Booth v Zhou - [2024] WASCA 29

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA
TITLE OF COURT :   THE COURT OF APPEAL (WA)
CITATION:   BOOTH -v- ZHOU [2024] WASCA 29
CORAM:   VAUGHAN JA
TOTTLE J

HEARD:   22 MARCH 2024
DELIVERED          :   22 MARCH 2024
PUBLISHED           :   22 MARCH 2024
FILE NO/S:   CACV 78 of 2023
BETWEEN:   BARRY MILES BOOTH
First Appellant
JENNIFER ROSE BOOTH
Second Appellant
AND
WEN JUN ZHOU
Respondent

ON APPEAL FROM:
Jurisdiction              :   DISTRICT COURT OF WESTERN AUSTRALIA
Coram:   BOWDEN DCJ
Citation: ZHOU -v- MINDARIE DRIVE PTY LTD [2023] WADC 63
File Number            :   CIV 947 of 2020

Catchwords:

Appeal - Practice and procedure - Application for security for costs - Turns on own facts

Legislation:

Nil

Result:

Application dismissed

Category: B

Representation:

Counsel:

First Appellant	:	C Horwood
Second Appellant	:	C Horwood
Respondent	:	P Lafferty

Solicitors:

First Appellant	:	Laird Lawyers
Second Appellant	:	Laird Lawyers
Respondent	:	Armeli & Molony Lawyers

Case(s) referred to in decision(s):

George 218 Pty Ltd v Bank of Queensland Ltd [2016] WASCA 56
Yerkey v Jones (1939) 63 CLR 649
Zhou v Mindarie Drive Pty Ltd [2023] WADC 63

REASONS OF THE COURT:

