Citrus Queensland Pty Ltd (ACN 110 855 359) v Sunstate Orchards Pty Ltd (ACN 095 659 733)

• Jurisdiction: Australia Federal only
• Judgment Date: 10 December 2008
• Neutral Citation: [2008] FCA 1867
• Court: Federal Court

FEDERAL COURT OF AUSTRALIA

Citrus Queensland Pty Ltd (ACN 110 855 359) v Sunstate Orchards Pty Ltd (ACN 095 659 733) [2008] FCA 1867

PRACTICE AND PROCEDURE – consideration of an application for security for costs, pending an appeal – consideration of an application for a stay of orders made in relation to a cross‑claim, pending an appeal – consideration of the principles influencing the exercise of the discretion on each motion

Federal Court of Australia Act 1976, s 56

Federal Court Rules, Order 52, r 17

Jones v Dunkel (1959) 101 CLR 298 - cited

Kizbeau Pty Ltd v W G & B Pty Limited (1995) 184 CLR 281 - cited

Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1 - cited

HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640 - cited

Netaf Pty Ltd & Anor v Bikane Pty Ltd (1990) 92 ALR 490 - cited

Yorke & Anor v Lucas (1985) 158 CLR 661 - cited

Quinlivan v Australian Competition and Consumer Commission (2004) 160 FCR 1 - cited

Bell Wholesale Co. Pty Ltd v Gates Export Corporation (1984) 2 FCR 1 - cited

Cameron’s Unit Services Pty Ltd v Kevin R Whelpton & Associates (Australia) Pty Ltd (1986) 13 FCR 46 - cited

Bryan E Fencott & Associates Pty Ltd v Eretta Pty Ltd (1987) 16 FCR 497 - cited

Bruce Pie & Sons Pty Ltd v Mainwaring (1985) 1 Qd R 401 - cited

Procon (GB) Ltd v Provincial Building Co. Ltd (1984) 2 All ER 368 - cited

Sagacious Procurement Pty Ltd v Symbion Health Ltd [2007] NSWCA 205 - cited

Powerflex Services Pty Ltd v Data Access Corporation (1996) 137 ALR 498 - cited

Alexander v Cambridge Credit Corp. Ltd (receivers apptd) [1985] 2 NSWLR 685 - cited

Starborne Holdings Pty Ltd v Radferry Pty Ltd & Ors [1998] FCA 548 - cited

Henderson v Amadio Pty Ltd (No. 3) (1996) 65 FCR 66 - cited

Cook’s Construction Proprietary Limited v Stork Food Systems Australasia Pty Ltd [2008] QCA 322 - cited

Sevenhill Holdings Pty Ltd v Musovic [1992] FCA 372- cited

CITRUS QUEENSLAND PTY LTD (ACN 110 855 359), PETER MICHAEL TRACY and SUNSTATE CITRUS PTY LTD (ACN 112 847 560) [SUBJECT TO DEED OF COMPANY ARRANGEMENT] v SUNSTATE ORCHARDS PTY LTD (ACN 095 659 733), ANDREW COLIN STRAHLEY and DAVID BREED

QUD368 of 2008

GREENWOOD J

10 DECEMBER 2008

BRISBANE

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	QUD368 of 2008

BETWEEN:	CITRUS QUEENSLAND PTY LTD (ACN 110 855 359) First Appellant PETER MICHAEL TRACY Second Appellant SUNSTATE CITRUS PTY LTD (ACN 112 847 560) [SUBJECT TO DEED OF COMPANY ARRANGEMENT] Third Appellant
AND:	SUNSTATE ORCHARDS PTY LTD (ACN 095 659 733) First Respondent ANDREW COLIN STRAHLEY Second Respondent DAVID BREED Third Respondent

JUDGE:	GREENWOOD J
DATE OF ORDER:	10 DECEMBER 2008
WHERE MADE:	BRISBANE

THE COURT ORDERS THAT:

1. On or before 9 January 2009 the appellants provide security for costs of the first respondent and second respondent of the appeal in an amount of $105,000.00 by way of unconditional bank guarantee in that sum or otherwise to the satisfaction of the District Registrar of the Queensland District Registry of the Court.

2. The appeal be stayed until the provision of that security or until further order of the Court.

3. The appellants pay the costs of the first and second respondents of and incidental to the notice of motion for security for costs filed by the respondents on 14 November 2008.

4. The orders of Collier J made on 5 September 2008 as amended by her Honour’s further order of 17 October 2008 be stayed on condition that the first appellant, Citrus Queensland Pty Ltd, pay into Court an amount of $195,782.83 by 9 January 2009.

5. Monies paid into Court by a real estate agent described as Ray White Rural on 29 December 2005 together with accretions in an amount of $40,239.06 remain in Court pending the determination of the appeal.

6. The costs of the motion filed by the appellants on 12 November 2008 are reserved.

7. The parties have liberty to apply on three days notice.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using eSearch on the Court’s website.

