to provide security, noting an "absence of persuasive and independent financial documentation": at [54] This left his Honour "to grapple with Mr Williamson's vague, but inherently self-serving, assertion - which was not even articulated at the hearing in May - that 'I have always expected that (the applicant) would have money to pay the costs once this matter came to a hearing'". In agreeing to vary Order 7 regarding the timing of the tranches for payment of the security, his Honour described the extension as "in the circumstances, generous", and emphasised that (at [68]): "… with that generosity, the applicant should understand that in a proceeding with this age and the procedural imbroglio that the parties have enveloped this Court in over the last 7 months, will come a corresponding strictness in the enforcement of deadlines for the provision of security; with the potentially far-reaching procedural consequences which may follow to the applicant if those dates for the tranches are not complied with."
Order 7 as varied required Ranclose to pay $30,000 by 15 August 2021, with further payments of the same amount due by each of 15 November 2021; 15 February 2022, 15 May 2022, and 15 August 2022. His Honour also varied Order 8 to read: "The proceeding on the Amended Statement of Claim is to be stayed if security is not provided in compliance with order 7". Ranclose did not make the first payment by 15 August 2021. Accordingly, on 16 August 2021, the proceedings were stayed by operation of Order 8.

The proceedings before Gibson DCJ

As I have noted above, the respondents applied for the proceedings to be dismissed pursuant to rule 42.21(3) of the UCPR which provides: "If the plaintiff fails to comply with an order under this rule, the court may order that the proceeding on the plaintiff's claim for relief in the proceedings be dismissed."
Gibson DCJ observed that the application for security for costs was brought by "the sole defendant at that time (there are now two defendants)", but that it was "the defendants" making the application for dismissal: Ranclose Investments Pty Ltd v Leda Management Services Pty Ltd & Anor [2021] NSWDC 651 at [2]. It is of some significance that her Honour so described the procedural history, in circumstances where, as I will outline below, an issue was raised in the course of the hearing as to the beneficiary of the order for security.
The application was initially listed for hearing on 12 November 2021. On that date, after receiving evidence and hearing submissions from both parties, her Honour adjourned the hearing to 30 November 2021, so as "to give the plaintiff a final opportunity to comply with Abadee DCJ's orders for payment of the first tranche": at [3]. When the hearing proceeded on 30 November 2021, no payment had been made.
Towards the end of the hearing on 30 November 2021, counsel for the applicants raised that there was no security order in favour of the second defendant, being Leda Holdings. Her Honour reviewed the terms of Order 6 and formed the view that the order applied to both defendants, but invited the applicants' counsel to discuss it with his instructing solicitor. Having done so, the applicants' counsel stated that it was incorrect to have made the submission that he did.
At the conclusion of the hearing on 30 November 2021, Gibson DCJ reserved judgment until the following day, principally to enable her Honour to address material served late on the evening of 29 November 2021. On the evening of 30 November 2021, the applicants' solicitor served further material purporting to show that Mr Williamson had raised $10,000 and could raise a further $20,000 if he was given until 5 December 2021. Instead of proceeding immediately to judgment on 1 December 2021, her Honour heard submissions that day on whether she should accept the further material, treating receipt of that material as an application to reopen. On 2 December 2021, her Honour gave judgment, refusing the application to reopen and dismissing the proceedings: at [4]-[5].
Her Honour agreed with the observation of Abadee DCJ that "the court is not in the business of creating insuperable barriers to corporate applicants prosecuting a claim so long as the interests of the opposing party can be adequately protected": at [19]. The "real difficulty" in that regard in the present case was that "… the plaintiff has had no income since 2017 and, even placing the material in Mr Williamson's latest affidavit in its most favourable light, is unlikely to receive income from business activities for some considerable time": at [20]. Gibson DCJ concluded that, "[i]n practical terms, even if the first tranche is paid in full now, the future is clouded with doubt", with her Honour left "[e]ssentially" in the same position as Abadee DCJ when the application was first heard in May 2021: at [42].
Gibson DCJ rejected Ranclose's argument that there would be no prejudice to the respondents because "if the proceedings remain stayed, any legal costs incurred would be inconsequential as there would be no activity of significance": at [43]. Her Honour regarded that submission as contrary to the overarching principles of s 56 of the Civil Procedure Act 2005 (NSW): at [44]. Additionally, her Honour noted that "having any litigation pending can be a source of distress or concern not only to individuals but also to businesses": at [45].
Her Honour separately took into account the pressures on the court's available resources. Those pressures were "not assisted by proceedings being stayed and then periodically listed if and when the plaintiff wishes to agitate some aspect of its claim or is able to pay a tranche of security and seeks further revision of the security orders": at [47]. Finally, her Honour considered that dismissing the proceedings did not create any prejudice to Ranclose because it could commence fresh proceedings against the defendants for the same relief: at [51]. Her Honour observed that the limitation period on Ranclose's cause of action would not expire until February 2024, and there was no bar to the company instituting fresh proceedings "when it has the means to do so": at [50].

