Kadoe Pty Ltd v Thomsons Laywers
[2015] QDC 56
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- Unreported Judgment
- Kadoe Pty Ltd v Thomsons Laywers[2015] QDC 56
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Kadoe Pty Ltd v Thomsons Laywers[2015] QDC 56
Kadoe Pty Ltd v Thomsons Laywers[2015] QDC 56
DISTRICT COURT OF QUEENSLAND
CITATION: | Kadoe Pty Ltd & Ors v Thomsons Laywers [2015] QDC 56 |
PARTIES: | KADOE PTY LTD (ACN 135 970 504) TRADING AS KADOE COMMERCIAL COATINGS (first appellant) and MRS CAROLYN THOMSON (second appellant) and MR WAYNE THOMSON (third appellant) v THOMSONS LAWYERS (A FIRM) (respondent) |
FILE NO/S: | 149 of 2014 |
DIVISION: | Civil |
PROCEEDING: | Application |
ORIGINATING COURT: | District Court, Brisbane |
DELIVERED ON: | 17 March 2015 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 28 January 2015 |
JUDGE: | Reid DCJ |
ORDER: |
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CATCHWORDS: | Application to amend notice of appeal – application to remove party to appeal – application to stay proceedings and enforcement warrant pending outcome of appeal – security for costs – whether magistrate erred in ordering that costs be assessed – whether magistrate then erred in entering judgment – procedure on assessment – obligation to ensure court does not fall into error – where the court’s attention was not drawn to significant content of an affidavit – where appellants were initially self-represented |
CASES: | Paroz v Clifford Gouldson Lawyers [2012] QDC 151 Elphick v MMI General Insurance Limited & Anor [2002] QCA 347 Natcraft Pty Ltd v Det Norske Veritas [2002] QCA 241 |
LEGISLATION: | Uniform Civil Procedure Rules 1999 (Qld) rr 78, 439, 738, 742, 743, 743G, 743H, 750, 751, 761, 785 |
COUNSEL: | P. Somers for the appellant R. Dickson for the respondent |
SOLICITORS: | McBride legal for the appellant Thomson Geer for the respondent |
Introduction
- [1]Before the court are three interlocutory applications brought by both the appellants and the respondent in appeal proceedings. For clarity, I shall refer to the parties as appellants and respondent, rather than applicant and respondent. There are two sets of appeal proceedings arising out of a Magistrates Court proceeding brought by the respondent against the appellants relating to a claim for payment of their costs associated with acting for the first appellant in legal proceedings.
- [2]What I shall describe as the first appeal being that in proceeding number 1049 of 2014 is an appeal of an order made on 22 August 2014 by a magistrate. The second is a related appeal in the District Court of Queensland, appeal number 4962 of 2014, in which the appellants seek leave to appeal an order made on 18 March 2014 in the same Magistrates Court proceedings by another magistrate.
- [3]Both appeals however relate to the same central issue, namely whether the second and third appellants should properly have been parties to the Magistrates Court proceedings.
- [4]In interlocutory applications in the first appeal the appellants apply:
- (a)Pursuant to r 751(b) of UCPR to amend their Notice of Appeal filed 17 September 2014 in the first appeal;
- (b)Pursuant to r 761(2) of UCPR to stay the judgment of the Magistrates Court dated 22 August 2014, as subsequently amended on 15 December 2014, and the enforcement of that Order, until determination of the appeal;
- (c)For leave to remove the first appellant from the appeal pursuant to r 750 of UCPR.
- [5]The application to remove the first appellant from the first appeal was not opposed. It is of course a recognition that the first appellant is indebted to the respondent for its fees.
- [6]The respondent also applies for security of costs. That application is opposed.
- [7]No orders are sought in respect of the second appeal.
- [8]Before turning to a consideration of the applications themselves it is necessary to recount something of the significant history behind this matter, because that history is of relevance to the exercise of the discretion involved in determining the applications.
