Solicitors:
Di Girolamo Lawyers (Appellant/Respondent to Notice of Motion
Yeldham Price O'Brien Lusk (Respondent/Applicant on Notice of Motion)
File Number(s): 2021/358220
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[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
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Judgment - EX TEMPORE
HIS HONOUR: By notice of motion filed on 7 March 2022 the applicants, who are members of a firm of solicitors trading as Sparke Helmore, seek security for costs of an appeal in which they are respondents. On 18 March 2022 they filed a notice of cross-appeal. The respondent to the notice of motion is Shoal Bay Beach No 1 Pty Ltd, which is the appellant and the cross-respondent. I will refer to the applicants in these reasons as Sparke Helmore, and I will refer to the Respondent to the notice of motion as SBBC.
Sparke Helmore was retained by a company now in liquidation, Shoal Bay Beach Constructions No 1 Pty Ltd, to which I will refer if needed as SBB1. Its liquidator assigned its claim against Sparke Helmore to SBBC. On 19 November 2021, Adamson J gave judgment for SBBC for an amount to be calculated in accordance with her Honour's reasons. Her Honour reduced the damages awarded by 30% on the basis of a finding that SBB1 had been contributorily negligent. Her Honour also rejected SBBC's claim for damages for part of the asserted loss (Shoal Bay Beach Constructions No. 1 Pty Ltd v Mark Hickey and the persons listed in Schedule A to this Statement of Claim trading as at all material times Sparke Helmore (No 5) [2021] NSWSC 1499). On 26 November 2021 judgment was entered for $285,598.40. On 9 December 2021, her Honour ordered that there be no order as to the costs of the proceedings. That order did not disturb prior costs orders made (Shoal Bay Beach Constructions No. 1 Pty Ltd v Mark Hickey and the persons listed in Schedule A to this Statement of Claim trading as at all material times Sparke Helmore (No 6) [2021] NSWSC 1597).
SBBC had been ordered to provide security for costs of the proceedings below and provided security in the sum of $190,000. The judgment sum has been paid into court and remains in court pending the determination of an application by SBBC's former solicitor for a lien for unpaid costs. The amount of that claim is $251,598.40. SBBC undertakes not to seek to withdraw any part of the judgment sum pending the determination of the appeal.
Before the primary judge, SBBC had sought an order that the security for costs of the proceedings be released to it. The primary judge refused that order on the basis that Sparke Helmore's costs payable under previous costs orders which had not been disturbed were still to be assessed or agreed.
Sparke Helmore did not file a notice of intention to appeal; SBBC did. By its notice of appeal filed on 16 February 2022, SBBC appeals from the reduction of damages on account of the finding of contributory negligence, the rejection of part of the damages claimed, and the primary judge's refusal to order costs. By its notice of cross-appeal filed on 18 March 2022, Sparke Helmore cross-appeals on the finding of liability and contends that if it is liable, damages should have been reduced by more than 30% on account of SBB1's contributory negligence. The appeal and cross-appeal are listed for hearing on 21 June 2022 with an estimate of one day.
On 7 March 2022 Sparke Helmore's solicitor, Mr Price, made an affidavit in which he estimated the quantum of recoverable costs both of this application for security for costs (which he estimated in the range of $7,025 to $7,725) and recoverable future costs of the appeal if Sparke Helmore is successful on those applications. In relation to the appeal he estimated that the recoverable costs of the appeal would be between $58,625 and $61,125. This was said to exclude costs of any cross-appeal. At the time the affidavit was made, no cross-appeal had been filed. He estimated the quantum of costs of the appeal on the basis of a one day hearing. As both the appeal and the cross-appeal are set down for hearing for one day, it must follow that his estimate of the costs of the appeal excluding the cross-appeal, will need to be adjusted. No such adjustment was attempted and no further affidavit was filed by Mr Price after the filing of the notice of cross-appeal. There was no answering affidavit on quantum and Mr Price was not required for cross-examination.
SBBC says that the appeal is within a narrow compass, whereas the cross-appeal will require the ventilation of all the issues in evidence at trial. Hence it says that the quantum claimed is excessive. SBBC did not dispute that it is impecunious and I understood there was no issue that it would be unable to meet an order for costs if the appeal fails. It relied upon the fact that the judgment sum of $285,598.40 had been paid into court and that even if the lien claimed by its former solicitor was upheld to the full extent of the claim, there would still be $34,239.37 left to meet any adverse costs order. It submitted that the security claimed included the costs of the cross-appeal and submitted further that security for the cross-appeal should not be ordered. It submitted that the application should be dismissed on the ground that, so it says, Sparke Helmore is seeking security for costs of its cross-appeal, to which it is not entitled. It submits that it is only if the cross-appeal succeeds that there is any realistic prospect of security for costs of the appeal being called on. If the cross-appeal succeeds the appeal will necessarily fail, at least if the cross-appeal succeeds on the ground that Sparke Helmore was not liable. If the appeal and cross-appeal both fail, then in all likelihood there would either be no order as to costs, or both the appeal and the cross appeal would be dismissed with costs and the costs would be set off the one against the other. Of course if the cross-appeal fails and the appeal succeeds, then Sparke Helmore would not be entitled to its costs of the appeal. I agree that it is probable that unless the cross-appeal succeeds, it is unlikely that there would be occasion for Sparke Helmore to have recourse to security for costs of SBBC's appeal if security is ordered.
