Tyneside Property Management Pty Ltd v Hammersmith Management Pty Ltd

Procedural background 9On 16 December 2013 the appellants filed a motion seeking an extension of time within which to provide the security for costs. The proposed extension was until 3 February 2014, the date on which the motion was listed for hearing. It seems that that motion was not determined, but no steps were taken by the respondents until 10 February 2014. The order of Sackville AJA, security not having been provided, stayed the appeal. The respondents' motion of 10 February 2014 sought to take the matter one step further and have the appeal dismissed for "failure to comply with the orders made on 29 November 2013 for the provision of security". 10By way of response to that application, the appellants filed a motion on 17 February 2014 seeking to set aside the orders of Sackville AJA requiring security. (That motion and the motion currently before the Court, which appears to be in substantially the same terms, also sought, inappropriately, final relief in respect of the appeal.) On 20 March 2014 the appellants filed a further notice of motion seeking to set aside the orders made by Sackville AJA. Why they did so is obscure, as their motion of 17 February remained on foot and undetermined. 11During the trial and thereafter until January 2014, Moray & Agnew Lawyers were acting for the appellants. By letter dated 16 December 2013 Moray & Agnew advised Mr Haggis (the third appellant and principal of the two corporate appellants) that the UCPR, r 36.16 allowed a period of 14 days to apply to vary the terms of the judgment given on 29 November 2013. The letter noted that "[t]he application to extend time cannot be made after today." 12That rule (r 36.16) was relevant to an application to vary an entered final order, but not to the possibility of variation of an interlocutory order of a single judge. It is not clear that the appellants were ever advised as to their rights under s 46 of the Supreme Court Act, nor of the possible time limitations imposed on such rights. 13Further, the correspondence with Moray & Agnew indicated that steps were being taken to obtain financial assistance from a litigation funder. Although the appellants were actively engaging with Moray & Agnew in pursuit of such opportunities as they had to pursue their appeals, they were adamant that they could not accept the continued role of counsel who had appeared for them at trial and who, in their opinion, had sabotaged the trial. On 22 January 2014 Moray & Agnew wrote to Mr Haggis and Ms Florence (a director of one of the corporate appellants and Mr Haggis' daughter) noting that the clients were prepared to instruct a litigation funder only if new counsel were appointed; the letter advised that Moray & Agnew were unable to continue to act on that basis. The letter concluded with advice that the application to extend time was listed for hearing on 3 February and the appeal was listed for directions on 12 February 2014. They advised that "unless you have arrangements in place to furnish a bank guarantee to the Court for the $80,000 security by 3 February 2014", the respondents were likely to apply to have the proceedings dismissed with costs. 14The circumstances favourable to an extension of time to seek to set aside the judgment ordering security for costs were that, (a) the appellants were actively engaged with their solicitors seeking to arrange the necessary funds to make the payment; (b) the solicitors never advised them as to their rights under s 46(4) or the limitation period which applied, and (c) the appellants' application of 17 February 2014 was filed only 14 days after the listing of the motion to extend time and seven days after the respondents filed a motion to dismiss the appeal. 15On the present application, Mr Haggis was given leave to appear for the corporate appellants and his daughter, Ms Florence, was given leave to speak on behalf of all the appellants, including Mr Haggis. She read various affidavits. Although the affidavits did not in terms set out the beliefs and understandings of the individuals, particularly Mr Haggis and Ms Florence, as to their rights and understanding as to the relevant limitation periods, they did annex the correspondence from Moray & Agnew which demonstrated the factors set out at [14] above. In those circumstances, unless the application would be entirely futile, the appellants should have an extension of time within which to file the relevant motion until 17 February 2014. Although the motion now before the Court is dated 20 March 2014, the latter motion is relevantly identical and there was no suggestion of prejudice to the respondents because the fresh motion, rather than the earlier motion, was now relied upon. Further, to the extent the material now before the Court shows changed circumstances, the application was made by the litigants in person about three weeks after their lawyers withdrew.

Nature of respondents' application for security 16With respect to the corporate appellants, the application for security was founded on s 1335(1) of the Corporations Act. As Sackville AJA noted at [18], the impecuniosity of the corporation not only enlivens the Court's power, but is a substantial factor in the exercise of the discretion conferred by the section. The judge was satisfied that the corporations would be unable to pay the respondents' costs if their appeals failed. The other two issues were the prospects of success on the appeals and whether, if security were to be ordered, the appeals would be stultified: at [20]. The judge was content to assume that each appeal had sufficient prospects of success: at [21]. The critical consideration was therefore whether an order for security would be met from funds external to the companies. It was the findings that there were two potential sources of funds which are challenged on the present application. 17It was also contended before the primary judge, on behalf of the companies, that the appeal brought by Mr Haggis would go ahead in any event and that many of the same issues would be agitated on his behalf. As a result, there would be no purpose in awarding security against the companies, at the risk of stultifying their appeals. However, the primary judge was not satisfied that the companies' appeals would go ahead if they were ordered to provide security and could not, and if Mr Haggis were free to pursue his own appeal: at [29]. Nor was the judge satisfied that there would be any substantial overlap with respect to issues: at [36]. 18With respect to Mr Haggis, the application for security was founded on the UCPR, r 51.50. The respondents were required to demonstrate more than impecuniosity, namely "special circumstances". The judge was satisfied that special circumstances existed warranting an order against Mr Haggis, although the order in fact made was a global order against all three appellants: at [38] and [41]. What were deemed to be relevant special circumstances was not entirely clear; however, if justice required the order to be set aside with respect to the companies, there was no submission that it should be maintained as against Mr Haggis personally. 19The focus of the submissions on the present application was the availability of funds to permit the appeal to go ahead. Accepting the companies were impecunious, the judge found that funds would be available from one of two sources. The first was Ms Florence. In describing the proceedings, the primary judge referred to the fact that Ms Florence had (a) "paid hundreds of thousands of dollars towards the costs incurred by the appellants in the proceedings"; (b) was a 20% shareholder in one of the appellant companies (Tyneside), and (c) had paid the filing fee on the notice of appeal (an amount of $6,090): at [8] and [10]. The judge also noted that Ms Florence had offered to provide a personal guarantee as to the respondents' costs: at [19]. He noted that the "difficulty" with the offer was that "the appellants say that Ms Florence's liabilities exceed her assets" which, if correct, rendered the offer of "little or no practical value to the respondents." The conclusion with respect to Ms Florence's circumstances was set out at [37] in the following terms: "I appreciate that I have indicated that I am not satisfied that Ms Florence cannot and will not contribute more funds to the costs of running the appeal. Equally, however, the evidence does not enable me to conclude that her proffered guarantee in relation to costs orders on the appeal provides any worthwhile protection to the respondents." 20In the result, the critical finding related to Ms Florence's ability and willingness to contribute to the costs of running the appeal for the companies. The question of willingness may be put to one side: her past conduct demonstrated that she would be willing to support the appeal if funds were reasonably available. 21The question of ability to fund the companies' appeal was the critical matter. The underlying assumption before the primary judge was that the solicitors and counsel then acting for the appellants would continue to act on a speculative basis, without requiring prepayment of any part of their fees. On this basis, the judge made the following finding at [22]: "I am not persuaded that the appeal by Tyneside and Namlot would be stultified by an order requiring them to provide security. On the evidence, there are two possible sources of funds required to provide security for the costs of the appeal (bearing in mind that the appellants' legal representatives are prepared to conduct the appeal without requiring payment of fees and disbursements in advance of the hearing). The first possible source is Ms Florence; the second is the appellants' solicitors." 22Before the primary judge, the appellants relied upon an affidavit of their former solicitor, Julien Castaldi, of 12 November 2013. Although he had been the solicitor for the appellants for some three years prior to 1 November 2013, he had resigned from Moray & Agnew on that date. 23His affidavit set out background material with respect to the companies, noting that Ms Florence had a minority shareholding in one company, Tyneside. He set out information concerning the financial capacity of Mr Haggis, which appears to have been accepted by the primary judge. He also set out financial information as to the circumstances of another shareholder, Mr Haggis' wife, who was seriously disabled as a result of a brain injury. No issue seems to have arisen with respect to her capacity. Mr Castaldi stated that a third shareholder, Mr John Oliver, was antagonistic to the appellants and had given evidence for the respondents at trial. The primary judge accepted that evidence. There remained the statements of Mr Castaldi with respect to the financial capacity of Ms Florence. As with the other shareholders, Mr Castaldi spoke from information and belief. He said that he was informed by Ms Florence "that she is [an] enrolled nurse however unable to work at present due to an injury incurred in the workplace." He described her assets and liabilities as consisting of a half-share in a house (jointly owned with her husband) "worth approximately $400,000 ... which is presently mortgaged to ANZ Bank in the amount of approximately $350,000 ... and to Moray & Agnew for approximately $371,466". Household contents and a motor vehicle were said to have a combined value of approximately $15,000. 24With respect to Ms Florence alone, the primary judge described the evidence as being "not in a satisfactory form", noting that "the evidence of the value of the house consists of an unsupported assertion based on information and belief" which is "of no probative value": at [23] and [24]. He noted that the statement of assets and liabilities was not "complete" but only referred to "significant assets and liabilities". The judge continued at [26]: "The affidavit says that Ms Florence is an enrolled nurse, who is unable to work as the result of an unspecified injury. But the affidavit does not address the primary Judge's finding that Ms Florence was a principal of Delamere and, in that capacity, apparently was involved in undertaking work for the development. The affidavit does not address whether Ms Florence is or has been in a position to derive income from performing work other than as a nurse." 25In a passage challenged on this application, the primary judge also stated that "Ms Florence elected not to provide affidavit evidence as to her financial position and, in particular, her capacity to continue providing funds to enable the appellants to prosecute their appeal": at [23]. That finding, it was submitted, was inaccurate and unfair to Ms Florence. In the course of the hearing the primary judge had asked "would I not take into account that she's chosen not to give evidence herself, why is it satisfactory for a solicitor to give that kind of evidence on information and belief?" Counsel responded that it had not been thought to be "a matter of contention" and sought an indulgence for an opportunity for Ms Florence to put on an affidavit: Tcpt, 25/11/13, p 23(40)-24(15). The judge rejected the application as seeking "a second opportunity to remedy a defect" which had arisen as a result of a deliberate forensic choice: Tcpt, p 24(22)-(28). 26Counsel later said "she has made the offer and repeats it to be personally answerable" for the evidence (Tcpt, p 25(15)) and again noted (Tcpt, p 25(28)) that: "What she has done by making that offer is to make herself answerable. She has come out from behind the company and put her head on the chopping block." 27The appellants contended that, while the primary judge was entitled to refuse the application to allow Ms Florence to give evidence, it was inappropriate to make a finding against the appellants that she (or they) had exercised a choice that she not give evidence. 28With respect to Moray & Agnew, the primary judge noted that they were owed at least $371,000 on account of costs and were prepared to defer payment of costs and disbursements of the appeal until judgment: at [27]. He concluded that the solicitors "have a substantial interest in the outcome of the appeal". Noting that counsel had stated that "the solicitors would not be prepared to contribute towards an order for security", the judge said that there was "no evidence to that effect." That led him to conclude that he was not satisfied that the solicitors would not be prepared to advance further funds to ensure that the appeal could go ahead: at [28]. 29The appellants contended that these statements were erroneous. Although the evidence might have been inadequate, the primary judge had been referred to the statement in Mr Castaldi's affidavit that: "The proceedings are not being funded by any third party. I am informed by Mr Haggis that there is no other source of funding available to him for the conduct of the appeal. I am informed by Ms Florence that there is no other source of funding available to her for the conduct of the appeal." 30After referring expressly to that statement, counsel accepted that there was no express statement that Moray & Agnew would not pay an amount by way of security on behalf of their clients, but stated that "those are my firm instructions": Tcpt, p 7(22). Counsel continued: "I sought particular instructions on that late last week and then received instructions that the solicitors are not willing to provide security from their own sources."