Background
- [9]On 22 August 2014 the magistrate pursuant to r 743H of UCPR ordered that there be judgment for the respondent, a firm of solicitors, against each of the appellants. The second and third appellants are directors of the first appellant. This initial judgment, in the sum of $72,810.75, was subsequently amended to a figure of $53,074.95 to reflect the fact that almost $20,000 had admittedly been paid to the respondent and had been overlooked in the calculation of the judgment sum.
- [10]The sum of the judgment related to the respondent’s fees in respect of two actions, one brought by another firm of solicitors, The M Kent Law Firm against the first appellant and the other brought by Tremco Pty Ltd also against the first appellant.
- [11]On 18 March 2014 another magistrate had made orders pursuant to r 743G of UCPR that Stephen Hartwell be appointed to assess the costs of the respondent for 12 separate invoices issued to the first appellant for the Tremco Pty Ltd action and for five separate invoices issued to the first appellant for The M Kent Law Firm matter.
- [12]Each of those orders was made on an application by the respondent against the three appellants for the assessment of those invoices issued to the first appellant. 18 March 2014 was the day listed for a directions hearing in relation to that application. The respondent relied on an affidavit of Sophie Sweeney sworn 11 February 2014. Ms Sweeney was a solicitor with the respondent. In her affidavit she asserts that the appellants (plural) instructed the respondent to perform work on both the Tremco Pty Ltd matter and the M Kent Law Firm matter. She also asserts that the respondent issued the invoices, which the magistrate subsequently ordered be assessed by Stephen Hartwell, to both the first appellant and also to the second and third appellants.
- [13]This assertion is made despite the fact that her affidavit:
- (i)Acknowledges that only the first appellant was a party to the proceedings brought by Tremco Pty Ltd and by The M Kent Law Firm;
- (ii)Exhibits the 17 invoices which on their face are directed to Kadoe Commercial Coatings, the business name for the first appellant, and not to the second or third appellants. The invoices to the first appellant are marked “Attention: Ms Carolyn Thomson”, the second appellant;
- (iii)Exhibits the respondent’s trust account ledgers for each matter which clearly state the client name as Kadoe Commercial Coatings. All transfers to the respondents in those ledgers are from “Kadoe Pty Ltd (Kadoe Comm Coating)”. The second and third appellants are not mentioned anywhere in the trust ledger.
- [14]In her affidavit Ms Sweeney asserts that the sum of $67,205.10, the total fees claimed with respect to both the Tremco Pty Ltd and The M Kent Law Firm matters is “outstanding from the (appellants)” to the respondent. Nowhere does she assert how or why the second or third appellants were said to be so liable. I shall return to this matter later when considering evidence before me with respect to a putative costs agreement with the respondents.
- [15]Before the first magistrate the second appellant appeared for each of the appellants. They were all respondents to the application. The transcript reveals that she had “an affidavit to hand up this morning”. It was by her and sworn on that day. No objection was taken to that course by counsel for the respondent. Before me he submitted that the second appellant’s “handing up” the affidavit was simply “a defacto way of filing it” but that it was not read on the application. He submitted it was “not before the court” and further, that if it was known the appellants’ intended to rely on it to show that the second and third respondents were not responsible for the respondent’s fees it would have been objected to and leave may have been sought to cross-examine her under r 439 of UCPR.
- [16]I note the document in the Magistrates Court file has written on it the words “filed in court 18.3.14”.
- [17]The difficulty it seems to me with counsel’s submission is that the second appellant was self-represented and acting for each of the appellants. She would not have been familiar with the terminology of the court. The affidavit dealt with two issues of great relevance to that morning’s proceedings – namely, whether the second and third appellants were liable and whether, as she submitted, the matter should be adjourned. She “hand(ed) up” the affidavit which made it abundantly clear that she was asserting that only the first appellant was liable for the solicitor’s costs. That must have been clear to the respondent and to their counsel upon perusing the affidavit, which had been given to them that morning. It must also have been clear that her purpose in handing up the affidavit was for the magistrate to read it and take it into account in formulating her decision. If the magistrate had done so, she would have realised the issue of whether the second and third appellant were liable was a live issue. Furthermore, I conclude it would have come as no surprise to the respondent that the second appellant would make that assertion because such issues were very clearly raised in correspondence between the second appellant and the respondent on earlier occasions.