SBBC submits that it should not be required to provide security for the costs of the cross-appeal and so much was common ground. Sparke Helmore does not seek security for its costs of the cross appeal although, as I have alluded to, there is a risk that the quantum sought is excessive if security is confined to the costs of the appeal alone, as it must be.
The ordering of security of the costs of the appeal would not be tantamount to ordering security for costs of the cross-appeal. SBBC has brought its separate process of appeal, which is in no way defensive. Sparke Helmore will incur the costs of defending the appeal and, if successful, would be entitled to its costs of the appeal in the ordinary way. It appears to be common ground that Sparke Helmore would be out of pocket for those costs if security is not ordered.
The judgment has been paid into court and, as I have said, SBBC undertakes not to seek payment out of the judgment pending determination of the appeal and cross-appeal. The proceeds of the judgment paid into court are not, on that account, an asset to which it can be assumed Sparke Helmore will be able to have recourse if the appeal fails and it obtains a costs order substantially in its favour. As SBBC contends, the scenario where that is likely is one where Sparke Helmore's cross appeal succeeds, which would mean that it would be entitled to repayment of the moneys paid into court.
Neither party's written submissions addressed the moneys paid into court as security for costs of the proceedings below. I was told that $25,000 has been paid out to Sparke Helmore on account of costs to which it is entitled under earlier costs orders that have not been disturbed. SBBC has not made any application for the release of the remaining $165,000 which stands at the moment still as security for costs of the proceedings below. Although the issue was raised by me, neither party argued that the moneys already paid into court as security for the costs of the proceedings below, should be applied in part as security for costs of the appeal.
Accordingly, I think that some amount of security for costs of the appeal ought to be provided. As I have mentioned, Mr Price's estimate of recoverable costs of the appeal was made before the cross-appeal was filed. It appears to me inevitable that part of the costs of the appeal and cross-appeal will overlap and the quantum of security for costs of the appeal should reflect this. Thus, one of the grounds of cross-appeal is that the primary judge should have reduced the damages by more than 30% on account of SBB1's contributory negligence. The likelihood of overlap is apparent. No precision is possible. The parties accepted that I could apply a broad brush to assess the appropriate amount for which security should be ordered, having regard to the need to discriminate between the costs of the appeal and the cross-appeal and the lack of detail in Mr Price's estimate that might show how each item of costs was estimated so as to relate to the appeal only, even if a cross-appeal were filed.
Sparke Helmore submitted that SBBC should be ordered to provide security for costs of the appeal in the sum of $65,650 to be provided by way of payment into court or irrevocable bank guarantee. That sum includes an amount for the costs of this application. I think it is appropriate that the amount of security which I order should include the costs of this application as the costs order I will shortly make will be that the costs of the notice of motion be Sparke Helmore's costs in the appeal. However, having regard to the overlapping of costs on the appeal and cross-appeal and the need to discriminate between them, and because since Mr Price's affidavit was filed orders have been made for a one day hearing for both the appeal and the cross-appeal, the amount of security which I will order will be in the sum of $45,000, not $65,650.
Sparke Helmore recognises that it would be inappropriate for it to proceed with its cross-appeal if the appeal does not proceed because SBBC is unable to provide the security. Sparke Helmore undertakes not to prosecute the appeal in that event. I will note that undertaking.
I make orders in accordance with the proposed short minutes of order handed up by counsel for Sparke Helmore, with the following amendments. In order (1) I substitute the word "appellant" for "plaintiff" and I substitute the figure of $45,000 for $65,650. With those amendments I make order (1), and I make orders (2), (3), (4) and (5) as set out in that document.
I also order as follows.
(6) The costs of the respondents' notice of motion filed 7 March 2022 be the respondents' costs in the appeal.
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Decision last updated: 05 May 2022
Parties
Applicant/Plaintiff:
Shoal Bay Beach Constructions No 1 Pty Ltd
Respondent/Defendant:
Mark Hickey & the persons listed in Schedule A to the Notice of Appeal trading as Sparke Helmore