Application for an extension of time

The applicants filed a notice of intention to appeal on 1 January 2022. The notice was not accepted in relation to the decision of Abadee DCJ, as it was well outside the time in UCPR rule 51.8, but it was accepted in relation to the decision of Gibson DCJ of 2 December 2021 (although it was also out of time). The applicants did not file a summons accompanied by a White Folder, as required by UCPR rule 51.12, until 22 April 2022. This was outside the time for filing the summons, following the notice of intention to appeal, by a matter of weeks.
The four factors of general relevance to an application to extend time within which to appeal (or, in the present case, seek leave to appeal) are the length and explanation for the delay, whether the applicant has a fairly arguable case, and the extent of any prejudice suffered by the respondent to the application: Jingalong Pty Ltd v Todd [2014] NSWCA 330 ("Jingalong") at [40] per McColl JA, citing Tomko v Palasty (No 2) (2007) 71 NSWLR 61; [2007] NSWCA 369 ("Tomko") at [55] per Basten JA (Hodgson and Ipp JJA agreeing); see also Huang v The Owners of Strata Plan No 7632 [2021] NSWCA 194 at [15] per Basten JA. The power to extend time must be exercised in recognition of the fact that the respondents have a vested right to retain the judgment proposed to be the subject of appeal: Jingalong at [41]; Jackamarra v Krakouer (1998) 195 CLR 516; [1998] HCA 27 at [4]; Tomko at [55].
The applicants' solicitor, Mr Clancy, has sought to explain the delay in two affidavits, sworn on 5 April 2022 and 12 August 2022. The latter was also sworn in support of a notice of motion to file an amended summons and draft notice of appeal. That application was heard on 12 August 2022, with the applicants being granted leave to file the amended documents. Mr Clancy filed a further affidavit, sworn on 15 September 2022, in which he addressed the service of a notice under s 78B of the Judiciary Act 1903 (Cth) in relation to proposed Ground 1 of the draft Notice of Appeal.
The focus of Mr Clancy's affidavit of 5 April 2022 was the period following the decision of Gibson DCJ on 2 December 2021. It is apparent from that affidavit that the delay in filing a competent application for leave to appeal was not attributable to the applicants. According to Mr Clancy, they instructed him to lodge an appeal from the orders of Gibson DCJ on 24 December 2021, when the making of an application for leave to appeal would have been within the time permitted by the UCPR. The delay was due, in the first instance, to Mr Clancy's preparation of the summons using the wrong form; and, then, his omission to prepare a White Folder to accompany the summons, without which the summons was not accepted (leading to the filing of the notice of intention to appeal). Mr Clancy sought to attribute his failure to correct this position before April 2022 variously to leave commitments (given the time of year), deadlines in other matters upon his return from leave, physical illness, and care responsibilities associated with the illness of other family members.
The fact that the non-compliance with the rules was attributable to the applicants' solicitors, rather than due to advertence on the part of the applicants, is of some significance in terms of the extension of time to seek leave to appeal from the decision of Gibson DCJ: Jingalong at [54]-[56]. Further, the non-compliance was not of significant duration; and the respondents were on notice from early in January that the applicants sought to invoke the appellate processes of the Court, upon service of the notice of intention to appeal.
In terms of the substance of the arguments in support of the application for leave to appeal from her Honour's decision, I have considered the merits of the arguments below. As at least one of them is sufficiently meritorious to attract a grant of leave to appeal, I do not consider them so weak as not to warrant the extension of time, having regard to the other discretionary factors. Accordingly, I would grant an extension of time for the applicants to seek leave to appeal from that decision.
The position is different in relation to the extension of time required to seek leave to appeal from the decision of Abadee DCJ. The delay in making that application was of a significant duration, noting that the orders were made in May 2021 and varied in June 2021. In his affidavit of 12 August 2022, Mr Clancy sought to explain the delay on the basis that he did not appreciate the error in his Honour's orders until 30 November 2021, when a solicitor in his firm returned from the hearing before Gibson DCJ and told him how her Honour had interpreted the order (presumably having regard to the exchange with the applicants' counsel that I have set out above). Notwithstanding his appreciation of the issue on 30 November 2021, Mr Clancy did not raise it with Gibson DCJ on 1 December 2021, when he appeared for the applicants and made submissions in relation to the receipt of the material he had sent by email overnight. No further explanation has been advanced in Mr Clancy's affidavits for the delay in seeking leave to appeal from Abadee DCJ's decision, or to correct it under the slip rule, following his discovery of the issue on 30 November 2021.
In terms of the proposed ground on which leave to appeal is sought with respect to the decision of Abadee DCJ, it is premised on Gibson DCJ having relied on his Honour's order for security for costs operating to the benefit of both Leda Management and Leda Holdings. However, in dismissing the proceedings, it is apparent from [2] of her Honour's reasons that Gibson DCJ was aware that Leda Management alone had applied for security for costs, while both Leda Management and Leda Holdings had applied for dismissal. Accordingly, there is no utility in granting leave to appeal to correct the slip, still less any injustice that requires correction. Accordingly, and having regard to the length of the delay, I would not grant an extension of time in which to seek leave to appeal from his Honour's order.