- [18]On 11 July 2013, Pip McGrath, a solicitor with the respondent, wrote an email to the second appellant. It was CC’d to others, namely Andrew Kelly, a partner of the respondent, and Sophie Sweeney the solicitor with the firm who swore the affidavit I earlier referred to.
- [19]The email concerned a conference held shortly before with a barrister. It is clear from the email that advice was given at that conference involving a plan to possibly wind up the first appellant and to progress the litigation, at least that with Tremco Pty Ltd, “as slowly as allowable under the court rules while you start progressing matters for restructure”. Paragraph numbered 4 in that email, which was exhibited to an affidavit by Millicent Russell, the current solicitor for the appellants, filed on 5 December 2014 in the first appeal proceedings, makes it clear that the respondent was very aware of the effect of such a proposal on its ability to recover the costs of legal work performed by them in the various litigation against the first appellant. The email states:
“As we are sure you will understand, in light of the proposed course of action to be taken with Kadoe, we will also need to transfer our client agreements with Kadoe into agreements with you and Wayne personally. To this end, the amended client agreements for the dispute with Tremco and the M Kent Law Firm are attached for your review. The originals are following by post with a copy of each enclosed for you to sign and return to us”.
- [20]On that same day a letter from Andrew Kelly, a partner of the respondent, was sent to the second and third appellants. It too is exhibited to Ms Russell’s affidavit. It refers to the respondent having previously entered into a client agreement “with you” and to “work for you” that the respondent had done on the Tremco Pty Ltd and The M Kent Law Firm litigation. No costs agreements with the second and third appellants have been produced to me, and no explanation ever given to me as to how work was “for (them)” other than an inference that it was because they were the directors of the first appellant. The letter states:
“We note that we are re-issuing this Client Agreement as a result of future steps that you intend to investigate, and likely pursue, with respect to Kadoe which necessitate us re-issuing this Client Agreement to you both personally.
This letter and the attachments, including the Term of Engagement, is our offer to enter into a Client Agreement (including a costs agreement) with you.”
- [21]The second and third appellants were asked in the letter to read the documents carefully and, if they were acceptable, to sign and return them. If they were not acceptable, the second and third appellants were asked to contact Mr Kelly as soon as possible. The letter also states that if they did not return a signed copy of the letter, but continued to provide the respondent with information and instructions, the respondent would assume they had accepted the offer on the terms set out in the letter.
- [22]The affidavit of the second appellant filed at the time of the hearing of 18 March 2014 before the first magistrate, makes the assertion that the second and third appellants sought legal advice about what the second appellant called a “personal guarantee for the fees of (the respondent)” and that, ultimately, they did not sign them because the respondent would not negotiate its terms. I assume the reference to a personal guarantee is a reference to the proposed client agreement I have referred to.
- [23]It is, in that circumstance, not possible to conclude that the respondent was not fully aware of this problem when they instituted proceedings against not only the first appellant but also against the second and third appellants. It is not possible to think that they were not aware of the problem when they listed the matter for directions before the magistrate on 18 March and even more so when the second appellant filed the affidavit that I have referred which made clear that she asserted that the second and third appellants were not liable for costs incurred by the first appellant.
- [24]My conclusions about the respondent’s knowledge that they had no agreement with the second and third appellants entitling them to recover the fees owed by the first appellant from them personally were heightened by events which occurred during the hearing of the application before me.