Resolution of s 46(4) application 31According to the appellants, a number of factors now warrant a different conclusion. First, Ms Florence has proffered evidence of her inability to find the security ordered by the primary judge. The respondents did not seek to cross-examine Ms Florence, but challenged the relevance of the evidence, on the basis that it was not before the primary judge. Secondly, the evidence proffered by the appellants indicated that Moray & Agnew were no longer acting for them. The possibility that, in those circumstances, Moray & Agnew would be willing to provide the security was remote: in any event, they had not done so. 32Thirdly, no security had in fact been provided and the respondents were now seeking to strike out the appeals. Thus, stultification, of which the primary judge had not been persuaded, had come to pass. This was not merely a self-fulfilling prophecy on the part of the appellants: they proffered evidence as to the steps they had taken, primarily a fruitless attempt to obtain litigation funding from a commercial provider, to fulfil the condition. 33These factors raise a real issue as to the proper course to be taken by this Court on an application to discharge a decision of a single judge to order security for the respondents' costs of the appeal. Generally speaking, the Court has accepted that an applicant under s 46(4) bears a heavy burden to demonstrate error, or a miscarriage of a discretionary decision: see, eg, Rinehart v Welker [2011] NSWCA 403 at [48] (Bathurst CJ and McColl JA). This language expresses a principle of restraint. It is based upon three broad propositions. The first is that the application is not an appeal: Supreme Court Act, s 19(2). The second is that such orders commonly involve (as in this case) the exercise of a discretionary judgment. The third reason is that the question is one of practice and procedure, with respect to which even appellate intervention is approached with restraint: Adam P Brown Male Fashions, at 178. 34There are, however, factors which militate against imposing too heavy a burden upon an applicant in some circumstances, even where error is relied on. The first is that the section contains no such constraint. That is not to say that the principles noted above are not relevant, but rather that they should be approached flexibly with regard to the circumstances of the particular case. 35Secondly, the powers granted by s 46(4), not described as an appeal or, indeed, a review, do not in their terms imply a more limited approach than would be permissible on an appeal. Thirdly, an interlocutory order is open to reconsideration before the proceedings are finally disposed of, particularly if there has been a change in circumstances: those were not the circumstances in which the principle of restraint was espoused. Fourthly, if the order under review is likely to terminate the proceedings, without a hearing on the merits, the Court should be willing to reconsider the appropriateness of the order if an arguable challenge is raised. 36With respect to the financial capacity of Ms Florence, an affidavit was in fact prepared on the date of the hearing before the primary judge, namely 25 November 2013. Although it was not permitted to be deployed at that hearing, it was read before this Court. It provided the detailed information which was missing from the solicitor's affidavit before the primary judge. It was deficient in only one respect: it did not contain a valuation of the property at West Wallsend jointly owned by Ms Florence and her husband. However, it did give an adequate description of the property and provided an extract of properties in the area from a real estate website. That material is sufficient for the Court to infer, on the probabilities, that Ms Florence had no equity in the property once the secured liabilities were taken into account. She had no other accessible means to meet the amount ordered for security for costs. (She had a superannuation fund which was not only inaccessible, but which would not have met the bulk of the security required.) She was not cross-examined on this material. If it were appropriate for this Court to form a view as to the facts, it is that the appellants have established that Ms Florence could not, from her own resources, provide the necessary security. 37In a subsequent affidavit, dated 11 February 2014, Ms Florence gave evidence of an offer made by a friend on 4 January 2014 that she and her husband would lend the amount of $80,000 for the appeal. She said that she rejected the offer. Given the risks of failure, the rejection of the offer by a friend with no interest in the outcome was not unreasonable. 38There was correspondence annexed to Ms Florence' first affidavit relating to arrangements sought to be made with Moray & Agnew to obtain litigation funding. 39On 6 December 2013 Mr Haggis and Ms Florence wrote to Moray & Agnew noting that there was a caveat over the Florence house "which if lifted could go a long way to fund the Security of Costs". Other correspondence complained that it was the advice of Mr Castaldi and counsel that it was not necessary for the appellants to file any further evidence with respect to security for costs other than Mr Castaldi's affidavit. 40By 18 December 2013 Moray & Agnew were awaiting instructions to sign confidentiality agreements with two possible funders "to enable key appeal documents to be provided to them for the purpose of assessing whether they would be prepared to provide the security and/or fund the costs of your appeal." The following day, 19 December 2013, Moray & Agnew noted a statement made by Mr Haggis and Ms Florence that it was "untenable for us to continue" with trial counsel. The letter stated that if trial counsel were to cease to act, Moray & Agnew would also cease to act. They further stated that Moray & Agnew "are unable to continue to act for you if we are not able to brief the litigation funders to investigate the possibility of providing funding for at least the security for costs, and potentially our fees." Outstanding fees were said to be "currently in the vicinity of $143,000." 41On 20 January 2014, Mr Haggis wrote to Moray & Agnew providing details of his dissatisfaction with trial counsel, noting Moray & Agnew's warning that they would cease to act if counsel were not briefed and inquiring why "the litigation funder can't pay for a new barrister if they are going to garnish half of our settlement proceedings." 42Given that the appellants and Moray & Agnew have parted ways, it would now be reasonable to infer that Moray & Agnew were no longer willing to provide any assistance with respect to security for costs of the appeal, if they ever were. That they appear not to have been willing to allow Ms Florence to seek a loan against the security of her home provides some confirmation of that inference. The fact that such a possibility was raised by the appellants also provides some support for the conclusion that there was no equity left in the home which would allow Ms Florence to offer security for a loan. 43The withdrawal of Moray & Agnew constituted a significant change in the circumstances in place at the time of the hearing before the primary judge. It is clear from the communications between the individuals representing the appellants and Moray & Agnew that this parting of the ways was neither contrived nor unreasonable on either side. Although Mr Haggis and Ms Florence had strong doubts about the conduct of the solicitor who had been handling the matter during the trial, he was no longer involved in the appeal. Their primary concern was to obtain fresh counsel. That is not necessarily an unreasonable step to take, especially where trial counsel has lost the confidence of the clients. On the other side, Moray & Agnew clearly had confidence in trial counsel and were not prepared to attempt briefing fresh counsel in respect of a long and complex trial and a relatively complex appeal. The result, not foreseeable at the time of the hearing before the primary judge, was that a significant basis for the judgment has fallen away. 44Once it is accepted that there is a basis for reconsidering the order made by the primary judge, it is permissible (whatever might otherwise be the position) to look at the fresh material provided by Ms Florence as to her financial capacity. That material is sufficient to satisfy the Court that there is no reasonable prospect of her providing the amount by way of security ordered by the primary judge and, indeed, confirms that there was no reasonable opportunity of that occurring at the time of the hearing before the primary judge, although the evidence before him was insufficient to establish that fact. 45The changed circumstances would have been sufficient to permit a fresh application to be made with respect to the order for security for costs. The onus placed on the appellants with respect to such a fresh application would not be greater than that with respect to a challenge to the initial decision, based on error. This Court can deal with the matter on that basis. For the reasons set out above, it is now clear that the order for security for costs will stultify the appeal. Indeed, given the absence of any realistic possibility that the amount of the security will be obtained, if the order is not varied the respondents' motion to strike out the appeal would be allowed.