The application for leave to appeal from the orders of Gibson DCJ

Leave applications in this Court attract a general obligation on the applicant to establish that there is an issue of principle, a question of public importance or a reasonably clear injustice going beyond something that is merely arguable: PPK Willoughby Pty Ltd v Baird [2019] NSWCA 48 at [6], citing Jaycar Pty Ltd v Lombardo [2011] NSWCA 284 at [46]; BE Financial Pty Ltd v Das [2012] NSWCA 164 at [32]-[38]; Secretary, Department of Family and Community Services v Smith (2017) 95 NSWLR 597; [2017] NSWCA 206 at [28]. Where the orders complained of are interlocutory, and were made in the exercise of discretion on a matter of practice and procedure, there is a high hurdle for an applicant for leave: D v Australian Financial Security Authority formerly known as Insolvency & Trustee Service Australia [2017] NSWCA 50 at [49] per Ward JA and Sackville AJA.
There are four proposed grounds of appeal concerning the reasons for judgment of Gibson DCJ. I will deal with them in turn. However, it is important to note that there is a powerful discretionary consideration weighing against the grant of leave, in the face of which the grounds would require a significant degree of merit. In dismissing the proceedings for want of payment of security, Gibson DCJ found that Ranclose had not earned any income since 2017, and the evidence before her did not shed any real light on when it would commence doing so. In this regard, her Honour had adjourned the dismissal application specifically to facilitate the making of the first payment of $30,000 before 29 November 2021, which opportunity Ranclose had been unable to convert. There is no evidence before this Court that there has been any change in Ranclose's financial position.