- [25]Counsel for the respondent submitted to me that the affidavit I have referred to, filed by the second appellant in the court on 18 March immediately before her Honour ordered that Stephen Hartwell will be appointed to assess the costs of the respondent for the invoices issued to the first appellant, and which very clearly raised for the magistrate’s consideration the question of whether the second and third appellants were liable for those costs, was not relied on by the appellants before the magistrate. He submitted, as I previously stated, that the affidavit was filed, but not read. The second appellant was of course representing herself and each of the other appellants.
- [26]The transcript shows she did not, after handing up the affidavit, refer to its contents, Counsel for the appellants however submitted to me that the affidavit provided clear evidence that the issue was raised. In my view that is clearly so. Having handed it up she was entitled to thank the magistrate would read and consider it. He also noted that the material relied on by the respondents in the Magistrates Court (and before me) did not include any costs agreement. He submitted to me that his clients had made numerous requests for any such agreements, but they had not ever been provided. Counsel for the respondent, interrupted that submission and indicated that he was instructed that there were costs agreements with all three parties, i.e. with each of the first appellant and the second and third appellants.
- [27]I indicated that in my view those costs agreements should be provided to the court and that, in the absence of their production, I would be strongly inclined to conclude that there were no such costs agreements. Counsel indicated that they would be produced after the luncheon adjournment, if possible.
- [28]After lunch a number of letters were tendered by counsel for the respondent. They in part related to a complaint by the second appellant to the Legal Services Commission about the conduct of a solicitor employed by The M Kent Law Firm. I do not see the relevance of that in this matter. The last document tendered, Exhibit 6, was however a letter from the respondent, under their then name of “Thomson Geer”, to the appellants’ current solicitors, McBride Legal. The letter refers to correspondence from McBride Legal to the respondent of the previous day. The letter from the respondent says:
“1.1You have requested for copies of the client agreements between our firm and your client (Agreements).
1.2Your clients already have a copy of these Agreements and as such our firm will not be providing a further copy.”
- [29]When I indicated to the respondents’ counsel that this effectively meant that I had no copy of the alleged cost agreement, he submitted that copies of the agreement were part of Exhibit 3, one of the documents tendered by him. That exhibit included a copy of the letter of 11 July 2013 from the respondents to the second and third appellants that I have earlier referred to. The attached agreements were those sent to the appellants but never signed. As I previously said, the accompanying letter makes clear that the agreements were sent because of a perceived need to have the second and third appellants execute costs agreements due to a decision that meant the first appellant might be wound up. As I indicated to the respondent’s counsel, in the absence of it providing signed costs agreements I would infer that none were ever signed.
- [30]Furthermore, I also conclude that the respondent at all times knew that to be the case. The second appellant’s affidavit filed in the Magistrates Court at the time of the hearing of 18 March must have very clearly brought to the respondent’s attention her specific reliance on the respondent’s failure to have obtained executed client agreements pursuant to which the second and third appellants might have been obligated to pay costs incurred by the first appellant to the respondent.
- [31]At no time did the respondent demonstrate to me that it had any belief that it was entitled to recover costs from the second and third appellants. There was no basis for their doing so. Any suggestion that if it had been known that the purpose of the affidavit filed on the morning of the 18th March was to support such a viewpoint, as the respondent’s counsel submitted to me, that it would have sought to object to the affidavit or have sought to cross-examine the second appellant, is groundless. The filing of the affidavit by an unrepresented party could have had no other purpose and that course was not adopted by the respondent’s Counsel on that day.
- [32]Counsel for the respondent submitted that the second appellant had effectively accepted before the magistrate on 18 March that she and the third appellant were liable for such costs. That submission flies in the face of the affidavit that she filed during the hearing. She was not cross-examined about its contents and no contrary evidence was called.
- [33]Counsel’s submission that she accepted her liability, and that of the third appellant, depended upon her use of language during the hearing on 18 March. He referred to her use of the plural – “we” or “us” – when describing the relationship with the respondents. She said, for example, that the respondents “gave us advice” or wrote “to us”. She also said that, if the matter was adjourned to allow a mediation involving another matter (an issue which on a reading of the transcript took up effectively all of the oral argument before the learned magistrate on 18 March), that “we” would pay the bill from the proceeds of that mediation if it was successful. She also said “we’ve told them that their fees will be paid in full” if the mediation was successful and that if it was not “we’re quite happy to let the costs assessment go ahead”.
