Summer Hill Business Centre v Equititrust Limited [2011] NSWCA 8 (7 February 2011)

Last Updated: 25 February 2011

Court of Appeal New South Wales

Case Title:	Summer Hill Business Centre v Equititrust Limited
Medium Neutral Citation:	[2011] NSWCA 8
Hearing Date(s):	7 February 2011
Decision Date:	07 February 2011
Jurisdiction:
Before:	Allsop P
Decision:	1. Subject to 2 below, both motions be stood over for the making of final orders in chambers. 2. In relation to costs, on the motion for the stay, the respondent's costs of that motion be its costs in the appeal; and in relation to the security for costs, each party pay its own costs. [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
Catchwords:	Costs - security for costs - appeal costs - special circumstances
Legislation Cited:	Uniform Civil Procedure Rules Pt 50 r 8
Cases Cited:	Transglobal Capital Pty Limited v Yolarno Pty Limited [2004] NSWCA 136
Texts Cited:
Category:	Procedural and other rulings
Parties:	Summer Hill Business Estate Pty Limited (ACN 123 332 730) (First Appellant) West Apartments Pty Limited (ACN 106 212 971) (Second Appellant) Demian Constructions Pty Limited (ACN 003 365 100) (Third Appellant) Shimden Pty Limited (ACN 003 365 100) (Fourth Appellant) CTP Pty Limited (ACN 074 208 021) (Fifth Appellant) Tramdell Pty Limited (ACN 003 335 402) (Sixth Appellant) C A R Holdings Pty Limited (ACN 053 889 919) (Seventh Appellant) Demian Holdings Pty Limited (ACN 083 158 049) (Eighth Appellant) Riverland Estate Pty Limited (ACN 103 933 825) (Ninth Appellant) Demian Investments Pty Limited (ACN 082 158 030) (Tenth Appellant) Belgrave Holdings Pty Limited (ACN 007 671 128) (Eleventh Appellant) Equititrust Limited (Respondent)
Representation
- Counsel:	Counsel: Mr M Ashhurst SC (Appellants) Mr J Hogan-Doran (Respondent)
- Solicitors:	Solicitors: Blackstone Waterhouse Lawyers (Appellants) Tucker & Cowen Solicitors (Respondent)
File number(s):	2010/283982
Decision Under Appeal
- Court / Tribunal:
- Before:	Pembroke J
- Date of Decision:	30 July 2010
- Citation:	Summer Hill Business Estate v Equititrust [2010] NSWSC 776
- Court File Number(s)	2010/67275
Publication Restriction:

Judgment

1	ALLSOP P: There are before me two motions; one by the appellants, Summer Hill Business Centre Pty Limited and others for a continuation of stay orders made by the Court in the Equity Division, and secondly, by the respondent Equititrust Limited for security for costs.

2

The first motion has been substantively resolved, although not finally to every detail. Exhibit A before me on the motion is a letter of Tucker & Cowen, solicitors, to Blackstone Waterhouse containing a list of issues which need to be dealt with before the propounded guarantee from Abacus Limited would be seen to be satisfactory security. Conditions 2, 3 and 4 in that letter were appropriate and prudent matters for the solicitors on behalf of Equititrust Limited to raise. They were that: condition 2, the guarantee be clearly expressed to be irrevocable and unconditional as a promise to pay; condition 3, that the guarantee should expire 28 days after delivery of judgment by the Court of Appeal, not on a given date in 2011; and condition 4, the description of the agreement ought to refer to security for judgment in the Supreme Court proceedings.

3

To avoid costs and to avoid any difficulty with a self-executing order, what I propose to do, given that I anticipate that these three conditions will be satisfactorily dealt with by or on behalf of the appellants, is to extend the stay in terms that the parties will bring before me until further order, but noting that if conditions 2, 3 and 4 are not satisfactorily dealt with today, the respondent will have liberty to approach me tomorrow, on notice to the appellants, for an application which may be brought orally to discharge the stay forthwith, an application which, unless there is very good explanation as to why these conditions have not been dealt with adequately, I would presently be minded to grant.

4	That deals with the question of the stay and I direct the legal representatives to bring to my chambers later today an agreed form of stay also granting liberty to the parties to approach me tomorrow if conditions 2, 3 and 4 have not by then been complied with.