Proposed ground 1

By proposed Ground 1, the applicants contended that Gibson DCJ had no power to make an order dismissing the statement of claim, either under rule 42.21(3) of the UCPR or any provision of the Civil Procedure Act, by reason of direct inconsistency with s 1335 of the Corporations Act 2001 (Cth). The applicants submitted that by operation of s 109 of the Constitution (Cth), the direct inconsistency between rule 42.21(3) and s 1335 operated to render the former inoperative. The applicant served a notice under s 78B of the Judiciary Act 1903 (Cth) in relation to this proposed ground.
Although the applicants' arguments as to inconsistency pointed to a number of differences between the two provisions, their principal contention was that unlike rule 42.21(3) of the UCPR, s 1335 of the Corporations Act makes no provision for dismissal of proceedings if security is not paid. Rather, it provides only for a stay of proceedings. Senior Counsel for the applicants submitted orally that the absence of an express power of dismissal in s 1335 was deliberate, and that it necessarily followed that there was no power to dismiss proceedings in which a court had made an order for security under the provision.
Taken to its logical conclusion, the implication of a negative stipulation in s 1335 of the Corporations Act of the nature for which the applicants contended would preclude a court from relying on its general powers of case management to dismiss proceedings which are stayed by operation of an order under that provision. Section 61 of the Civil Procedure Act, for example, provides that the Court may, by order, dismiss proceedings in which a party to whom a direction has been given by order of the Court fails to comply with the direction. Senior Counsel for the applicants accepted that this was the consequence of the construction for which he contended.
Such a constraint on otherwise broad powers would not readily be implied from the absence of an express power to dismiss proceedings in a provision of a different statute. Still less would one draw that implication when s 1335 of the Corporations Act can operate, in accordance with its terms, harmoniously with case management provisions. Failure to provide security when ordered may be relied upon in support of an application for dismissal of proceedings for want of prosecution: Porter v Gordian Runoff Ltd (No 3) [2005] NSWCA 377. As Young J (as he then was) said in Asian Investments Corporation Ltd v Symons (unreported, 10 April 1996, BC9601190), after an extensive review of the earlier authorities, "The rule that proceedings may be dismissed if security for costs is not provided has been part of the law for a long time." In circumstances where the applicant's arguments as to direct inconsistency rested on this proposition, the proposed ground has insufficient merit to warrant a grant of leave. The other semantic differences between r 42.21(1)(d) and s 1335 on which the applicants rely do not result in any substantive inconsistency; the same principles apply to both provisions: Fitzpatrick v Waterstreet (1995) 18 ACSR 694; Lesvos Pty Ltd v Penrith Whitewater Stadium Ltd (2006) 58 ACSR 481; [2006] NSWSC 823; Canberra Data Centres Pty Ltd v Vibe Constructions (ACT) Pty Ltd [2010] ACTSC 20 [197]; Fire Containment Pty Ltd v Peter Robins [2011] NSWSC 444 [18].
At the hearing, the applicants sought leave to rely on an amended draft notice of appeal which added to proposed Ground 1 that rule 42.21(3) of the UCPR was not engaged in federal jurisdiction. This aspect of the ground sought to bring forward what was previously a particular of Ground 1, relying on s 79(1) of the Judiciary Act, which relevantly provides that: "The laws of each State or Territory, including the laws relating to procedure … shall, except as otherwise provided by the Constitution or the laws of the Commonwealth, be binding all Courts exercising federal jurisdiction in that State or Territory in all cases to which they are applicable."
The applicants contended that the proceedings were in federal jurisdiction and that, by reason of the inconsistency with s 1335 of the Corporations Act, a Commonwealth law "otherwise provided", meaning that the application of rule 42.21(3) was not "picked up". In my view there is a question about whether the proceedings were in federal jurisdiction, having regard to the formulation of the claims. However, and in any event, the constructional difficulty that attended the applicants' s 109 argument in terms of establishing a relevant inconsistency between rule 42.21(3) and s 1335, presents a similar difficulty for their reliance on the "otherwise provides" qualification in s 79: see, for example, Grant Samuel Corporation Finance Pty Ltd v Fletcher (2015) 254 CLR 477; [2015] HCA 8 at [23]. This argument is also of insufficient merit to warrant a grant of leave.

