Arnold v District Council of Yorke Peninsula No. Scgrg-99-400 Judgment No. S215

[1999] SASC 215

ARNOLD & ORS v DISTRICT COUNCIL OF YORKE PENINSULA
[1999] SASC 215

Land and Valuation Division

Debelle J (ex tempore)

1. There are two matters before the court.  The first is an appeal against an order made in the Environment Resources and Development Court (“the Environment Court”) that the appellants provide security for costs in the sum of $6,000.  The second is an application for leave to appeal from that decision to the extent that leave is necessary.  It is unnecessary to determine whether leave to appeal is necessary.  My present inclination is that it is not.  Both the application for leave to appeal and the appeal have been heard together and there is no need to rule upon that issue.  If leave were necessary I would be disposed to grant leave for the reasons which follow.  To the extent that the application for leave to appeal is out of time I would extend the time within which to lodge the application. 

2. The order for security for costs has been made in respect of proceedings seeking orders pursuant to s.85 of the Development Act 1993. The proceedings were issued on 21 December 1998. The appellants seek a number of declarations and ancillary orders. Shortly stated, the effect of the application is to seek orders that a development approval is void on a number of grounds. Those grounds include that, when dealing with the grant of development approval, the planning authority did not follow the procedures prescribed by the Development Act and the regulations made there under.

3. On 23 December 1998 leave was granted pursuant to s.85(4) to serve the summons. The respondents to the summons are the planning authority, the District Council of Yorke Peninsula, and the holder of the planning consent, a Mr Feneley. On 6 March 1999 Mr Feneley applied for an order for security for costs. The application was heard on 19 March 1999. A judge of the Environment Court ordered that the appellants provide security for costs in the sum of $6,000 on or before 21 April 1999. The appellants appeal from that decision. Neither of the respondents appeared on this application. Each has indicated that it will abide the order of the court.

4. There are some unsatisfactory features of the matter.  An affidavit was tendered in the Environment Court on behalf of Mr Feneley.  It seems that an affidavit in response to Mr Feneley's affidavit was tendered by Mr Arnold or by Ican Enterprises Pty Ltd.  The affidavit was not admitted.  Nevertheless, the judge had regard to some paragraphs of that affidavit for the purposes of making his order.  This was an entirely inappropriate procedure.  It plainly places an appellate tribunal in great difficulty in determining an appeal when a judge has regard to evidence which is not before the appellate tribunal.

5. The judge found that Mr Arnold was not impecunious.  He found that he had an income of $29,000.  Mr Arnold also owns a parcel of land which, according to the evidence has been assessed by the Valuer-General as having a capital value of $32,000.  The evidence showed that Mr Arnold had paid $50,000 for the land.  Adopting a conservative view, the land has a value at least of $32,000 as assessed by the Valuer-General.  There was evidence of an undischarged mortgage stamped to $35,000.  However, the judge accepted the evidence of Mr Arnold that the loan had been repaid but the mortgage for reasons of convenience had not been discharged.  I must proceed on the footing of the findings of fact made by the judge.  Thus, Mr Arnold has an income of $29,000 and an asset worth at least $32,000.  There are good reasons, therefore, for holding that Mr Arnold was not impecunious.

6. However, the judge had doubts as to the financial standing of Ican Enterprises Pty Ltd (“Ican Enterprises”).  There is no real evidence as to its financial standing.  All that has been proved is that its issued capital is limited to $100.  There is no evidence of its income other than an assertion that it receives $44,000 in respect of an insurance policy which it had procured to cover risks associated with Mr Arnold as a director of the company.  The company continues to receive that sum $44,000 per annum.  There is, however, no evidence as to the company’s outgoings or to show whether it holds any assets.  No annual return was proved.  Mr Feneley had an onus to produce credible testimony that Ican Enterprises would be unable to pay its costs if it was unsuccessful.  Once such evidence had been adduced, it was for Ican Enterprises to seek to prove that it could discharge any order as to costs made against it if it were unsuccessful.  The evidence adduced by Mr Feneley did constitute prima facie evidence that Ican Enterprises was unable to pay its costs if unsuccessful.  It was for Ican Enterprises, therefore, to adduce evidence and there is no such evidence before me.  However, some evidence was before the judge in the Environment Court.