Appropriate orders 46The changed circumstances set out above demonstrate that the present order for security will, or is highly likely to, prevent the appellants proceeding with their appeal. That requires that the order for security for costs be revisited. Stultification is undoubtedly a factor which must be taken into account in determining whether to order security for costs, but it is not a determinative factor. In dealing with an application for costs under the predecessor to s 1335 of the Corporations Act, Clarke J, in Yandil Holdings Pty Ltd v Insurance Company of North America (1985) 3 ACLC 542, stated at 545, col1: "The Court is vested with an unfettered discretion as to whether an order is made and, if so, upon what terms. The fact that the ordering of security will frustrate the plaintiff's rights to litigate its claim because of its financial condition does not automatically lead to the refusal of an order. Nonetheless it will usually operate as a powerful factor in favour of exercising the Court's discretion in the plaintiff's favour." 47This passage was cited with approval by Beazley J in the Federal Court in KP Cable Investments Pty Ltd v Meltglow Pty Ltd (1995) 56 FCR 189 at 197; see also Pioneer Park Pty Ltd (In liq) v Australian and New Zealand Banking Group Ltd [2007] NSWCA 344; 65 ACSR 383; 25 ACLC 1,707; 2 BFRA 753 at [51]. There is no reason to doubt the correctness of the proposition. It leads inevitably to consideration of the merit of the plaintiff's (in this case the appellants') case. The purpose of the provision for security with respect to the costs of a company is to remove the potential for unfairness to a respondent faced with an impecunious corporate claimant in litigation where costs would ordinarily follow the event. Successful resistance to the claim may require the respondent to incur significant expense which is not recoverable because of the impecuniosity of the claimant. A primary justification for the unfettered discretion to order security with respect to a claim by a corporation is that those who stand to benefit from success do not stand to bear the responsibility in the event of failure. 48If there were no corporate appellant, the question of security would be determined by reference to the UCPR, r 51.50, which requires a finding that there be "special circumstances" before the court's power to order security is engaged with respect to an appeal. However, in the case of a corporation, the power is not so constrained: Pioneer Park at [22]. 49The situation is complicated where there is an insolvent corporate claimant and an individual with separate interests to pursue. If there were no proper justification for ordering security in relation to the claims by the individual, that might provide a powerful reason for not ordering security with respect to the corporation: Winnote Pty Ltd (In liq) v Page [2005] NSWCA 362; 64 NSWLR 244 at [38]-[43] (Mason P). However, as in that case, "the overwhelming thrust of the appellants' argument will be directed at matters that are either common to each appellant or supportive only of the case of the corporate appellant": at [41]. It is by no means clear that the case for Mr Haggis is one which would proceed if the claim brought by the company were unable to proceed. Nor can it be said that the respondents are protected by the likelihood of a costs order against both Mr Haggis and the corporate appellants in the event that the appeal fails. There is no evidence that Mr Haggis is better able to meet such an order than the companies: the situation in Winnote was different, the President accepting that Mr Roach (the individual appellant) was "apparently a man of substantial means": at [43]. No order was made in Winnote, but the President noted that the situation would merit review if Mr Roach would cease to be a party to the appeal or "if compelling material emerged to cast doubt on his capacity to meet an adverse order for the costs of the appeal": at [45]. 50The factors relevant to an order for security for costs with respect to an appeal differ from those which are likely to be the focus of attention with respect to a trial in the following respects: (a) the nature of the claims having been ventilated at a trial, the court will be in a better position to make a tentative assessment of the strength of the case on appeal; (b) while there may be expectations of a lengthy trial, an appeal, even where the trial has proved to be lengthy, will in all likelihood be far shorter; (c) the articulation of the various interests of the appellants in proceedings will have been clarified by the judgment under appeal, thus allowing a reasonable understanding of whether the individual appellant has a significant interest in the outcome of the appeal; (d) the extent of the likely liability for costs will be more readily assessed, given the more restricted nature of the proceeding, and (e) the appellants will have had an opportunity to litigate their claims. 51In these circumstances, and assuming that an order for security in any significant amount will stultify the proceeding, the necessary balance must be drawn between the risk of unrecoverable financial loss to the respondents, in the event of their success, against the potential loss to the appellants of not being able to pursue a meritorious claim. 52In the present case, that balance weighs against the appellants. Given the impecuniosity of the individual and the corporate appellants and the absence of any shareholder of financial means standing behind the latter, the risk to the respondents approaches a certainty. On the other hand, whilst the respondents concede that the appeal is arguable, for the reasons explained by Emmett JA, there can be no confidence in the appellants' chances of success. Acknowledging all the risks and difficulties in making a firm assessment without having the benefit of full argument, it is not possible to infer that the appellants' chances involve a real prospect of success. The appellants have had an opportunity to run their claim at trial and have comprehensively failed to make good their claims. The likelihood of setting aside the judgment of the trial judge is too remote to justify the risk of further financial expense to the respondents. 53In these circumstances, an order for security should be made, despite the changed circumstances since the decision of the primary judge. There is no basis for considering that the amount ordered by way of security was excessive. I agree with the order proposed by Emmett JA with respect to security and the further period which he would allow. 54There remains a question as to the costs of the present motions. I too would order that the costs of the motions be costs in the appeal. If security is obtained so that the appeal may proceed, a separate order as to the costs of the motions may inspire a further round of litigation relating to them, with a demand that they too should be paid before the appeal can proceed. To avoid that outcome, the costs of the motions should be the respondents' costs in the appeal. 55MEAGHER JA: I agree with the reasons and proposed orders of Emmett JA. 56EMMETT JA: In May 2003, the first two appellants, Tyneside Property Management Pty Ltd (Tyneside) and Namlot Nominees Pty Ltd (Namlot), commenced proceedings against the respondents, Hammersmith Management Pty Ltd (Hammersmith) and Roche Group Pty Ltd (Roche). Tyneside and Namlot claimed many millions of dollars in damages for the alleged repudiation by Hammersmith and Roche of agreements entered into in connection with a land development project near West Wallsend known as Pambulong Forest (the Project). Hammersmith filed a cross-claim to recover an advance of $100,000 made to Tyneside under a management agreement relating to the Project (the Management Agreement). Hammersmith also joined the third appellant, Mr Roy Haggis, as a cross defendant in the cross-claim. Mr Haggis had guaranteed Tyneside's indebtedness to Hammersmith. 57On 28 May 2013, after a trial that commenced in February 2011 and continued for 25 hearing days, Brereton J published reasons for the conclusions that his Honour had reached. The reasons were published some two years after the hearing had concluded. In his reasons, his Honour said that the dispute between the parties arose out of contractual arrangements entered into on 4 June 1999 when Tyneside was engaged by Hammersmith to manage the Project. Namlot was to receive a specified share of the profits generated by the Project. It was envisaged that the Project would entail a subdivision of land, with construction to commence in February 2000 and sales to commence in the third quarter of 2000, generating a profit of almost $70,000,000 by March 2011. 58The arrangements were evidenced by a profit deed (the Profit Deed) and the Management Agreement, which were both entered into on 4 June 1999. Hammersmith contended that the Management Agreement was terminated by mutual consent on 28 January 2003 when, consequent upon Tyneside's resignation as project manager, it was agreed that Roche would assume management of the Project. Hammersmith also contended that the Profit Deed was terminated by notice given on 11 March 2003. Alternatively, Hammersmith contended that the Management Agreement and the Profit Deed were terminated on 11 March 2003, on the bases that, first, Tyneside had repudiated the Management Agreement and the Profit Deed by its resignation on 28 January 2003 and, secondly, that Tyneside was in default in several respects under both agreements. 59Brereton J said that the main issues in the proceedings before him included the following:

• Whether the Management Agreement was discharged by agreement on 28 January 2003 or, alternatively, whether Tyneside repudiated the Management Agreement by resigning on that occasion;
• Whether Tyneside committed acts of default under the Management Agreement or the Profit Deed entitling Hammersmith to terminate those agreements, as it purported to do on 11 March 2003;
• If no, whether Tyneside was entitled to damages for Hammersmith's repudiation of the two agreements. 60Brereton J accepted that there was a consensual termination of the Management Agreement on 28 January 2003, when it was discharged by agreement. His Honour did not accept the alternative case that the Management Agreement was terminated on 11 March 2003 for repudiation. The conclusion that there was a consensual discharge of the Management Agreement on 28 January 2003 was dispositive of the proceedings and Tyneside's case failed on that basis. Brereton J also concluded that, had the Management Agreement not already been consensually discharged, Hammersmith would have been entitled to terminate it pursuant to the terms of the Management Agreement, which in turn would have entitled Hammersmith to terminate the Profit Deed. 61On 6 June 2013, his Honour made orders:
• dismissing Namlot's claim for breach of contract;
• dismissing Tyneside's claim for breach of contract; and
• directing the entry of judgment against Tyneside, as principal debtor, and against Mr Haggis, as guarantor, in the sum of $100,000 plus interest. 62Brereton J also ordered Tyneside, Namlot and Mr Haggis to pay the costs of the proceedings. Prior to the trial, Tyneside and Namlot had provided security for Hammersmith's and Roche's costs of the trial in the sum of $100,000. Brereton J ordered that the amount of the security be paid out to them. 63On 6 September 2013, the appellants filed a notice of appeal from the orders made by Brereton J. The notice of appeal contains some 51 grounds, many of which are challenges to findings of fact. On 4 October 2013, the respondents filed a notice of motion seeking security for their costs of the appeal (the Security Motion). Sackville AJA heard the Security Motion on 25 November 2013. There was no dispute before his Honour that the appellants would be unable to pay the respondents' costs of the appeal should any order to that effect be made against them, since each of the appellants formally conceded that it or he would be unable to pay such costs. A significant question in the hearing of the Security Motion was whether the requirement to provide security would stultify the appeal. 64Mr Julien Castaldi, who was the solicitor for the appellants from 13 December 2010 until 1 November 2013, swore an affidavit that was read on behalf of the appellants at the hearing of the Security Motion before Sackville AJA on 25 November 2013. During the time when he was acting for the appellants, Mr Castaldi was a partner of Moray & Agnew, the solicitors then acting for the appellants. Mr Castaldi ceased to be a partner of Moray & Agnew after 1 November 2013. However, he continued to assist the appellants in relation to the Security Motion. Mr Castaldi gave evidence on information and belief as to the financial capacity of Mr Haggis and of his daughter, Ms Maryann Florence, who is a shareholder of Tyneside. Mr Castaldi's evidence also dealt with the financial capacity of Mr John Oliver, who is also a shareholder of Tyneside. I shall return below to the evidence as to financial capacity. 65On 29 November 2013, for reasons published on that date, Sackville AJA ordered that, by 16 December 2013, the appellants furnish security for the costs of the respondents of and incidental to the appeal in the amount of $80,000. His Honour directed that, in the absence of agreement between the parties, such security be provided by way of bank guarantee. His Honour also ordered that the proceedings be stayed until security was provided in accordance with those orders. His Honour ordered that the appellants pay the respondents' costs of the Security Motion. 66There are now two notices of motion before the Court in relation to the appeal. First, by notice of motion filed on 10 February 2014 (the Dismissal Motion), the respondents seek summary dismissal of the appeal by reason of the failure on the part of the appellants to comply with the orders made by Sackville AJA on 29 November 2013. Secondly, by notice of motion filed on 21 March 2014 (the Review Motion), the appellants ask the Court to set aside the orders made by Sackville AJA. By the Review Motion, the appellants also ask the Court to set aside the judgment and orders made by Brereton J and to grant leave to them to apply for a new trial. However, the Review Motion was filed out of time (see further below, [99]ff) and the appellants would require the Court to grant an extension of time in order to proceed. 67Although the appellants were represented at the trial and at the hearing of the Security Motion, they presently have no legal representation. On the hearing of the Dismissal Motion and the Review Motion, Mr Haggis appeared in person with the assistance of Ms Florence. With the leave of the Court, Mr Haggis and Ms Florence also appeared on behalf of Tyneside and Namlot. 68Since the hearing of the Security Motion, Moray & Agnew and counsel who had been briefed for the appellants at the trial and on the hearing of the Security Motion have ceased to act for them. Nevertheless, the hearing of the Review Motion must proceed on the basis of the material before Sackville AJA. It may be that a change of circumstances since the hearing in November could be the basis for a separate application by the appellants. However, it is not something to be taken into account when dealing with an application under s 46(4) of the Supreme Court Act 1970 (NSW) to discharge or vary orders made by a single Judge of Appeal. I shall return to that question below. 69Certain of the prayers for relief in the Review Motion would involve upholding the appeal on a summary basis. The appellants cannot, simply by filing a notice of motion, obtain orders that are tantamount to the upholding of their appeal. Those prayers are quite misconceived and should be dismissed summarily. 70The two notices of motion raise several questions. The first is whether an extension of time should be granted in respect of the Review Motion. The second question is whether, assuming an extension of time were to be granted, the orders for security made by Sackville AJA should be set aside or varied in any way. The third question is whether, assuming the orders made by Sackville AJA are not set aside or varied, the appeal should be dismissed for want of compliance with those orders. A further question arose during the hearing of the motions as to whether this Court should have regard to a change of circumstances affecting the appellants. 71Logically, the question of an extension of time should be decided before dealing with the merits of the Review Motion. On the other hand, the prospects of success of the Review Motion are relevant to the exercise of discretion to extend the time to bring the Review Motion and that question will be addressed first. Before dealing with the questions raised by the motions, it is desirable to say something about the reasons of Sackville AJA.

