Treloar Constructions Pty Limited v McMillan

Stay application

Treloar Constructions seeks a stay of the execution and enforcement of the costs ordered by the primary judge on the grounds that the respondent is impecunious and if the costs are paid over it is likely that they will not be recoverable.
As is the case with applications for security for costs, the principles in relation to the grant of a stay are also well established. In Alexander v Cambridge Credit Corporation Limited (1985) 2 NSWLR 685 this Court stated, at 694, that it was "sufficient that the applicant for the stay demonstrates a reason or an appropriate case to warrant the exercise of discretion [to order a stay] in [the applicant's] favour".
In New South Wales Bar Association v Stevens [2003] NSWCA 95 Spigelman CJ (Meagher and Sheller JJA agreeing) observed, at [83], that the overriding principle was to ask "what the interests of justice require". His Honour referred to the statement in Alexander v Cambridge Credit Corporation set out in the paragraph above and, at [88], summarised the principles that the Court in that case had indicated were relevant, as follows: "'The onus is upon the applicant to demonstrate a proper basis for a stay that will be fair to all parties.' (694F) 'In the exercise of its discretion, the court will weigh considerations such as the balance of convenience and the competing rights of the parties before it.' (694G) '… where there is a risk that the appeal will prove abortive if the appellant succeeds and the stay is not granted, courts will normally exercise their discretion in favour of granting a stay.' (695C) '… where it is apparent that unless a stay is granted an appeal will be rendered nugatory, this will be a substantial factor in favour of the grant of a stay.' (695D) '… although courts approaching applications for a stay will not generally speculate about the appellant's prospects of success … this does not prevent them considering the specific terms of a stay that will be appropriate fairly to adjust the interests of the parties, from making some preliminary assessment about whether the appellant has an arguable case.' (695E)"
In Kalifair Pty Ltd v Digi-Tech (Australia) Pty Ltd; McLean Tecnic Pty Ltd v Digi-Tech (Australia) Pty Ltd (2002) 55 NSWLR 737; [2002] NSWCA 383 the Court, at [28], referred to the prima facie principle that a successful party to litigation is entitled to the fruits of the judgment and is entitled to be protected so far as is practicable from the risk that should an appeal be unsuccessful, assets which were earlier available to satisfy the judgment might no longer be available for that purpose. To that end, the court indicated that it may be appropriate to require, as a condition of a stay, that the applicant for the stay provide security.
In Penrith Whitewater Stadium Ltd v Lesvos Pty Ltd [2007] NSWCA 103 McColl JA observed that in that case, there was no question that if the judgment was stayed, the appellant who sought the stay of the first instance judgment would not be able to meet the judgment sum ordered against it should the appeal fail. In those circumstances, her Honour granted the stay without the imposition of any conditions.
Treloar Constructions submitted that it had arguable grounds of appeal. Included in its argument was that in circumstances where the primary judge had rejected the evidence of its expert, Mr Palmer, on the question of the solvency of the Company, her Honour erred in failing to determine the question of insolvency herself, on the evidence available.
Treloar Constructions' solicitor, Mr Mazzone, also deposed in his affidavit to having received a bill of costs and that it had been served with an application for assessment of costs. He deposed that if the assessment proceeded and if Treloar Constructions were successful on the appeal, the assessment process, and the costs involved, would have been wasted.
Mr McMillan acknowledged that the test for determining whether there was an arguable case was low, but nonetheless submitted that failure on any one of the issues raised with respect to insolvency on the appeal was sufficient for it to fail. In this regard, the question of the insolvency of the Company was said to be of particular importance. Unless Treloar Constructions proved insolvency, Mr McMillan's liability under s 588M did not arise.
Mr McMillan pointed to the fact that the expert, Mr Palmer, had made concessions and admissions in his evidence such that her Honour's characterisation of his report and his opinion as "flawed" was correct. Mr McMillan also pointed to the fact that, as her Honour stated at p 50 of her judgment, if the expert did not have sufficient information to form a view of the Company's insolvency, she was in a worse position. Mr McMillan submitted, therefore, that Treloar Constructions' complaint as to her Honour's failure to determine insolvency herself was without substance.