7. The reasons for making the order appear in the transcript for the proceedings.  After referring to the financial position respectively of Mr Arnold and the company, the judge dealt with the question whether the action had any prospects of success.  He noted that he had granted leave to serve the summons and expressed the view that there was nothing which caused him to resile from the conclusion that his order granting leave had been correct.  He then turned to examine whether there was any issue of public interest involved and concluded there was not.  He then set out his reasons for his decision at p.11.

   “I unequivocally accept that it is a matter of intense to Mr Arnold and through him to Ican, accordingly I have come to the conclusion that in determining whether security for costs should be ordered, I cannot accept this as a matter of public interest.  I have given very careful consideration to the question of whether I should order security for costs, and I realise the difficulty which it may impose upon Mr Arnold and Ican, were I to order such security.  I have come to the conclusion that the nature of the proceedings before me, the animosity which I perceive to be between the parties and the history of the matter, is that this is an appropriate case in which I should order security for costs.”

The judge then went on to determine the amount for which security should be given.

1. Given that the judge has found that Mr Arnold is not impecunious, it is difficult to determine the basis upon which an order for security for costs should have been made against him.  The only reasons which have been identified are the nature of the proceedings, the animosity between the parties and the history of the matter.  Neither the animosity between the parties nor the history of the matter is a ground for ordering security for costs.  As to the nature of the proceedings, the judge had himself granted leave to proceed.  It is difficult, therefore, to determine what characteristic of the proceedings required an order for security for costs. 

2. As for Ican Enterprises, the fact that there was no cogent evidence as to its capacity to discharge any order for costs made against it if unsuccessful triggered the discretion of the judge to make an order for security.  In the absence of such evidence, I think that it is appropriate that an order for security should have been made but not on the grounds which were identified by the judge. 

3. There is a further difficulty with this matter.  The usual practice when making orders for security to costs is to estimate the likely party and party costs to the end of the first day of the trial.  The judge's order was made on the footing that security should be given for the whole of the costs of the trial.  In these proceedings Mr Feneley has applied for an order striking out the proceedings on the ground that the court has no jurisdiction to hear and determine.  The application was listed for hearing on 29 April 1999.  That application was adjourned as the appellants had not provided security and had instituted this appeal.  The proceedings in the Environment Court have been stayed pending the resolution of the issue of security for costs.   If the application by Mr Feneley is successful that will be an end of the proceedings.  The appropriate order, therefore, would have been to have ordered security for costs until the end of that proceeding.  If Mr Feneley succeeded, no further security would be required.  If he failed, Mr Feneley could then apply again for security.  I do not think it is appropriate in this case to require the appellants to give security for the costs of the whole of the hearing.

4. I acknowledge that the amount of the order for security is relatively small.  Nevertheless I think it appropriate to interfere with the order.  I am inclined to do so because so far as the appellant Arnold is concerned he has assets which are sufficient to discharge any order for costs which might be made against him.  In this respect it is relevant to note that he has given an undertaking to this court that he will not borrow further against the unregistered mortgage. That undertaking is given until the determination of these proceedings or any earlier order of the Environment Resources and Development Court.  He, therefore, has a very substantial asset with which he can discharge any order as to costs made against him.  I make the order also because Mr Feneley can, if he wishes, make a further application for security once the Environment Court has determined his application to strike out these proceedings. 

5. In the course or argument I asked why it was necessary for there to be two applicants in the Environment Court to set aside the development consent.  No satisfactory reason has been proffered.  I am told that there is a real likelihood that Ican Enterprises may discontinue the proceedings.  If it does, that is a further reason for reducing the amount of the security. 

6. For all of these reasons, I allow the appeal and reduce the order for security for costs to $1,500.  I order that it be paid to the Registrar of the Environment Resources and Development Court on or before 11 June 1999.

7. There will be orders:

8. Appeal allowed.

9. The order of the Environment Resources and Development Court is set aside and in lieu therefore order that the appellants pay the sum of $1,500 as security for costs to the Registrar of the Environment Resources and Development Court on or before 11 June 1999.

10. Question of costs reserved.