The Reasons of Sackville AJA 72Sackville AJA assumed, without deciding, that Tyneside and Namlot had an arguable case on the appeal. His Honour accepted that Tyneside and Namlot were impecunious, in the relevant sense, and that, unless an order were made requiring the provision of security, the respondents would be forced to defend an appeal involving many issues of fact and law with no real prospects of recovering their costs from the appellants, should they succeed. 73Sackville AJA referred to the fact that Ms Florence, through the appellants' solicitors, had offered to provide a personal guarantee in respect of any adverse costs orders against the appellants. The difficulty with that offer, according to the respondents, was that Ms Florence's liabilities exceeded her assets. Consequently, the offer of a personal guarantee would be of little or no practical value to them. 74Two reasons were advanced to Sackville AJA as to why an order to provide security should not be made against Tyneside and Namlot. The first was that the order would stultify the appeal. The second was that, if they were ordered to provide security and failed to do so, but Mr Haggis was not required to provide security, his appeal would proceed and it would be necessary to canvass much the same issues as would arise in the appeal by Tyneside and Namlot. 75Sackville AJA was not persuaded that the appeal would be stultified by an order requiring the appellants to provide security. His Honour considered that there were two possible sources of funds required to provide security. The first possible source was Ms Florence. The second was Moray & Agnew, the appellants' solicitors. 76Sackville AJA observed that Ms Florence had "elected" not to provide affidavit evidence as to her financial position and, in particular, her capacity to continue providing funds to enable the appellants to prosecute their appeal. The appellants complain about the use by his Honour of the word "elected" and I shall deal with that complaint below. The only evidence as to the means of Ms Florence before his Honour was Mr Castaldi's affidavit. His Honour considered that that evidence was not in a satisfactory form and did not establish that Ms Florence was unable to contribute some or all of the funds that would be required if an order for security were to be made. His Honour was not satisfied that Ms Florence could not and would not contribute more funds to the costs of running the appeal. Equally, however, as I have said, his Honour was not satisfied that the evidence enabled him to conclude that the guarantee proffered by Ms Florence provided any worthwhile protection to the respondents. 77Further, Sackville AJA was not satisfied that Moray & Agnew, given that they had such a large stake in the outcome of the proceedings, would not be prepared to advance further funds, if an order for security were made, to ensure that the appeal could go ahead. His Honour said that the solicitors had a substantial interest in the outcome of the appeal (see Ballard v Brookfield Australia Investments Ltd [2012] NSWCA 434 at [41]). His Honour observed that Moray & Agnew were owed at least $371,000 on account of costs and that they were prepared, at the time of the hearing of the Security Motion, to defer the payment of costs and disbursements in relation to the appeal until judgment was delivered. His Honour noted that counsel for the appellants had asserted from the bar table that the solicitors would not be prepared to contribute towards an order for security, but observed that there was no evidence to that effect. 78Sackville AJA was not satisfied, if Tyneside and Namlot were ordered to provide security, but Mr Haggis was not, that the appeal would proceed in any event and that the same issues would be canvassed. His Honour observed that the only issue in the appeal so far as Mr Haggis was concerned was whether or not he should be held liable on his guarantee, the amount of which was only $100,000 plus interest. It was not clear to his Honour what practical value there would be in Mr Haggis pursuing an appeal on his own account without Tyneside and Namlot being permitted to continue with their appeal. The appeals by Tyneside and Namlot, if successful, would result in judgments in their favour for millions of dollars. An appeal by Mr Haggis alone, if successful, would simply relieve him from a judgment of $100,000 plus interest. 79Sackville AJA observed that there was no evidence that Mr Haggis would still want to pursue his appeal, if the appeal by Tyneside and Namlot were stayed. Further, the many grounds of appeal in the notice of appeal do not appear to address specifically the grounds on which Mr Haggis challenged the orders made against him. His Honour therefore considered that it was extremely difficult to know what issues Mr Haggis's appeal, as distinct from the appeal by Tyneside and Namlot, would raise and how long it would take to deal with them. His Honour was satisfied that there were special circumstances justifying an order for security being made against Mr Haggis, as well as against Tyneside and Namlot. 80The parties disagreed as to the likely duration of the appeal, should it proceed. His Honour considered that, if the appeal were to proceed, it should be capable of being heard within two days, although that was likely to require the appellants to focus more clearly and precisely on what they say are the significant errors in the reasoning of Brereton J. His Honour considered that justice would be done if the appellants were required to provide security for costs in the sum of $80,000.

The Review Motion 81Section 46(1) of the Supreme Court Act relevantly provides that a Judge of Appeal may exercise the powers of the Court of Appeal to deal with costs. Under s 46(2), a Judge of Appeal may exercise the powers of the Court to make any order or give any direction in any appeal or other proceedings, other than an order or direction involving the determination or decision of the appeal or other proceedings. Under s 46(5), a judgment, order or direction given or made by a Judge of Appeal is, subject to s 46(4), to have effect as a judgment, order or direction of the Court. Under s 46(4), the Court may discharge or vary a judgment, order or direction given or made by a Judge of Appeal. 82The application for review of the decision of Sackville AJA is brought under s 46(4). An application under s 46(4) is neither an appeal from, nor a new hearing of the matter determined by, a single Judge of Appeal. Unless sufficient ground be established upon which the order being reviewed should be discharged, the order should stand. Where the decision being reviewed is discretionary, the approach to an application for discharge of the orders made by a single Judge of Appeal is akin to that applied to the review of discretionary decisions generally. That is to say, there must be some error of law, a material error of fact, a failure to take into account some material consideration or the taking into account of an irrelevant consideration. Alternatively, it must be shown that the decision is so unreasonable as to suggest that one of those types of errors must have been committed even though one does not appear on the face of the reasons. A person seeking review under s 46(4) bears a heavy burden in having orders made by a single Judge of Appeal set aside (see Ralph Lauren 57 Pty Ltd v Byron Shire Council [2014] NSWCA 107 at [18]-[19]). 83The appellants' submissions in support of the Review Motion do not criticise his Honour's reasoning in any way. It is difficult to find in their submissions any specific complaint concerning the exercise of discretion by Sackville AJA. Rather, the submissions are directed at complaints about the conduct of the lawyers who appeared for them at the trial before Brereton J and on the hearing of the Security Motion. That is to say, they focus upon events preceding the hearing before his Honour that involved themselves and their legal representatives, and upon the manner in which their legal representatives presented their case before Sackville AJA. None of those matters constitutes an error on the part of Sackville AJA. 84However, in the course of oral argument, two possible complaints emerged. The first complaint concerns the question of whether Moray & Agnew would be prepared to contribute towards an order for security. The second complaint related to the absence of affidavit evidence from Ms Florence as to her financial position and her capacity to continue providing funds to enable the appellants to prosecute their appeal.

Moray & Agnew as a source of security 85Mr Castaldi said in his affidavit that the appellants' counsel was prepared to be briefed in the appeal on a speculative basis, such that he would not be paid if the appeal were not successful. Mr Castaldi also said that he was authorised by Moray & Agnew to say that, to enable the appeal to proceed, the firm was acting for the appellants on the basis that payment of its outstanding fees in relation to the hearing at first instance, and its fees for the appeal, would be deferred until the appeal hearing had concluded and a decision had been given. 86Mr Castaldi then said, in his affidavit, that the proceedings were not being funded by any third party and that he had been informed by Mr Haggis that there was no other source of funding available to him for the conduct of the appeal. He also said that he had been informed by Ms Florence that there was no other source of funding available to her for the conduct of the appeal. 87In the course of the hearing of the Security Motion, Sackville AJA asked counsel for the appellants why he should not infer that the case would be run "through the good offices" of the solicitors and counsel. Counsel agreed that the case would "be run in effect on spec". When asked by his Honour how, in those circumstances, the appeal could be stultified, counsel responded that it would be stultified if security were ordered, because he had firm instructions to the effect that the solicitors were not prepared to lodge security. Counsel said that, while the solicitors were prepared to provide representation to the appellants, they were not prepared to guarantee an adverse outcome for the respondents. When asked as to the evidence on that question, counsel referred to the assertion in Mr Castaldi's affidavit that the proceedings were not being funded by any third party and that he had been informed by Mr Haggis that there was no other source of funding available to him for the conduct of the appeal. 88The respondents emphasise the distinction drawn by Mr Castaldi in his affidavit between the statement that Moray & Agnew was acting for the appellants on the basis that it would defer payment of its fees, and the statement that the proceedings were not being funded by any third party. Mr Castaldi's affidavit said that he was authorised by Moray & Agnew to say that its fees would be deferred but did not say that he was authorised by Moray & Agnew to say anything about whether Moray & Agnew would provide security for costs. His assertion of his instructions from the bar table, of course, was not evidence. 89Given that Moray & Agnew had such a large stake in the outcome of the proceedings, Sackville AJA was not satisfied, on the evidence, that Moray & Agnew would not be prepared to advance further funds, if an order for security were made, to ensure that the appeal could go ahead. His Honour came to that conclusion in the light of the observation that there was no evidence to the effect that the solicitors would not be prepared to contribute towards an order for security. 90Moray & Agnew are no longer acting for the appellants in the appeal. Thus, a significant change in circumstances has occurred since the orders made by Sackville AJA. While the change in circumstances has no bearing on the correctness of the decision of Sackville AJA, it will have a bearing on the manner in which the Court should dispose of the motions.