This appeal came before the court pursuant to an amended Registrar's Notice to Attend dated 11 March 2024 to hear the respondent's application in an appeal dated 29 February 2024 seeking an order for security for the costs of the appeal. After hearing from the parties we dismissed the application and said that we would provide written reasons for that order. These are our reasons for dismissing the application.
The application was supported by affidavits of the respondent's solicitor sworn 29 February 2024 and 15 March 2024.
The court also received two sets of written submissions from the respondent in support of the application as well as written submissions on behalf of the appellants in opposition to the application. Those written submissions were supplemented by brief oral submissions. The court also had before it the Appeal Books in the appeal.
By way of background:
1.The appellants appeal against orders made on 16 June 2023 in the District Court (Bowden DCJ) following a six‑day trial. Judgment was entered in favour of the respondent against the appellants in an amount of $562,086.
2.The primary judge gave written reasons for those orders. See Zhou v Mindarie Drive Pty Ltd [2023] WADC 63.
3.It is apparent from the primary judge's reasons that the appellants, among others, jointly and severally guaranteed the repayment of a loan advanced by the respondent to a company called Mindarie Drive Pty Ltd. The appellants were sued on the guarantee. The appellants raised a number of defences including undue influence, unconscionability in equity and under the Australian Consumer Law and the principle in Yerkey v Jones (1939) 63 CLR 649.
4.The primary judge rejected the various defences. In particular, as to the defence of undue influence, the primary judge held that while there was relevantly a presumed relationship of influence:
(a)the respondent did not know and had no constructive notice of the matters giving rise to the relationship of influence: Primary reasons [405];
(b)the appellants executed the guarantee in the exercise of their independent will and not as a result of any actual or presumed undue influence: Primary reasons [412], [413].
5.The appellants filed an appeal notice on 7 July 2023. Thereafter, on 23 August 2023, the appellants filed their appellant's case. The appellants seek to agitate two grounds of appeal. Those grounds of appeal are confined to the appellants' undue influence defence. The appellants appear to accept the intermediate factual findings made by the primary judge but claim that the primary judge erred in law in reaching the conclusions previously mentioned by drawing incorrect inferences from the intermediate facts.
The basis for the application for security for costs appears from the respondent's solicitor's affidavits. Following entry of judgment the respondent registered a Property (Seizure and Sale) Order on the appellants' property. In early February 2024 the Sheriff's Office remitted the net proceeds from the sale of the appellants' property to the respondent's solicitor. There was a shortfall of some $15,493.01. In addition to that remaining part of the judgment debt the appellants have a liability for the costs of the primary proceedings. Those costs are yet to be taxed. However, the respondent's own costs were more than $200,000. There is no evidence that the appellants have any other realisable assets.
The respondent, by her solicitor, first sought security for costs on 30 November 2023 (having previously foreshadowed a possible security for costs application in an email dated 14 September 2023). At that time the appellants' solicitor said it was unlikely that security for costs would be consented to. However, it was not until 13 February 2024 that the appellants' solicitor finally said that no security would be provided. The application for security for costs was then filed on 29 February 2024. In support of the application the respondent's solicitor provided a draft bill of costs quantifying the costs sought in an amount of $14,608. Of the $14,608, $6,116 relates to work already done on the appeal; $3,256 relates to the application for security for costs itself; and $5,236 relates to the hearing of the appeal and delivery of judgment.
The appeal is set down for hearing on 9 April 2024. The parties were informed of the hearing date by the Court of Appeal office issuing a Notice of Hearing Date on or about 11 January 2024. So, although the respondent has been aware of the forthcoming appeal hearing since mid‑January 2024, the application for security for costs was not filed until the final day of February 2024.
The principles that this court applies on an application under r 43(2) (read with par (f) of the definition of 'interim order') of the Supreme Court (Court of Appeal) Rules 2005 (WA) for security for the costs of an appeal were summarised in George 218 Pty Ltd v Bank of Queensland Ltd [2016] WASCA 56 [41] - [48]. We adopt those principles but do not consider it necessary to reproduce them in full for the purpose of these reasons. The relevant principles are not in dispute.
It is, however, worth recording that:
1.An order made in the exercise of the power to order security is an order made to serve the interests of justice: George 218 Pty Ltd [42].
2.In considering whether to order security for costs pursuant to r 44(1) the court exercises an unfettered discretion - albeit that the discretion is to be exercised judicially: George 218 Pty Ltd [43].
3.The exercise of discretion in ordering security for the costs of an appeal is not subject to O 25 r 1 of the Rules of the Supreme Court 1971 (WA): George 218 Pty Ltd [44].
4.In this court account is taken of the circumstance that an appellant has already had the benefit of a decision by a court of justice: George 218 Pty Ltd [44].
5.An appellant's inability to satisfy a costs order should the appeal fail will generally in itself be a significant factor to be taken into account in favour of an order for security. However:
(a)impecuniosity is not in itself generally accepted as the sole ground for the making of an order for security; and
(b)where security is ordered against an impecunious appellant the amount ordered should not be greater than is absolutely necessary.
See George 218 Pty Ltd [46] - [47].
6.Other relevant factors generally include:
(a)The appellant's prospects of success.
(b)Whether the appellant would be shut out of the appeal if security for costs were ordered.
(c)Whether there has been any delay in the respondent filing the application for security for costs.
See George 218 Pty Ltd [48].