Proposed Ground 2

Proposed Ground 2 contended that Gibson DCJ erred in dismissing the amended statement of claim in circumstances where Leda Holdings had not applied for security of costs and did not give any undertaking not to pursue the cross-claim if an order for security was made and not complied with (as it was). The applicants accepted that her Honour recognised, at [2] of her reasons, that only Leda Management had applied for security for costs. However, they submitted that it followed from that circumstance that there was no power under UCPR rule 42.21(3) to dismiss the proceedings as against Leda Holdings. Alternatively, they submitted that Gibson DCJ failed to consider whether the proceedings should be dismissed as against a defendant which had not sought (and did not have the benefit of) an order for security.
The respondents submitted that the power in rule 42.21(3) is a discretionary power. Its exercise is not, in terms, predicated on an application being made by the beneficiary of the order under rule 42.21(1); nor do its terms constrain the court from dismissing the entirety of proceedings, as opposed to the claim against the particular defendant who sought and obtained an order.
In Thomatis v McLean (1896) 13 WN (NSW) 68 at 69, Manning J posited that in circumstances where only one of several defendants obtained an order for security for costs, the plaintiff could "abandon his suit and continue it against the other defendants who do not ask for security", and added that "if the defendant who has obtained the order applies to dismiss the suit for want of prosecution, the Court would only dismiss the suit as against him, not as against all the defendants". In Asian Investments, Young J reformulated Manning J's proposition in Thomatis as providing that "if only one of several defendants obtained an order for security for costs that defendant could apply to dismiss the suit for want of prosecution as against him only but there was no effect as to any of the other defendants". Whether rule 42.21(3) of the UCPR can be invoked and/or relied on by a party, to obtain an order for dismissal of proceedings as against it for non-compliance with an order for security not made in its favour, is a question of principle that favours a grant of leave to appeal. I have had the advantage of reading in draft the reasons for judgment of Brereton JA and agree with his Honour's additional observations in [5] above.

Proposed Ground 3

Proposed Ground 3 was in similar terms to Ground 2 but sought to attack her Honour's exercise of the discretion to dismiss the amended statement of claim. The applicants contended that Gibson DCJ failed to take into account the following "material" considerations, namely, that Leda Holdings had not applied for security for costs; that Leda Management had not disclosed its own impecuniosity for a period of some two years; and that Leda Holdings paid Ranclose's invoices and was likely the principal but had the proceedings dismissed as against it when it had not sought security.
It is implicit in the formulation of these considerations as "material" that her Honour was not bound, in the exercise of the discretion that rule 42.21(3) confers, to take into account the considerations on which the applicants sought to rely. Even if her Honour were so bound, in circumstances where her Honour was alive to the fact that Leda Holdings had not applied for security for costs, it would be difficult for the applicants to establish the error for which they contend, namely, that her Honour did not consider the matters they raised. It follows that this proposed ground does not warrant a grant of leave.