Ms Florence as a source of security 91In the course of the hearing of the Security Motion, Sackville AJA asked counsel for the appellants why he should not take into account the fact that Ms Florence had chosen not to give evidence herself. His Honour asked why it was satisfactory for a solicitor to give that kind of evidence on information and belief. Counsel for the appellants responded that the lawyers acting for the appellants did not understand it to be a matter of contention until they saw the respondents' submissions. His Honour said that it was always going to be a matter of contention as to whether a party that seeks to obtain relief from the Court has adduced evidence that is sufficient to satisfy whatever might be the requirements for the granting of such relief. His Honour said that a party does not need to be told that in submissions. 92Counsel for the appellants then said to Sackville AJA that, if his Honour were otherwise minded to act on the footing that there was an insufficiency in the evidence, he would seek the indulgence of an opportunity for Ms Florence "to put on an affidavit verifying". His Honour responded that there was enough interlocutory disputation in the case and that the appellants had had ample opportunity to put on whatever evidence they wanted. His Honour said that forensic decisions are made all the time and that, fairly obviously, a deliberate decision had been made to put on evidence on information and belief. His Honour said that that was a forensic choice and, if the evidence turned out to be the subject of submissions that it was not in satisfactory form, it may not be appropriate that the party be given a second opportunity to remedy a defect. His Honour referred to the requirement under s 56 of the Civil Procedure Act 2005 (NSW) for the Court to ensure the quick, cheap and just determination of proceedings. 93The appellants complain that, in his reasons, Sackville AJA characterised the matter as an election by Ms Florence not to file an affidavit. First, they say, there was no election on the part of Ms Florence. Ms Florence is not a party to the proceedings. It may have been an election by the appellants, or by those advising them, but there was no election by Ms Florence. Secondly, they say, where counsel for the appellants in effect sought an indulgence that was refused, it is inappropriate to characterise the absence of evidence as an election, rather than a failure to address the issues adequately. 94However, as Sackville AJA observed, the evidence as to financial capacity that was before him was not in a satisfactory form. Mr Castaldi said in his affidavit that he had been informed by Mr Haggis, and that he believed, that Mr Haggis did not have the financial ability to raise up to $150,000, the amount claimed as security for costs by the respondents. Mr Castaldi said that Mr Haggis's significant assets consisted of tools of trade to the value of approximately $5,000 and a motor vehicle to the value of approximately $2,000. Mr Haggis is a shareholder of Tyneside and Namlot. He does not own any real property and rents his home. Mr Haggis is engaged as a full-time carer for his wife, who suffers from a serious incapacity. 95Mr Castaldi said that he had been informed by Ms Florence that she does not have the financial ability to raise the amount of security. He said that he had been informed that Ms Florence was an enrolled nurse, but that she is unable to work at present because of an injury incurred in the workplace. Ms Florence owns a house jointly with her husband. There was no evidence of the value of the house, although Mr Castaldi said that Ms Florence believed that the house was worth $400,000, the value of her share being $200,000. The indebtedness of Ms Florence and her husband to a bank, as well as fees due to Moray & Agnew, which total $371,466, are charged on the house. 96In the trial judgment, Brereton J described Ms Florence as a principal of Delamere Homes Pty Ltd (Delamere), a contractor for civil works undertaken as part of the Project. The filing fee of $6,090 paid in connection with the notice of appeal was provided by Ms Florence, who charged her interest in her family home with payment of some hundreds of thousands of dollars of the appellants' costs of the trial.

Outcome of the Review Motion 97On the material before Sackville AJA, it may well have been open to his Honour to conclude that Moray & Agnew was not prepared to advance its own funds by way of security in order to enhance the possibility of recovery of its outstanding fees, since the outstanding fees were already secured by a charge over Ms Florence's house. It may also have been open to his Honour to conclude that Ms Florence was not in a position to provide security for the respondents' costs. 98However, I am not persuaded that his Honour made an error of law or a material error of fact. On the state of the evidence before him, the conclusions that his Honour reached were also available to him. I do not consider that there was a failure to take into account a material consideration or that his Honour took into account an irrelevant consideration. I am not persuaded that there was an error on the part of Sackville AJA such as to warrant interference with his Honour's exercise of the discretion to order security. I do not consider that the appellants have established that, if an extension of time were granted, the orders made by his Honour on 29 November 2013 would be discharged.

Extension of Time 99As I have said, the Review Motion was brought under s 46(4) of the Supreme Court Act. However, under r 51.58(a) of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR), an application to discharge or vary an order of a Judge of Appeal must be filed within 14 days of the making of the order. Accordingly, any application to discharge or vary the orders made by Sackville AJA on 29 November 2013 should have been filed no later than 13 December 2013. There has been no formal application to extend the time for filing an application to review the orders made by Sackville AJA. 100The Review Motion was filed on 21 March 2014. While the Court has power under r 51.58(b) to extend the time within which a review application may be made, the respondents oppose the grant of such an extension. On 16 December 2013, the appellants filed a notice of motion seeking an extension to 3 February 2014 of the time to comply with the orders made by Sackville AJA (the Extension Motion). They have now abandoned that motion. However, the fact that it was filed is relevant to the exercise of the discretion to extend the time for filing a notice of motion under s 46(4). 101On 17 February 2014, the appellants filed and served a notice of motion seeking review of the orders made by Sackville AJA. The Review Motion seeks relief virtually identical to that sought by the motion of 17 February 2014. The appellants have indicated that the Review Motion is intended to replace the motion of 17 February 2014. However, the notice of motion of 17 February 2014 is significant in so far as it notified the respondents, no later than the time when it was served on them, of the desire of the appellants to have the orders made by Sackville AJA discharged. 102The Review Motion does not, in terms, seek an extension of time. Indeed, there has been no formal application for an extension of time to file an application for review of the orders made by Sackville AJA. The respondents did not address that question in their submissions filed on 6 March 2014. At that stage, the Review Motion had not been filed, although the appellants had filed their notice of motion of 17 February 2014. On 6 March 2014, the appellants filed submissions in relation to the Dismissal Motion and submissions in support of their notice of motion of 17 February 2014. The latter submissions did not address the question of an extension of time. 103On 28 April 2014, the respondents filed submissions in response to the appellants' submissions of 6 March 2014. Once again, the question of an extension of time was not addressed. However, in the respondents' earlier written submissions, filed on 6 March 2014, in response to the Extension Motion and the appellants' motion of 17 February 2014, the point was made that the 17 February 2014 motion was not filed within the required 14 days, and it was submitted that no extension of time should be granted. 104In the course of the hearing of the Review Motion and the Dismissal Motion, the appellants provided further written submissions in support of the Review Motion. Those submissions consisted of a detailed commentary on the reasons of Sackville AJA. They did not address the question of an extension of time. On the other hand, in oral argument, counsel for the respondents made submissions in opposition to the grant of an extension of time. 105As I have said, the last day for filing an application for a review of the orders made by Sackville AJA on 29 November 2013 was 13 December 2013. The notice of motion filed on 17 February 2014 was therefore more than two months out of time. However, in the meantime, the appellants filed the Extension Motion on 16 December 2013. The Extension Motion sought to vary the orders made by Sackville AJA. The motion filed on 17 February 2014 and the Review Motion sought to discharge the orders made by Sackville AJA. 106There was no evidence before the Court to explain why, when the Extension Motion was filed, no claim was made at that time for the discharge of the orders made by Sackville AJA. Indeed, the relief claimed in the Extension Motion assumes that security should be provided. The only question was when. 107There was no evidence from the appellants to the effect that they sought advice as to their rights of appeal from the orders of 29 November 2013 or to have them reviewed. There was no evidence from the appellants that they were unaware of their right under s 46(4) to apply for the discharge of the orders made by Sackville AJA. 108Clearly enough, having filed the Extension Motion, the appellants must be taken to have been aware of their right to apply to have the orders varied. At the time of filing the Extension Motion, they were represented by solicitors and counsel. Moreover, they must be taken to have been aware that, at least in respect of the Extension Motion, a time limit applied for that motion to be filed. In an email to Mr Haggis on 16 December 2013, a partner of Moray & Agnew informed him that the UCPR allow 14 days from the date of judgment to apply to vary the terms of the judgment, and that "the application to extend time cannot be made after today". In a further letter to Mr Haggis and Ms Florence on 18 December 2013, Moray & Agnew informed them that the solicitors for the respondents had asserted that the Extension Motion should have been filed by 13 December 2013. 109Further, it is clear that, no later than 17 February 2014, when they filed their first notice of motion seeking review of Sackville AJA's decision, the appellants were aware of the possibility of having the orders discharged or set aside. There was no evidence from them that their understanding of their rights or entitlements changed between 16 December 2013 and 17 February 2014. 110On the other hand, by the end of January 2014, Moray & Agnew, who had been acting for the appellants in relation to the Security Motion, had ceased to act. However, that was some weeks, albeit including Christmas and New Year, after those solicitors had filed the Extension Motion on behalf of the appellants on 16 December 2013. 111The evidence indicates that, up to 17 February 2014, the only concern and focus of the appellants was on obtaining an extension of time within which to provide the security. That is to say, there is no evidence that they were concerned that the decision to require security was flawed in any way. 112In the absence of any evidence as to why the appellants waited until 17 February 2014 before filing an application to discharge the orders made by his Honour, coupled with the fact that the whole focus of the appellants until that time was on extending the time for providing security, I am not persuaded that the appellants have established a sufficient basis for extending the time within which to apply to discharge the orders made by Sackville AJA. There should be no extension of time. It follows that the Review Motion should be dismissed.