- [34]In my view use of such language could not possibly have caused the respondent to believe, bearing in mind the history of their attempts to have the second and third appellants sign costs agreement and the content of the second appellant’s affidavit, that the second and third appellants were accepting that they were liable to pay the respondent’s invoices to the first appellant.
- [35]Counsel for the respondent indicated to the magistrate on that first occasion that his client opposed any adjournment. He submitted the application was “simply for the appointment of a costs assessor to undertake the costs assessment of solicitor’s fees”. That submission was made in circumstances where he must of known that the question of whether or not the second and third appellants were personally liable was very much in issue. The magistrate was effectively allowed to make the order without her attention being directed to the real issue raised by the appellant’s and about which the respondent, I have found, was very aware.
- [36]Upon the directions hearing of 18 March 2014, pursuant to r 743G(2)(d) of UCPR,the court should have considered, inter alia, whether it was appropriate for any question to be tried before the costs were assessed including whether a person claimed to be liable to pay costs was in fact so liable.
- [37]In Paroz v Clifford Gouldson Lawyers [2012] QDC 151, McGill SC DCJ said:
“[6]The reason for r 743G(2) and (3) is that, although disputes as to the quantum of costs are appropriately determined by a costs assessor, if there is a more wideranging dispute ... it is more appropriate for that issue to be determined by the court in a hearing … prior to the actual assessment taking place. … If there was an issue as to the validity of the costs agreement … or as to any other matter which affected the bill in a substantial general way, it would have been better for the matter to have been decided by the court prior to referring the bill to the assessor.”
- [38]In my view having regard to the contents of the affidavit it was clear the question of whether the second and third appellants were liable ought have been determined by the Magistrates Court. That was a critical question. In my view it is very strongly arguable indeed that the failure of the magistrate to have made directions to allow the determination of that question invalidates the assessment since the critical issue has not ever been considered.
- [39]Ultimately her Honour made an order appointing a costs assessor to assess the costs of the respondent for the invoices issued to the first appellant. When the assessment was completed the matter came before another magistrate on 22 August 2014. His Honour ordered, pursuant to r 743H(4) of UCPR, that there be judgment for the respondent in the sum of $72,810.75 against each of the appellants.
- [40]On this occasion the appellants were represented by a solicitor, an employee of a firm, Go To Court Lawyers. She indicated to the magistrate that she had been contacted the previous night and first met and had had a brief conference with her clients on the morning of the hearing. She asked for an adjournment and said “I’m not in position to proceed should an adjournment not be granted”.
- [41]Counsel for the respondent referred to the costs assessor’s certificate of 1 July 2014. He told the court that no application had been made for review of the costs assessor’s certificate. He pointed out that the certificate on its face provided that Mr Hartwell “assessed the legal costs payable by the (appellants) (plural) to the (respondent) in the amount of $72,810.75”. He submitted that since no application had been made for review, the respondents were entitled to judgment. Importantly, in view of what I have said about the second appellant’s affidavit filed before the magistrate on 18 March, he submitted “there had been no excuse or sworn evidence to this court such as would incline the court to exercise some discretionary indulgence to the other side”.
- [42]The solicitor for the appellants did nothing other than asking for an adjournment to allow the appellants to obtain legal advice. She indicated to the magistrate that there was a large number of documents which she had not been able to review. She said she “would not be in a position to make submissions in relation to the application this morning”.
- [43]The magistrate was, in such circumstances, not referred by that solicitor to the second appellant’s affidavit clearly stating that she and her husband had not signed any costs agreement binding on them to pay the first appellant’s costs to the respondent and they were not liable for those costs. It seems to me that an assertion that there was no sworn evidence, as I have earlier referred to, misstated that position.