5

Turning to the question of security for costs, this is an application brought under Pt 50 r 8 of the Uniform Civil Procedure Rules. That provides that in special circumstances, the Court may order that such security as the Court thinks fit be given of the costs of an appeal to the Court. I dealt with this in fairly short order last December, and notwithstanding the evidence of Mr Tucker, who is an experienced solicitor, who estimated the costs over $90,000 for the appeal, I said I thought $50,000 would be an appropriate sum.

6

There have been since then, matters which have taken the parties time and their lawyers time, and therefore, cost the parties money, but I think I should approach the matter as I did in December in broad form. I approached the matter in December in an environment that there appeared to be significant questions as to the solvency of the appellants. Mr Demian's affidavit of 31 January 2011 in [34], which reflected some earlier evidence he gave in an affidavit read last year, made clear in a fairly frank way that the group of companies which he controls might go into liquidation if the stay was not granted.

7

That led me to describe the group as asset rich and cash poor. Since December, one of the two underlying financiers of the group has come forward with funding to enable it to give a guarantee to secure the sums in dispute. That guarantee of Abacus Limited, is the document in respect of which the three conditions have been raised by the respondent through its solicitors. Thus, the sums in dispute, something over $600,000, are now secured and it is a question of security for costs. There is an open offer of $50,000 security which is not acceptable to Equititrust. It wants more, and Mr Hogan-Doran indicated a sum of $75,000.

8

In the absence of acceptance of the $50,000, the appellants contest the respondent's right to any security at all. In all the circumstances, I think there are special circumstances. I accept of course, what the Court said in Transglobal Capital Pty Limited v Yolarno Pty Limited [2004] NSWCA 136. There the Court, comprised of Beazley JA, Santow JA and Ipp JA, made clear, as if I may respectfully say must be the case, that insolvency alone or impecuniosity, is not a factor which gives a right to security, it is only a relevant consideration in special circumstances. Here, on the evidence, there was a possibility of insolvency if these sums could not be secured. I certainly took the view last year that in circumstances where a financier would not support the group to the extent of the dispute, it would have been unjust to expect the winning party to the litigation to support the group for the sum involved by giving a stay, and I made my views fairly plain in December.

9

The financier has come forward with support by the guarantee. I do not have before me the precise terms of Abacus Limited's financial arrangements nor Capital Finance Limited's arrangements, but there is some force in Mr Hogan-Doran's submission that though the present has been secured, the future is not so clear. Also, the respondent finds itself in the position of having allowed a financier in last year, that is Abacus, and losing its security in terms which arguably may have covered the disputed amounts of costs. That is not entirely clear and I accept there is debate about it. Further, here ordering security will not stifle the litigation.

10

It is common ground on the evidence that the appellants are able to fund a security of $50,000 or $75,000. The question is how much should they be ordered to fund. In those circumstances, I think it would be wrong just to allow the totality of the risk as to costs to fall on the respondent, should the appellants' financial position in the future deteriorate. However, I should also take into account that there is sufficient evidence for me to conclude that there is a real prospect that the financial position of the appellants may not deteriorate in the future. There are substantial assets that have been sworn to. There is a refinancing in two months' time of which I have no detail, but I do not think it would necessarily be just for me to require more than the kind of money that I was talking about last December. For those reasons, I think special circumstances have been made out, and I think in all the circumstances, the sum of $50,000 that I first indicated is a fair and appropriate sum.

11

Thus in relation to the motion for security, I order the parties bring in short minutes reflecting the most appropriate agreed commercial accommodation for dealing with the security, if it can be agreed, otherwise I will make orders in the usual way that the appeal be stayed unless $50,000 is paid into court within 7 days. The orders that I make are: I stand both motions over for the making of final orders in chambers and direct the parties to bring short minutes to my chambers later in the day which will be dealt with in chambers. If the parties cannot agree, I will formulate orders myself and deal with them in chambers.

12

In relation to costs, the orders for costs will be included in the document that comes up. On the motion for the stay, the respondent's costs of that motion will be its costs in the appeal with the effect, therefore, that the appellants pay their own costs once and for all on that application. In relation to security for costs, each party pay its own costs.

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