In the present case the application for security for the costs of the appeal was based on two matters. First, the apparent impecuniosity of the appellants. Second, the appeal having no reasonable prospects of success. The respondent also said that there is no evidence to suggest that the appeal will be stifled if security is ordered. So far as the application was filed late the respondent submitted that the delay was not caused by the respondent or her legal representatives.
The appellants said that the appeal is brought on a bona fide basis and has reasonable prospect of success. It was acknowledged that the appellants lack of material assets was a significant factor in support of the respondent's application. It was said, however, that the appellants' apparent impecuniosity should not be the sole consideration. Otherwise the appellants drew the court's attention to the timing of the application. The appellants referred to the respondent's significant delay in first raising the issue of security for costs and then further delay in filing the application for security for costs. The appellants said any application should have been brought in late August 2023 rather than a matter of weeks before the appeal hearing after the appellants had prepared all the documents necessary for the appeal.
We turn now to evaluate where the interests of justice lay in this particular case so far as it concerned an order for security for the costs of the appeal.
There were a number of factors that supported the court exercising its discretion in favour of an order for security for costs. First, on the evidence there was reason to believe that the appellants will be unable to pay the costs of the respondent if the appellants are unsuccessful in the appeal. This is a significant factor, to which we gave considerable weight, in evaluating whether there should be an order for security for costs. Second, the appellants were unsuccessful following a trial in which they participated. The interests of justice did not necessitate that the appellants be afforded a further opportunity to vindicate their position without proffering a security so as to meet the costs of the respondent if the appellants are unsuccessful in the appeal. An award of security at this stage did not operate to deny the appellants a right to litigate. They had already been afforded that opportunity. Third, as the respondent submitted, there was no evidence that an order for security for costs would stifle the appeal. The appellants had not adduced any evidence of their financial circumstances and whether or not resources could be made available to them in the event that the court made an order for security for costs.
There were, however, countervailing factors that militated against the court ordering that the appellants provide security for the costs of the appeal.
First, having considered the appellants' written submissions on the appeal, we were satisfied that the appeal is fairly arguable and, in that sense, could be said to have reasonable prospects of success. This is not to say that the appeal will succeed or is likely to succeed. At this interlocutory stage the strength of the appeal is necessarily a matter of impression rather than a matter of certitude. It suffices to say that having considered the appellant's case as filed our provisional view is that the appeal is fairly arguable.
It is also apparent that the appeal is quite confined. This is not a scattershot appeal where an appellant challenges every substantial adverse finding in the hope that some challenge might stick. That being the case, and consistent with our view that the appeal is fairly arguable, we were satisfied that the appeal is bona fide. Plainly, in that respect, the appeal has not been brought merely to stave off execution - the respondent has already proceeded to enforce her judgment debt against the appellants before the hearing of the appeal.
Second, there had been considerable delay in bringing the application for security for costs. The respondent, by her solicitor, wrote to the appellants' solicitor seeking security for the costs of the appeal on 30 November 2023. That was some three months after the appellant's case was filed. In the ordinary course it is to be expected that the issue of security for the costs of the appeal would be raised shortly after the filing of the appellant's case and before the respondent is put to the expense of preparing its respondent's answer. It is true that the formal refusal of security on behalf of the appellants was not forthcoming until 13 February 2024. But, as and from 30 November 2023, the appellants' solicitor had said it was unlikely that the appellants would consent to security. In those circumstances a respondent, acting prudently, could and should have sought a final response far earlier - and, in the event of continued failure to respond to the request for security, could and should have brought the application far sooner. Even when the response was forthcoming the respondent delayed for a further two weeks in bringing the application.
Weighing the competing factors we were not satisfied that the court should exercise its discretion to order for security for costs at this late stage in the appeal process. The position might be otherwise had the application for security been brought promptly. But that was not the case. There was, in our view, substantial force in the appellants' criticism of the timing of the application - in particular that it came on the eve of the appeal hearing at a time when the appellants had prepared all the documents necessary for the appeal. In all the circumstances the belated filing of the application was such that, despite the factors that supported an order for security for costs, it was not in the interests of justice to order that the appellants provide security for the costs of the appeal when the appeal hearing was set down for hearing in some 18 days.
Separately, had we been persuaded that security for costs of the appeal was appropriate, we would not have ordered security in the amount sought. At the most we would have ordered security for the likely costs associated with the upcoming appeal hearing. The other costs are all 'sunk' costs which properly ought not be the subject of an order for security given the delay in making the application.
For these reasons we ordered that the respondent's application in an appeal dated 29 February 2024 is dismissed. The costs of the application were ordered to be the appellants' costs in the appeal. That was the order sought by counsel for the appellants; an order in that form was not opposed by counsel for the respondent.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
AR
Associate to the Honourable Justice Vaughan
22 MARCH 2024