- [44]The magistrate adjourned briefly. When he returned, counsel for the respondent submitted “an adjournment could only be of any utility if the advice is in relation to a review of the costs assessor’s certificate”. He submitted that “the costs assessor’s certificate speaks for itself”. He also submitted that the time for review had passed. He did not refer to the dispute, raised on the affidavit, as to whether the second and third appellants were liable, which should have informed the magistrate’s discretion as to whether to give judgment under r 743H(4) of UCPR.
- [45]The magistrate then adjourned for about one and a half hours before delivering his reasons for judgment. In his reasons he referred to the affidavit of Ms Thomson filed on 18 March to which I have previously referred. He said the application before the earlier magistrate was “quite resisted” on the basis of that affidavit. I interpose that although the affidavit itself provided good grounds for resisting the application, it seems clear, as I have earlier said, that the magistrate merely turned her mind to the question of an adjournment and not to the appropriateness of appointing costs assessors when the preliminary issue, which clearly arose, cried out for determination. The magistrate noted that no attempt had been made to review the assessor’s certificate pursuant to r 742 of UCPR and that the assessor had noted there had been no request for reasons pursuant to r 738 of UCPR. He said that the appellant’s delay in seeking advice about the certificate was not adequately explained. He indicated he saw “little point” in adjourning the matter and entered judgment against each of the appellants.
- [46]It is clear from the transcript of the proceedings before the magistrate that he, like the first magistrate, also never considered the issue of whether the appellants were liable for the costs incurred by Kadoe Pty Ltd. Any submission to the contrary is in my view groundless. Pursuant to r 743H(3) and (4) of UCPR, his Honour was at that time still empowered to give directions as to any issue in dispute between the parties or if there were no such issues, could give any judgment considered appropriate.
- [47]His Honour’s reasons refer to the second appellant’s affidavit filed at the directions hearing on 18 March 2014. He must not have considered its content, or perused the transcript of that hearing, that demonstrates that the first magistrate did not turn her mind to the serious questions it raised as to the liability of the second and third appellants to pay the respondent’s costs.
- [48]Subsequently the amount of the judgment was reduced under the slip rule to take account of sums admittedly paid to the respondents.
- [49]It is critical that at no time did either magistrate, and despite the second magistrates specifically referring to the affidavit of the second appellant, ever consider the effect of her assertion that the second and third appellants were not liable. At no time did Counsel for the respondent ever point out to either magistrate what was apparent, I find, to his clients; namely, there was no basis for recovering costs from the second and third appellants identified in the material. That omission was in circumstances where the appellants were initially unrepresented and then represented by a solicitor who clearly indicated to the court that she could not assist with submissions, other than as to an adjournment, as she had had no opportunity to peruse the material.
- [50]The question, then, is what are the consequences of such matters?
Leave to Amend Notice of Appeal in First Appeal
- [51]The current Notice of Appeal in the first appeal against the order of the magistrate made on 22 August 2014, clearly states that it is an appeal from that order made on 22 August. The grounds of appeal however include that the respondent added the second and third appellants to the proceedings when they were not responsible for the payment of legal costs in the matter and that the Magistrates Court on 18 March 2014 (the decision of the first magistrate) “failed to give adequate attention to who was responsible and/or liable to pay costs”.
- [52]The appellants concede that this aspect of the Notice of Appeal, concerning the order of 18 March, should be removed from the Notice of Appeal in the first appeal and dealt with in the Notice of Appeal for the second appeal. No orders are sought in the second appeal so I assume that the appellants’ view is that the notice in that matter properly raises that issue.
- [53]The procedure for appeals to the District Court is of course largely governed by the rules applying to appeals in the Court of Appeal. Rule 785(1) of UCPR provides that Part 1 of Chapter 18 (other than certain designated rules) apply to appeals to the District Court. The appellants seek leave to amend the appeal in a number of other respects also. First, as I earlier indicated, it proposes that the first appellant be removed as a party. I will give leave pursuant to r 750 of UCPR that the first appellant be removed as a party to the appeal.