Dismissal Motion 113There has been no stay of the orders made by Brereton J requiring payment of costs and other moneys by the appellants. Nevertheless, apart from the sum of $100,000 that had been provided by way of security, the appellants have not paid any of the costs ordered in favour of the respondents. Further, neither Tyneside nor Mr Haggis has satisfied any part of the judgment entered against them. Security has not been provided in accordance with the orders made by Sackville AJA, or at all. 114The orders on the Security Motion were made on 29 November 2013. The security was to be provided by 16 December 2013. On that day, the Extension Motion was filed. On 18 December 2013, the appellants' solicitors warned them of the possibility that the appeal would be dismissed if the security were not provided. It was that possibility that had prompted the application for an extension. Some six months had elapsed from when the security was due and the hearing of the Review Motion, and the appellants accept that there is no prospect that they will ever be in a position to provide the security ordered by Sackville AJA. 115On 4 January 2014, a Ms Helen Millsteed, a friend of Ms Florence, offered to lend Ms Florence $80,000 "for the appeal". Ms Florence declined that offer. The respondents therefore contend that the Court should conclude that the failure by the appellants to provide the security is not by reason of their inability to do so, but their unwillingness to do so. The fact that an appellant is in a position to provide security, but declines to do so, is a matter of particular importance to the exercise of the Court's discretion (see Evans v Cleveland Investments Global Pty Ltd [2013] NSWCA 439 at [6] and [7]). 116UCPR r 51.50(2A) provides that an appeal may be dismissed where an appellant fails to comply with an order that security be provided. The appellants have been on notice of the possible consequences of failing to provide security since December 2013. They were informed by Moray & Agnew as early as 19 December 2013 that, if security were not provided by 3 February 2014, the appeal would likely be dismissed and that, if the appeal were dismissed, there would be no opportunity to set aside the orders made by Brereton J. 117If the order for security remains in place and is not satisfied, there would be no utility in keeping the appeal on foot. If the appellants had adduced evidence indicating that there was some prospect of obtaining security, it may have been appropriate to refuse the relief claimed in the Dismissal Motion until the appellants had explored fully any possible source of security. Alternatively, it may have been appropriate to adjourn the hearing of the Dismissal Motion until the appellants had exhausted any possible sources of security. That is not the case. Accordingly, subject to what follows, the appropriate order would be that the appeal be dismissed with costs.

Change of Circumstances 118For the reasons I have given, the appellants have been unsuccessful in their application for review of the orders made by Sackville AJA. The respondents have been successful in their application for summary dismissal of the appeal. 119However, as I have said, there has been a significant change of circumstances since the orders were made by Sackville AJA, in that the appellants are no longer represented by Moray & Agnew or by any other lawyers. In the course of the hearing of the applications, once evidence of the change in circumstances had emerged, the possibility of the making of an application to vary or discharge the orders made by Sackville AJA, on the basis of the change in circumstances, was raised, but not pursued. In particular, the question whether such an application could or should be dealt with by this Court was not considered. 120In that context, on 29 August 2014, the parties were invited to respond to the following questions: 1. If the Court found error on the part of Sackville AJA: (a) Should the power to order security be re-exercised on the basis of current information, including evidence as to events since the judgment under review? (b) Are there other issues, such as the merits of the appeal, that Hammersmith would seek to address? (c) Should that be undertaken by this Court or by a single judge? 2. If the Court were not persuaded that Sackville AJA was in error, but considered that a variation or discharge on the basis of change of position might be justified: (a) Can the Court dispose of the application under s 46(4), or must a separate application be made to discharge or vary the order? (b) On either approach, do the answers given to Question 1(b) and 1(c) apply? 121The respondents responded that, if the Court found error on the part of Sackville AJA, the power to order security should be re-exercised by this Court on the basis of current information, including evidence as to the events since Sackville AJA's judgment. The respondents also indicated that there were other issues, such as the merits of the appeal, that it sought to address. They suggested that that exercise should be undertaken by a single judge. 122The respondents also responded that, if the Court was not persuaded that Sackville AJA was in error, but considered that a variation or discharge on the basis of change of circumstances might be justified, the Court could dispose of the present application under s 46(4) and a separate application would not be necessary. In that case, Hammersmith also confirmed that there were other issues, such as the merits of the appeal, that it would seek to address. It did not express any opposition to this Court undertaking any further review. 123The response from Tyneside was not entirely responsive to the questions. In the circumstances, a further directions hearing was conducted on 15 September 2014 by Meagher JA concerning the further conduct of the proceedings. Following that hearing, Meagher JA gave the following directions: (1) Tyneside and Namlot were to submit a chronology, after counsel for Hammersmith had seen and consented to it. (2) The parties were to submit a note of the references in the existing material before the Court that contain submissions as to the arguability of the existing grounds of appeal, noting that the appellants wish to amend the existing notice of appeal to add an allegation of fraud against Hammersmith's solicitors, although no such amended notice of appeal has yet been produced. (3) Tyneside and Namlot were to submit a document correcting Schedule 6 of their existing submissions, after counsel for Hammersmith had seen and consented to it. 124In response to those directions, Hammersmith provided, by email of 17 September 2014, references to its submissions before Sackville AJA as to the arguability of the existing grounds of appeal. Tyneside and Namlot have also provided references to submissions as to the arguability of the existing grounds of appeal and corrections to existing submissions. The Court has received no chronology and no amended notice of appeal has been filed. However, the Court has received from the appellants a document entitled "Draft of Issues for the Amended Notice of Appeal". That document did not fall within the directions given by Meagher JA and has not been considered by the Court. 125Sackville AJA had proceeded on the basis that the appeal was at least arguable. Having regard to the conclusion that his Honour reached, it was unnecessary for him to address that question. Having regard to the change of circumstances, such that the requirement for the provision of security would stultify the appeal, it is now necessary to consider the merits of the appeal. 126In its written submissions to Sackville AJA, Hammersmith submitted that no indication had been given by Tyneside of the grounds to be relied upon in resisting an order for the provision of security, save for an argument concerning stultification. However, Hammersmith addressed six factors that it contended were relevant (relying on KP Cable Investments Pty Ltd v Meltglow Pty Ltd (1995) 56 FCR 189). 127The first factor was delay. In the present case, the notice of appeal was served on 9 September 2013 and on 25 September 2013, the solicitors for Hammersmith wrote to the solicitors for Tyneside notifying an intention to seek security for costs. The Security Motion was filed on 4 October 2013. Thus, there was no delay on the part of Hammersmith in applying for security. 128The second factor was the strength of the appeal, which is dealt with in more detail below. Four other factors were addressed by Hammersmith. Hammersmith did not suggest that the appeal was otherwise than bona fide and there had been no suggestion that any impecuniosity on the part of the appellants was caused by Hammersmith. Further, there was no suggestion that the application for security was being used to deny the appellants the right to litigate. The sixth factor was the question of stultification, which Hammersmith addressed in some detail and was also addressed by Sackville AJA. Given the change of circumstances referred to above, it is necessary for this Court to consider Hammersmith's contentions as to the strength of the appeal.

Strength of the Appeal 129In dealing with the strength of the appeal, Hammersmith set out an overview of the central issues in the proceedings before Brereton J relating to the termination of the Management Agreement and Profit Deed. Hammersmith submitted that, on appeal, for the appellants to resurrect those two agreements, they would need to be successful in all of three issues (relating to consensual and contractual termination) about which Brereton J found against them, and which comprise 46 grounds of the appellants' notice of appeal. 130Hammersmith contended to Sackville AJA that the resolution by Brereton J of the issues as to termination involved credit findings adverse to Tyneside and Namlot, including findings that Mr Haggis was an unreliable witness, based on his Honour's observations that Mr Haggis propounded a seriously misleading résumé; gave false evidence, including deliberately altering minutes of a meeting in a material way to justify a false position; gave evidence that his Honour described as "preposterous"; and gave other evidence that his Honour concluded could not conceivably have been true, but which was detailed, comprehensive and elaborate in an attempt to prove part of his case, rather than giving accurate evidence. In those circumstances, Hammersmith submitted, the prospects of the success of the appeal were slim. It is therefore necessary to consider the credibility of Mr Haggis, as well as the prospects of the appeal in relation to the issues of consensual termination and contractual termination of the Management Agreement.

Credibility of Mr Haggis 131In concluding his assessment of the witnesses, Brereton J observed that he could not genuinely prefer the evidence of one particular witness to another and that it would be difficult to accept the version of a single witness, except where it was against his or her interest. However, there were few critical incidents in which the evidence was "one on one". Instead, there were usually multiple witnesses to most controversial meetings and often, though not invariably, notes or other contemporaneous records. His Honour explained in his reasons, where it mattered, the manner in which particular factual controversies had been resolved. 132Brereton J explained in some detail his reasons for concluding that Mr Haggis was an unreliable witness. His Honour considered that, as the cross-examination of Mr Haggis proceeded, it became clear that he was determined to make and support his case from the witness box and that he was an advocate for his case, rather than a detached historian: his evidence repeatedly showed signs of a lack of objectivity in a reluctance to make concessions that were called for and in seeking to resile or escape from concessions when their consequences became apparent. 133In particular, his Honour referred to a seriously misleading résumé provided by Mr Haggis, which he must have known would be relied upon in the proceedings. When its deficiencies were exposed, he gave spurious excuses. The résumé overstated his experience, conveyed the impression of far greater involvement in property development and project development than transpired to be the case, and suggested that he had a history of extensive involvement in a range of high value projects, including some over $10 million. Ultimately, when compelled to concede that the résumé was misleading, Mr Haggis sought to explain its assertions about his involvement in property development projects on the basis that it was intended to refer to his having undertaken feasibility studies, rather than the projects themselves. 134Brereton J also found that Mr Haggis gave false evidence that he was not under commercial pressure to conclude a deal with Roche. Mr Haggis annexed to his affidavit minutes of a meeting said to corroborate an assertion made by him related to the deal with Roche and said that he typed the minutes immediately after the meeting. His Honour was unable to accept that evidence as true. His Honour said that the inescapable inference was that the minutes must have been altered and appeared to have been deliberately reconstructed later to answer other evidence that emerged in the proceedings. 135An allegation was made that Hammersmith was precluded, by misrepresentation or estoppel, from relying on the provisions of the Profit Deed to the effect that default under the Management Agreement gave rise to a right to terminate the Profit Deed. Brereton J found that Mr Haggis gave false evidence that representations were made at a meeting in June 1999 that the Profit Deed would be treated as a standalone document and that he would not have executed the documentation but for those representations. His Honour considered that the contentions advanced by Tyneside, and sought to be supported by Mr Haggis, gave rise to significant issues of credit. His Honour was also unable to accept Mr Haggis's version of relevant events concerning the execution of the Profit Deed. Moreover, cross-examination of Mr Haggis demonstrated that his claim to have relied upon any representation from the 1999 meeting was constructed. While his evidence of reliance was detailed and comprehensive, he ultimately conceded that he could not have signed the documents in reliance on a representation that they were standalone documents. He reluctantly admitted that his elaborate affidavit evidence supporting the claim of reliance was wrong and "accidentally misleading". His Honour considered that Mr Haggis was more concerned with proving essential aspects of his case than with the need for accuracy. 136Brereton J also referred to other matters that impacted adversely on Mr Haggis's credit, including repeated incorrect assertions to Hammersmith in October 2002 as to the degree of completeness of the works under the Project and a false assertion that he and Ms Florence had lent $200,000 in connection with the Project. Finally, his Honour considered that Mr Haggis's denials and non-recollections concerning the events of the meeting of 28 January 2003, when the Management Agreement was said to have been terminated, were not credible.