Mr McMillan conceded that he was impecunious. At an early stage of the application for the stay either being made or foreshadowed, he had offered to consent to a stay on condition that the estimated amount of the costs be paid into his solicitor's trust account. Treloar Constructions had not acceded to this proposal, relying on an earlier failure of Mr McMillan's solicitors to honour an arrangement that he pay for half the transcript. The solicitors had refused to do so after judgment was handed down on the basis that as a result of the costs order made against it, Treloar Constructions had a much larger liability to Mr McMillan. Treloar Constructions stated to this Court that it has real concerns that if any condition was imposed for the grant of a stay order requiring it to pay an amount in respect of the costs that it has been ordered to pay, those moneys should be paid into court.
In my opinion, this is an appropriate matter in which to order a stay. Mr McMillan concedes that he is impecunious. Although the submission made by Mr McMillan's counsel in respect of the insolvency point appears to be of real merit, I am not satisfied that the appeal is not arguable. Indeed, Mr McMillan has effectively conceded that a stay is appropriate, but subject to a condition that security be provided for the monies that he is entitled to in respect of the costs order.
In my opinion, in circumstances where I have concluded that there is a reason to believe that Treloar Constructions will be unable to pay the costs of the respondent if the respondent is successful in opposing the appeal, and where Treloar Constructions has not demonstrated by any other evidence that it will be able to satisfy the costs order already made against it in respect of the first instance proceedings should the appeal fail, I consider that a condition of the stay, that it provide security in respect of those costs, should be imposed.
The parties were given an opportunity to agree as to the terms of any condition which might be imposed, and in the absence of agreement, to advise the order which each considers to be appropriate. Agreement was not forthcoming. Treloar Constructions proposed that an amount of $60,000 be paid into a joint controlled account in the name of both solicitors on the record. Mr McMillan proposed an order that an amount of $225,000 be paid into such account.
In the circumstances, I see no reason why an amount that reflects the likely amount for costs ordered for the first instance proceedings ought not be secured. Mr McMillan has served a bill of costs on Treloar Constructions, claiming an amount of 270,371.34. The proceedings were conducted over five days before the primary judge and experts were involved. Although Treloar Constructions proposed to challenge various aspects of the bill, an amount in the sum of $225,000, as proposed by Mr McMillan, appears to be appropriate. I also consider it appropriate to stay the assessment of the bill of costs pending the outcome of the appeal.
There is a question as to the appropriate orders for costs that ought to be made on these applications. The applications were heard together. Mr McMillan has been successful in his application for security for costs. Treloar Constructions has been successful in the primary aspect of its application for a stay. Mr McMillan had indicated his agreement to an order for a stay, but suggested that it be on condition that money be paid into his solicitor's trust account. However, Treloar Constructions essentially resisted that any condition be imposed upon the grant of the stay.
As I have indicated, the repository of any such security was in issue, although Mr McMillan readily conceded that payment into a joint account of the solicitors for the respective parties would be appropriate. It would have been sensible for that arrangement to have been offered at the outset. It is a fairly usual arrangement and a more usual arrangement than that initially suggested by Mr McMillan.
However, having regard to the submissions made in this matter and the orders proposed by Treloar Constructions, I doubt that Treloar Constructions would have agreed to securing an amount in the order or what was sought by Mr McMillan. In those circumstances, I am of the opinion that Mr McMillan should be entitled to the costs of the stay application from the time that he indicated the terms on which he would consent to an order for a stay.
Accordingly, I make the following orders: 1. The appellant, Treloar Constructions Pty Limited, provide security for the costs of the respondent, Brian McMillan, of the appeal in a sum of $75,000, such sum to be paid into court or by way of an irrevocable bank guarantee issued by an Australian bank and realisable on an order of the Court; 2. The proceedings be stayed until such time as the appellant has provided security for costs in accordance with order (1); 3. Upon the appellant paying $225,000 into a joint controlled monies account in the names of both solicitors on the record on this appeal, the execution and enforcement, including by way of a costs assessment, of the order made on 17 March that: 1. the appellant, Treloar Constructions Pty Limited, pay the respondent, Brian McMillan's costs: 1. on an ordinary basis up to and including 5 December 2015; and 2. on an indemnity basis thereafter, as and from 6 December 2015 is stayed until 7 days after judgment is given on the appeal or until further order of the Court.

At a glance

Court

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Before

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Judgment (7 paragraphs)

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Legislation Cited (2)

Cases Cited (14)

Cited By (22)