Proposed Ground 4

By proposed Ground 4, the applicants alleged that Gibson DCJ provided inadequate reasons for ordering Ranclose to pay the costs of the cross-claim. The applicants submitted that they were presumptively entitled to those costs pursuant to rules 42.1 and 42.20 of the UCPR, because it was Leda Management which sought dismissal of the cross-claim. In their submission, the Court failed to take into account that Leda Management had given an undertaking not to pursue its cross-claim, and the application for costs of the cross-claim constituted a pursuit of that cross-claim (in circumstances where Leda Management had forgone the cross-claim in order to persuade the Court to order security).
In evaluating the merits of this proposed ground (noting that it relates to costs), the respondents pointed out, by way of background, that Leda Management gave an undertaking, in the context of its application for security for costs, that if Ranclose was ordered to pay security and was unable to do so, Leda Management would not press its cross-claim. The dismissal of the cross-claim was, in their submission, the final step in not pressing the cross-claim and was consistent with its undertaking that would not be pressed. In circumstances where the reason that the cross-claim was being dismissed was Ranclose's failure to comply with the order to provide security, it was appropriate for her Honour, in the exercise of the discretion conferred by s 98 of the Civil Procedure Act and rule 42.20(1) of the UCPR, to order that Ranclose pay the costs of the cross-claim.
I note that when her Honour requested full argument on costs at the conclusion of the hearing on 30 November 2021, counsel for the respondents made submissions consistently with the submissions advanced on this application. Counsel for the applicants did not respond directly to these arguments; rather, he sought to rely on the late disclosure of Leda Management's financial status, by which time Ranclose had incurred significant costs on the cross-claim that it had filed. It was open to her Honour to form the view that the cross-claim was defensive and had been stayed on the undertaking of the defendants, and its dismissal followed from the dismissal of the main proceedings, such that costs should follow that event. Having regard to the breadth of the court's discretion as to costs, the applicants have not identified an error that would warrant this Court's intervention. Further, even if Ground 2 were successful on appeal, that success would not affect her Honour's dismissal of the proceedings as against Leda Management and the cross-claim (to which Leda Holdings was not a party).

Conclusion

I propose the following orders: 1. The application for an extension of time to seek leave to appeal from that part of the decision of Abadee DCJ in Ranclose Investments Pty Ltd v Leda Management Services Pty Ltd & Anor [2021] NSWDC 210 that required the first applicant to pay the future costs of the second respondent is refused. 2. Grant the applicants an extension of time to seek leave to appeal from that part of the decision of Gibson DCJ in Ranclose Investments Pty Ltd v Leda Management Services Pty Ltd [2021] NSWDC 651 by which her Honour dismissed the proceedings and ordered the first applicant to pay the costs of the claim and the cross-claim as agreed or assessed. 3. Grant leave to appeal on Ground 2 of the draft notice of appeal regarding that part of the decision referred to in Order 2. 4. The application for leave to appeal is otherwise dismissed. 5. Costs of the application for leave be costs in the appeal.

Endnotes

Below at [53].
Unreported, 10 April 1996, BC9601190.
(1896) 13 WN (NSW) 68 at 69. 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: 18 October 2022

] NSWCA 330 PPK Willoughby Pty Ltd v Baird [2019] NSWCA 48 Re Will of Gilbert (1946) 46 SR (NSW) 318 Secretary, Department of Family and Community Services v Smith (2017) 95 NSWLR 597; [2017] NSWCA 206 Thomatis v McLean (1896) 13 WN (NSW) 68 Tomko v Palasty (No 2) (2007) 71 NSWLR 61; [2007] NSWCA 369 Category: Principal judgment Parties: Ranclose Investments Pty Ltd (First Applicant) Wayne Williamson (Second Applicant) Leda Management Services Pty Ltd (First Respondent) Leda Holdings Pty Ltd (Second Respondent) Representation: Counsel: M Robinson SC, J Lucy (Applicants) AC Casselden SC, MJ Connor (Respondents)

Solicitors Clancy Lawyers Pty Ltd (Applicants) Bartier Perry (Respondents) File Number(s): 2022/00000341 Publication restriction: Nil Decision under appeal Court or tribunal: District Court of New South Wales Jurisdiction: Civil Citation: [2021] NSWDC 210; [2021] NSWDC 651 Date of Decision: 28 May 2021; 2 December 2021 Before: Abadee DCJ; Gibson DCJ File Number(s): 2019/142783

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (11 paragraphs)

Parties

Legislation Cited (5)

Cases Cited (23)

Cited By (3)