Consensual Termination 137Some 16 grounds of appeal relate to the conclusion by Brereton J that the Management Agreement was terminated consensually on 28 January 2003. 138In dealing with consensual termination of the Management Agreement, Brereton J observed that the first issue was what happened at a meeting of the directors of Hammersmith held on 28 January 2003. That, his Honour said, was a question of fact requiring resolution of the competing versions of events. 139It was undisputed that, at the meeting, Mr Haggis said something about resigning. The crucial areas of dispute were whether Mr Haggis's resignation statement was immediate or prospective, whether it was qualified or unqualified, whether it was expressed to be a resignation by Tyneside (and if so, whether Mr Oliver assented to it) and what, if anything, was said about termination of the Management Agreement. While there were differences in detail between the accounts given by the witnesses who were present at the meeting, which his Honour considered unsurprising, the essential question was whether what was said conveyed immediate or prospective resignation and whether reference was made to the termination of Tyneside as manager. 140Brereton J observed that, generally, Mr Haggis did not have a good recollection of what was said at the meeting of 28 January 2003 and that there were significant internal inconsistencies in his evidence. On the other hand, his Honour considered that the notes of the meeting of Mr Damian Roche, who was a director of Tyneside, bore the ring of contemporaneity, accuracy and detail and recorded the events in apparently impartial terms. However, the notes omitted any reference to Mr Haggis's statement about resignation. The appellants contended that Mr Roche's explanation for that omission was improbable. However, even on Mr Haggis's version, statements were made referring to resignation. On any view, Mr Haggis made a statement, qualified or not, to the effect that he would resign, which does not appear in Mr Roche's notes. That, his Honour considered, confirmed that such a statement was made, though not recorded by Mr Roche, and reinforced the credibility of Mr Roche's explanation. 141Brereton J found that, apart from Mr Haggis, who had no real recollection, the witnesses who were present at the meeting were left with the impression of an immediate resignation, and documents and statements made immediately after the meeting are to the same effect. His Honour was satisfied that what Mr Haggis said, in context, were words that conveyed immediate resignation, rather than an offer or proposal to resign in the future. His Honour was also satisfied that Mr Haggis did not merely forecast that he would resign if he were shown to be negligent, as he asserted in cross-examination, nor merely offer to find another project manager if Hammersmith had lost confidence in his management style and the direction in which he had taken the Project, as he suggested in a diary note. 142Brereton J considered that that was confirmed by the conclusions that his Honour reached in respect of events subsequent to the meeting. While his Honour found that it was clear that there was no formal resolution at the meeting to terminate the Management Agreement, his Honour was satisfied that, at the meeting, following his resignation statement, Mr Haggis assented to the proposition that the Management Agreement be terminated and that Roche assume management of the Project. 143Mr Haggis was one of two directors of, and one of three shareholders in, Tyneside, but he was also a director of Hammersmith. While Mr Haggis was present at the meeting of 28 January 2003 in his capacity as a director of Hammersmith, he was also there to answer questions about Tyneside's performance, and he had been the normal spokesman for Tyneside in its dealings with Hammersmith. Thus, Mr Haggis, as well as Mr Oliver, were present as representatives of Tyneside. Mr Haggis did what he did without demur from Mr Oliver, who did not express dissent. His Honour concluded that it was abundantly clear to every person in the room, following the meeting, that the Management Agreement was at an end. The parties did not leave the meeting with a view that the outcome of the meeting was conditional upon the execution of a formal document. 144There were ongoing and ultimately inconclusive negotiations for formalisation of what had been agreed on 28 January 2003. Brereton J accepted that, at least from 14 February 2003, Tyneside was exploring whether variations could be agreed, on the basis that the Management Agreement was still on foot. However, his Honour considered that Tyneside could not "change history" by adopting that position. On the other hand, Roche negotiated thereafter on the footing that there was already a concluded discharge of the Management Agreement. While Roche was seeking to refine and document the terms of the discharge agreement, it was doing so in the context that a binding agreement had already been struck. His Honour therefore accepted that there was a consensual termination of the Management Agreement on 28 January 2003, when it was discharged by agreement. 145The grounds of appeal in relation to Brereton J's conclusion that the Management Agreement was terminated consensually may be summarised as follows: (1)His Honour ought to have found that Mr Haggis merely intimated his willingness to resign on 28 January 2003, or, alternatively, that he merely offered to resign as an officer of Tyneside and Hammersmith declined to accept any resignation. (2)His Honour erred in finding that, as at 11 March 2003, the Management Agreement had already been terminated by such resignation and was not revived by the subsequent communications and conduct of the parties. (3)His Honour erred in holding that it was not possible to revive or reinstate a terminated contract by a course of subsequent communications and conduct under which the parties consensually treated the contract as still on foot. (4)His Honour erred in not directing himself that an oral offer to terminate the Management Agreement must be constituted by words evincing unequivocally an intention to permit the offeree to discharge the contract by acceptance of the offer and in not finding that such words were said. (5)His Honour overlooked or failed to take into account the evidence of preparations by Hammersmith for the 28 January 2003 meeting as evidence bearing on the credibility of accounts given at that meeting. (6)His Honour overlooked or failed to take into account the failure to provide Mr Haggis promptly with minutes of the meeting of 28 January 2003. (7)His Honour erred in giving no weight or insufficient weight to the respondents' failure to call Mr William Roche (who was another director of Hammersmith) to give evidence, in circumstances where he was present at the 28 January 2003 meeting and the discussion at that meeting was critical. (8)His Honour erred in rejecting Mr Haggis's evidence that, at the meeting, he sought an opportunity to reply to the criticisms made of him, on the basis that one of the witnesses had denied it, in that his Honour misapprehended that the witness had maintained such denial. (9)His Honour ought to have found that evidence of certain of the witnesses was inconsistent with the conclusion that Mr Haggis's words constituted an offer by Tyneside to resign. (10)His Honour ought to have held that the rejection of the sufficiency of Mr Haggis's personal resignation was sufficient evidence of the respondents' understanding and acceptance at the meeting that Mr Haggis was not authorised to terminate Tyneside's contract and Mr Haggis was not purporting to do so. (11)His Honour erred in finding that the request at the meeting for Mr Haggis to produce a rough master plan and a practical statement on community title reinforced a conclusion that there had been an agreed decision for Roche to take over management of the Project. (12)His Honour erred in acting on Mr Oliver's account of a subsequent conversation with Mr Haggis. (13)His Honour ought to have found that, by reason of other evidence of Mr Damian Roche, his recollection was not a sufficiently secure basis for finding that Tyneside resigned at the meeting. (14)His Honour ought to have found that the evidence of statements made at the meeting concerning a further negotiation was equally consistent with an offer to negotiate towards a prospective consensual termination, not having immediate effect as such termination. (15)His Honour erred in finding that the parties subsequently negotiated on the basis that a binding agreement to terminate the Management Agreement had already been struck. (16)His Honour erred in giving insufficient weight to the respondents' subsequent conduct as affirming the existence of the Management Agreement by first threatening to terminate it and then purporting to terminate it by the exercise of the contractual power of termination conferred by the Management Agreement itself. 146Having regard to the detailed matters addressed by Brereton J, as summarised above, and the specific challenges to findings made by his Honour, it appears that the appeal is at least arguable, in so far as it impugns the finding that the Management Agreement was terminated consensually at the meeting on 28 January 2003. Hammersmith did not suggest that the appeal was unarguable. On the other hand, having regard to the credibility findings made by Brereton J, the prospects of success are not at all strong.

Contractual termination 147As I have said, Brereton J concluded that, even if his Honour's conclusion concerning consensual termination of the Management Agreement were wrong, Hammersmith would have been entitled to terminate it under its terms for an event of default. Although four events of default were relied on before Brereton J, only two were the subject of findings adverse to Tyneside that are sought to be challenged on appeal. The first asserted event of default was that Tyneside did not comply with directions given to it that no new work was to be undertaken or commissioned; the second was that a warranty given by Tyneside as to its skill, experience, competence and ability was false.