- [54]The second and third appellants also seek to abandon many of the grounds of appeal articulated in the original Notice of Appeal. The power to allow amendment of the Notice of Appeal is contained in r 751 of UCPR which applies to this appeal. The proposed amendments are set out in a proposed amended Notice of Appeal exhibited to the affidavit of Millicent Russell filed on 17 December 2014.
- [55]It is proposed that the original grounds, which raise the issue concerning the respondent’s entitlement to recover its costs from the second and third appellants be deleted and effectively re-worded. It is proposed that the Notice of Appeal assert that pursuant to r 69 of UCPR the second and third appellants should be removed as parties to the respondent’s application filed 11 February 2014 in the Magistrates Court or, in the alternative, that pursuant to r 743G of UCPR the question of who was responsible and/or liable to pay legal costs to the respondent be considered and that the second and third respondents are not liable for those fees. In the alternative, the ground is said to be that pursuant to r 7439 of UCPR the Magistrates Court on 22 August 2014 erred in entering judgment against the second and third appellants.
- [56]These matters really are just a re-wording of the grounds articulated in paragraphs one and two of the original Notice of Appeal. I can see no reason, and none was suggested by counsel for the respondent, as to why those amendments should not be allowed.
- [57]More importantly the proposed amendments include the following:
“On hearing of the Appeal, the appellants will seek to produce fresh evidence:
- Deposing to a request made by the respondent to the second and third appellants on 11/7/2013 to enter into client agreements in relation to the respondent’s legal costs;
- Deposing to the second and third appellants’ response to that request;
- Rely on the affidavit of Caroline Mary Thomson filed by leave in the Magistrates Court proceedings on 18 March and in particular paragraph 2 of that affidavit. “
- [58]That issue is of course a matter to be determined by the Judge hearing the appeal of the matter, but I accept the Notice of Appeal should be amended so as to raise these issues which I have found ought have been considered on both 18 March and 22 August 2014. Indeed, as I have sought to indicate, it seems to me almost beyond dispute, that the order made on those two days ought not have been made because of the affidavit of the second appellant. That issue, in my view, ought clearly have been ordered to be determined as a preliminary issue consistent with Paroz v Clifford Gouldson Lawyers (supra).
- [59]I accept the appellants’ counsel’s submission that the amendments serve a useful purpose and more precisely articulate the ground identified in paragraphs one and two of the original Notice of Appeal. They reduce the scope of the appeal by deleting a number of grounds on which the appellants do not seek to rely. I can see no identifiable prejudice to the respondent in giving leave to allow the amendments. I will so order.
Stay of the Order of 22 August 2014 and of the Enforcement Warrant
- [60]The real issues in dispute before me concerned the application to stay the judgment of the magistrate of 22 August and to stay the subsequent enforcement warrant, and the issue of security for costs to which I shall shortly refer.
- [61]The test in respect of staying an order, and also the enforcement warrant, was stated by Jerrard JA in Elphick v MMI General Insurance Limited & Anor [2002] QCA 347 as follows:
“[8]To succeed on an application for a stay the applicants must show good reason for the stay to be granted and that it is an appropriate case in which to grant a stay. Those authoritative decisions in this court established that an appellant should demonstrate:
- A good arguable case on appeal;
- That the applicant will be disadvantaged if a stay is not ordered;
- That competing disadvantage to the respondent should the stay be granted does not outweigh the disadvantage suffered by the applicant if the stay not be granted.”