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	QUD368 of 2008

BETWEEN:	CITRUS QUEENSLAND PTY LTD (ACN 110 855 359) First Appellant PETER MICHAEL TRACY Second Appellant SUNSTATE CITRUS PTY LTD (ACN 112 847 560) [SUBJECT TO DEED OF COMPANY ARRANGEMENT] Third Appellant
AND:	SUNSTATE ORCHARDS PTY LTD (ACN 095 659 733) First Respondent ANDREW COLIN STRAHLEY Second Respondent DAVID BREED Third Respondent

JUDGE:	GREENWOOD J
DATE:	10 DECEMBER 2008
PLACE:	BRISBANE

REASONS FOR JUDGMENT

Background and short synopsis of the principal judgment

1 There are two notices of motion before the Court filed in this appeal proceeding. By motion filed on 14 November 2008 the first and second respondents to the appeal (“Sunstate Orchards” and Mr Strahley) seek an order that the appellants (formerly the three applicants in the principal proceeding) provide security for the first and second respondents’ costs of the appeal and an order for a stay of the appeal should any security so ordered not be provided within the time limited by any order.

2 By the second notice of motion filed on 12 November 2008, the applicant appellants seek an order that Order 2 of the Orders of the primary judge, Collier J, made on 5 September 2008 consequent upon an 18 day trial and an extensive judgment in the proceeding comprising 213 pages be stayed until the determination of the appeal filed on 7 November 2008 (time for filing and serving a notice of appeal having been extended by her Honour by 21 days). Order 2 is in these terms:

2. The Cross‑Claim [of the first respondent, Sunstate Orchards] filed 5 June 2007 be allowed as follows:

(a) the Cross‑Respondent [Citrus Queensland] pay the Cross‑Claimant damages in the sum of $385,383.00 for breach of the Packing Shed Agreement;

(b) the Cross‑Respondent pay the Cross‑Claimant the sum of $150,000.00 for a loan which remains due and owing; and

(c) the Cross‑Respondent pay the Cross‑Claimant interest at the annual rate of 10% on the sums ordered to be paid in subparagraphs 2(a) and 2(b) herein pursuant to section 51A Federal Court of Australia Act 1976 (Cth) to be calculated from the date the relevant cause of action arose.

3 On 17 October 2008, Collier J ordered the cross‑respondent to pay the cross‑claimant interest up to the date of judgment on 5 September 2008 in an amount of $163,409.02, in substitution for Order 2(c). On 1 June 2006, the Full Court per Gray ACJ, Spender and Dowsett JJ ordered that the first and third applicants in the proceeding provide security for the costs of the first and second respondents of the proceeding up to the end of the first day of the trial in an amount of $150,000.00. On 5 December 2006, Collier J ordered the first and third applicants to pay a further sum of $75,000.00 by way of security for costs. On 17 October 2008, Collier J ordered the applicants to pay the first and second respondents’ costs of the proceedings excluding certain interlocutory costs and gave liberty to the first and second respondents to apply to the Court for an order that monies provided by way of security for costs be released to them.

4 On 29 October 2008, Collier J ordered that an amount of $40,239.06 deposited with a real estate agent (and later paid into Court) be paid (together with accretions) to the first respondent. A part of the cross‑claim of the first respondent against the first applicant involved a claim for damages for contended breaches of an agreement between those parties, described as the Packing Shed Agreement. Under the agreement a deposit of $40,000.00 had been paid to a real estate agent as stakeholder. The first respondent determined the agreement for breach and elected to forfeit the deposit. In dismissing the claim of the applicants and finding for the first respondent on the cross‑claim, the primary judge made the order for release of the deposit monies and accretions to the first respondent’s solicitors. Her Honour further ordered in effect that any payment of the deposit monies be stayed pending the first applicant filing a notice of appeal by 7 November 2008 and filing an application for a stay of her Honour’s judgment and orders in respect of the cross‑claim by 14 November 2008. Both those steps have occurred and thus the deposit monies remain in Court.

5 Two questions now arise. First, whether and, if so, in what amount should the appellants be ordered to provide security for the costs to be incurred by the first and second respondents in the appeal. Secondly, whether the orders of the primary judge in relation to the cross‑claim ought to be stayed. At the outset, it should be noted that Mr Lynch, the solicitor for the appellants who appeared for them on both motions conceded that the appellants ought to provide security for the first and second respondents’ costs of the appeal. The scope of the controversy is the amount of the security. The applicants on the motion for security principally rely upon the affidavit of Mr James Alexander McLelland, an expert costs assessor, filed 21 November 2008 to support the proposition that the reasonable and likely costs to be incurred by the first and second respondents in responding to the issues raised by the 63 grounds of appeal, amount to $198,240.00. The appellants rely upon the affidavit of Mr Michael Anthony Graham sworn 25 November 2008, an expert costs assessor, who says that the allowable items of party and party costs likely to be incurred by the first and second respondents in addressing the grounds...