Failure to comply with directions 148Under cl 12.1(b) of the Management Agreement, it was an event of default entitling termination, if Tyneside did not comply with the directions of Hammersmith in relation to the Project. Hammersmith alleged that Tyneside failed to comply with a direction given on 8 August 2002 to the effect that it was not to incur any further costs and was to cease further work in relation to the Project, other than completing a dam and fore bay, until a review of the Project had been completed. It was alleged that the direction was ignored in that Tyneside subsequently, and at considerable potential cost to Hammersmith, gave instructions for the preparation of a master plan and an upgraded landscape plan, which potentially increased the estimated budget by more than $750,000, and gave instructions to consultants and surveyors to carry out various tasks in relation to mapping the first part of the master plan. Hammersmith also alleged that Tyneside failed to comply with a direction given on 12 November 2002, that Tyneside give instructions to cease all work that it had directed and not to incur any further costs in relation to the Project until further notice. 149In an affidavit, Mr Haggis denied that such instructions had been given but agreed in cross-examination that he had attended a site meeting on 8 August 2002 at which Mr William Roche said that he would like a review of the Project to be carried out and that he had been told that no further construction work was to be done other than the lake and fore bay until the review was complete. Following the site meeting on 8 August 2002, Mr Haggis held meetings in relation to the master planning process and permitted consultants to do so and thereby incurred expense. After 8 August 2002, Mr Haggis also gave a series of instructions to perform various tasks relating to the mapping of the first part of the master plan. 150Brereton J concluded that it was clear that, at the site meeting on 8 August 2002, a direction was given to Mr Haggis and to Mr Oliver, who acknowledged the direction, that no new work was to be undertaken or authorised until the board of Hammersmith had considered the outcome of the proposed review and given further directions. His Honour found that Mr Haggis accepted that such a direction was given and that it was disobeyed. His Honour rejected Mr Haggis's "quibble" that the direction was not confirmed in writing as not detracting from his concession that it was given: there was no requirement that it be in writing. His Honour also concluded that it was clear that, notwithstanding the controversy as to whether the direction referred to "new work" or "new works", it was understood by all not to be limited to construction works but to extend to new instructions to consultants. 151In relation to the she second direction, it was said to have been given by telephone to Mr Oliver to the effect that Tyneside must instruct that all work cease that Tyneside had previously directed to be done. Brereton J found that Mr Haggis clearly conceded that he did not comply with the second direction. Although Mr Haggis again quibbled that the direction was not in writing and that the work in question was essential, his Honour considered that Mr Haggis had made an unambiguous concession that the direction was given and disobeyed. His Honour concluded that Tyneside did not comply with a lawful direction of Hammersmith and thereby committed an event of default. 152The notice of appeal contains some ten grounds (grounds 37-46) in relation to the finding that Hammersmith was entitled to terminate the Management Agreement by reason of Tyneside's failure to follow directions. They may be summarised as follows: (37) His Honour erred in finding that the first direction was given at the site meeting on 8 August 2002. (38) His Honour erred in finding that the first direction was given by authority of Hammersmith. (39) His Honour erred in finding that the first direction was a lawful direction within the terms of the Management Agreement. (40) His Honour erred in giving no insufficient weight to the failure to adduce evidence from Mr William Roche who was present at the site meeting. (41) His Honour erred in finding that the first direction was understood not to be limited to construction works but to extend to new instructions to consultants. (42) His Honour erred in finding that the first direction extended to master planning work. (43) His Honour erred in finding that Hammersmith was authorised to give the second direction on 12 November 2002. (44) His Honour erred in finding that the second direction was a lawful direction within the terms of the Management Agreement. (45) His Honour erred in finding that Tyneside disobeyed the first direction and the second direction and ought to have found that there was no disobedience. (46) In finding that there had been disobedience of the second direction, his Honour overlooked the fact that the review to which his Honour referred had been completed by consideration of a relevant report at a meeting of directors held on 31 October 2002. 153The findings made by Brereton J that directions were given and were disobeyed depends significantly upon his Honour's assessment of the evidence of witnesses, in particular, Mr Haggis. I have already indicated his Honour's reasons for concluding that the evidence of Mr Haggis should be given little weight. In the circumstances, the prospects of success in overturning the conclusion of Brereton J as to termination by reason of failure to obey directions are weak.

Warranty as to skill, experience, competence and ability 154Under cl 4.1 of the Management Agreement and cl 5.1 of the Profit Deed, Tyneside covenanted to and warranted with Hammersmith that Tyneside had the skill, competence, experience and ability necessary to provide the services that it was required to provide in accordance with the provisions of the Management Agreement. Under cl 12.1(c) of the Management Agreement, it was an event of default if such a covenant or warranty was not true, complete or correct. 155Hammersmith sought to prove that Tyneside did not have the requisite qualities in a number of ways: both by seeking to establish that it had no relevant qualifications, training and experience, and by seeking to draw inferences from its performance as manager of the Project. 156One of the contentions of Hammersmith was that, as at the date of the Management Agreement, the relevant skill, experience, competence and ability of Tyneside was that of Mr Haggis, and that when one examined Mr Haggis's background, it became apparent that he did not have the requisite qualities. 157Mr Haggis was employed as a city planning officer for Salisbury, South Australia between 1962 and 1969. However, that did not involve experience in project managing developments. Mr Haggis claimed that, between 1970 and 1980, he practised as a property development consultant and that, between 1970 and 1999, he advised on and undertook development works in relation to various projects. He described his career during the period 1990 and 1997 as "property developer specialising in small home and unit development, land subdivision projects and building renovation schemes". He listed some 21 projects. 158Brereton J considered that, at first sight, that experience conveyed that Mr Haggis was a successful property developer whose group of companies had completed or were undertaking the projects that were listed. However, in the early 1990s, most of the companies with which he was associated went into liquidation and Mr Haggis himself became a bankrupt in 1992, during the period that he worked on projects for his daughter and son-in-law's company, Delamere. For many of the projects listed, his only involvement was to "assess" them. Apart from two of the projects, none of them had been developed by Mr Haggis or by companies associated with him. Many were not completed or even commenced, and the values attributed to them bore no relationship to Mr Haggis's role or, his Honour said, in many cases, to reality. The two projects in which Mr Haggis had personal involvement were sites in respect of which he had undertaken virtually no subdivision activity. They were not comparable in any way to the Project. Mr Haggis had no formal qualifications or training as a developer or project manager and had never before undertaken a project of, or remotely approaching, the scale of the Project. He agreed that none of the larger subdivisions with which he claimed to have been involved many years earlier in Adelaide were in any way comparable with the Project. 159Brereton J accepted that formal training and qualifications are not the only way in which one may acquire relevant skill, competence, experience and ability. His Honour also accepted that experience in smaller projects may equip one with the requisite experience to undertake a larger one. However, his Honour concluded that the proved absence on the part of Mr Haggis of relevant training, qualifications and experience as a project manager of developments even vaguely comparable to the Project or even of involvement in the management of any such project raised a powerful case that Tyneside did not have the qualities referred to in the warranty, and no evidence was forthcoming to establish that he did have those qualities. 160Brereton J concluded that, as at the date of the Management Agreement, Tyneside, through Mr Haggis, did not have the skill, competence, experience and ability of a project manager of a complex, very large scale green fields developments such as the Project entailed, and that the relevant warranty was not true or correct. Therefore, his Honour concluded, Hammersmith was entitled to terminate the Management Agreement and the Profit Deed under the terms of those respective instruments. 161The notice of appeal contains some 20 grounds in relation to that conclusion. Examination of the grounds does not immediately suggest positive prospects of success. Many of the grounds complain about the characterisation of the facts as to the skills of Mr Haggis. One could have no confidence that any of the grounds has a real prospect of success. His Honour's reasons in dealing with the breach of warranty extend to some 93 paragraphs of a judgment consisting of a total of 355 paragraphs. In those 93 paragraphs, Brereton J engages in a detailed analysis of the evidence and the conclusions to be drawn from it. It is not apparent that the grounds of appeal have any prospects of success.

Exercise of Discretion 162As I have said, Sackville AJA concluded that, if the appeal were to succeed, it should be capable of being heard within two days, although that was likely to require the appellants to focus more clearly and precisely on what they say are the significant errors in the reasoning of Brereton J. In that regard, it is significant that, in the hearing before this Court, the appellants foreshadowed additional grounds of appeal related to the conduct of both the solicitors for Hammersmith and their own solicitors. However, those grounds have not yet been formulated in an amended notice of appeal. 163Sackville AJA concluded that justice would be done if the appellants were required to provide security for costs in the sum of $80,000. Clearly, that sum does not represent the total amount for which the respondents to the appeal would be at risk if the appeal was dismissed. Security is never intended to provide a complete indemnity. It must be assumed, in weighing the balance, therefore, that the amount that the respondents may be required to pay out in order to defend the appeal, which they would not be able to recover from unsuccessful appellants, would be significantly in excess of $80,000. 164The superficial assessment of prospects required in a case such as this indicates that it will be difficult for the appellants to succeed. That is a matter to be weighed in the balance in considering whether or not an order for security is appropriate in circumstances, where the order may have the effect of stultifying the appeal. 165In circumstances where the risk to the respondents in resisting an appeal is a loss significantly in excess of $80,000, and the prospects for the success of the appeal are quite weak, justice requires that there be security. There is no reason to depart from the figure assessed by Sackville AJA. It follows that the change of circumstances does not lead to a different conclusion from that reached by Sackville AJA. On the other hand, the appellants should be afforded some further time within which to provide the security if they are able to do so. 166In the ordinary course, costs would follow the event. In that case, the appropriate order would be for the appellants to pay the respondents' costs of the motions in respect of which the appellants have been unsuccessful. However, if the appellants are able to provide security, there would be a risk that the further progress of the appeal would be delayed by additional disputes about the costs of the interlocutory proceedings. In the circumstances, the appropriate order would be for the respondents' costs of the interlocutory proceedings to be their costs in the appeal. If the appeal is dismissed, either because security is not provided or on the merits after a hearing, the respondents would be entitled to their costs of the motions in respect of which the appellants have been unsuccessful. On the other hand, if the appeal is successful, neither the appellants, nor the respondents, would be entitled to costs in respect of the motions.

Conclusion 167The orders that I propose are as follows: (1)The appellants' notice of motion filed on 16 December 2013 be dismissed. (2)The appellants' notice of motion filed on 17 February 2014 be dismissed. (3)The appellants' notice of motion filed on 21 March 2014 be dismissed. (4)The appeal be dismissed. (5)The appellants pay the respondents' costs of the appeal. (6)Orders (4) and (5) be stayed for 42 days. (7)If, within that period of 42 days, security in the sum of $80,000 has been provided in accordance with the orders made by Sackville AJA on 29 November 2013, orders (4) and (5) be discharged and the respondents' notice of motion of 10 February 2014 be dismissed. (8)The respondents' costs of the motions referred to in orders (1), (2), (3) and (7) be the respondents' costs in the appeal.

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: 05 December 2014