- [62]I have referred extensively to the circumstances of this matter earlier because of their relevance to the discretion as to whether to grant a stay (and also to the discretion as to whether to order security for costs). My conclusion that at all times the respondent knew that the second and third appellants had not signed any costs agreement and that they knew this was an issue on which the appellants strongly relied, is in my view relevant to my consideration of whether to grant the stay. So too in my view is the fact that the respondent, fully aware of that circumstance, failed to draw that fact to the attention of the magistrate on either 18 March or 22 August, in circumstances where the appellants were self-represented on the first occasion and represented by a solicitor who told the court that she had only just been briefed and had not read any of the material at all, and was unable to assist the court with submissions beyond asking for an adjournment. It is encumbent on an advocate – and in this case it must also be remembered the respondent is a firm of solicitors – to ensure a court does not fall into clearly identifiable error. In my view the failure to have drawn the attention of the court to the content of the affidavit of the second appellant filed on 18 March, and of its legal significance, in circumstances where, as I find, the respondent itself knew the second and third appellants had not signed any costs agreement binding them to pay the costs incurred by the first appellant to the respondent, very probably constituted a breach of that obligation.
- [63]It is my assessment the appellants have a very strongly arguable case on the appeal. In my view the respondent is not likely to be disadvantaged by any such stay beyond the inevitable disadvantage of being held out of its entitlements, if it is found entitled to its costs from the second and third appellants, for a further period. In so concluding I note the undertaking of the appellants not to dispose of a property at Pelican Waters owned by the second appellant, to which I shall shortly refer, without giving prior notice of that intention to the respondent.
- [64]By comparison a failure to grant a stay will very probably significantly disadvantage the respondent if the enforcement warrant is executed against the property of the second appellant or indeed if proceedings were taken under the provisions of the Bankruptcy Act against either of the second or third appellants.
- [65]In the circumstances I will order a stay of the judgment and of the enforcement warrant.
Security for costs
- [66]The respondent applies for security for costs of the appeal in the sum of $25,000. The court has an unfettered discretion to make such an order on an appeal. In Natcraft Pty Ltd v Det Norske Veritas [2002] QCA 241 the court indicated that relevant factors included:
- The appellant’s prospects of success on the appeal;
- That it can be inappropriate to order an impecunious appellant to provide greater security than absolutely necessary;
- Any delay in bringing the application for security for costs.
- [67]The court referred also to the fact that an impecunious appellant would be unable to satisfy any order for costs that might be made against it on the appeal and had already had a “day in court”, but lost.
- [68]This is a case where the appellants have shown they have no capacity to meet any order for security in the sum sought by the respondent or indeed even a lesser sum. The affidavit of their solicitor, Millicent Russell, filed on 17 December 2014 indicates that only the second appellant owns any real property – a property at Pelican Waters. It is said to have been valued in late 2013 at $560,000 to $600,000 but is subject to two mortgages to the ANZ Bank, totalling almost $800,000. It can be seen the second appellant has no equity in the property. Their combined weekly income is said to be $782, each receiving $391 a week.
- [69]Clearly they have no capacity to meet any order for security for costs. Counsel for the respondent submitted that should assist my making an order for security, since if the appellants were unsuccessful in the appeal, they would then be unable to meet additional costs incurred by the respondent in conducting the appeal and had already had their “day in court”. In many circumstances that can be a decisive issue. In the circumstances that I have outlined earlier in the judgment, and having regard to my assessment of the strength of the case on the appeal and the respondent’s conduct in the proceedings before the Magistrates Court, I conclude however that this is not an appropriate case in which to make an order for security for costs, despite the appellant’s impecuniosity.
- [70]I order:
- Pursuant to r 751(b) of UCPR, the appellants have leave to amend Notice of Appeal in the form exhibited to the affidavit of M K Russell filed 17 December 2014.
- Pursuant to r 750(1) of UCPR, the first appellant be removed as a party to this appeal.
- Pursuant to r 78 of UCPR, this appeal be consolidated with District Court of Queensland appeal proceeding number 4962 of 2014.
- Pursuant to r 761(2) of UCPR, the enforcement warrant dated 14 October 2014 issued by the Magistrates Court in proceeding number 1049 of 2014 and enforcement of the order made by the Magistrates Court on 22 August 2014 in that proceeding be stayed pending the outcome of this appeal.
- The respondent’s application filed 13 November 2014 be dismissed.
- Costs be reserved.