Bozic v Billis
[2022] WASC 294
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: BOZIC -v- BILLIS [2022] WASC 294
CORAM: ALLANSON J
HEARD: 31 AUGUST 2022
DELIVERED : 5 SEPTEMBER 2022
FILE NO/S: CIV 2557 of 2017
BETWEEN: FRANJO BOZIC
Plaintiff
AND
ANTON BILLIS
Defendant
FILE NO/S: CIV 2485 of 2018
BETWEEN: FRANJO BOZIC
Plaintiff
AND
RAND MINING LIMITED
First Defendant
ANTON BILLIS
Second Defendant
Catchwords:
Practice and procedure - Security for costs - Where plaintiff lives in Croatia and has no assets in Australia except those in issue in the proceedings - Where existing costs orders have not yet been satisfied - Where actions to be tried together and almost all disputed issues common to both actions
Legislation:
Rules of the Supreme Court 1971 (WA)
Result:
Security for costs ordered
Representation:
CIV 2557 of 2017
Counsel:
| Plaintiff | : | J C Yeldon |
| Defendant | : | I Armeli |
Solicitors:
| Plaintiff | : | Westmont Legal |
| Defendant | : | Armeli & Molony Lawyers |
CIV 2485 of 2018
Counsel:
| Plaintiff | : | J C Yeldon |
| First Defendant | : | No appearance |
| Second Defendant | : | I Armeli |
Solicitors:
| Plaintiff | : | Westmont Legal |
| First Defendant | : | Nova Legal |
| Second Defendant | : | Armeli & Molony Lawyers |
Case(s) referred to in decision(s):
Brundza v Robbie & Co (No 2) [1952] HCA 49; (1952) 88 CLR 171
Energy Drilling Inc v Petroz NL (1989) ATPR 50
Global Finance Group Pty Ltd (in liq) v Marsden Partners [2004] WASC 52
Mabrouk Minerals Pty Ltd v Mabrouk Holdings Ltd [2008] WASC 132
Palgo Holdings Pty Ltd v Gowans [2005] HCA 28; (2005) 221 CLR 249
PS Chellaram & Co Ltd v China Ocean Shipping Co (1991) 102 ALR 321
ALLANSON J:
Introduction
Franjo Bozic is the plaintiff in two actions in both of which Anthony Billis is a defendant. It is convenient to refer to them as the 2017 Action and the 2018 Action, the years in which they were commenced.[1]
[1] Proceedings against the first defendant in the 2018 Action, Rand Mining Limited, are currently stayed. In these reasons, I refer to Mr Billis as the defendant.
Orders for security for costs have previously been made in each action. In 2018, Archer J ordered security for costs to the stage of mediation in the 2017 Action; in 2019, Registrar Whitby ordered security for the costs of Rand Mining (then the sole defendant) in the 2018 Action.
Mediation is now complete. The defendant applies for orders for the plaintiff to provide security for costs to trial in each action.
The actions
The 2017 Action
The plaintiff was the registered holder of 224,000 shares in Tribune Resources. He pleads that, on or about 1 March 2010, the defendant caused the transfer of those shares to the defendant's wife, Ms Phanatchankorn Wichaikul.
The plaintiff alleges that the defendant signed the transfer form in the plaintiff's name and without his authority, and that the transfer was fraudulent.
The defendant pleads that, in or about April 2005, the parties made an oral agreement, by which the plaintiff 'pledged' 224,000 shares in Tribune Resources to the defendant in consideration for the defendant providing financial assistance to the plaintiff and another person for a business venture in Indonesia. The defendant does not deny that he transferred the shares to Ms Wichaikul, but pleads that the transfer was with the plaintiff's authority and consent.
The defendant also pleads statutory limitation and laches.
The 2018 action
The plaintiff holds 250,000 shares in Rand Mining, a publicly listed company. The defendant asserts that he has beneficial ownership in the shares.
The plaintiff brought the 2018 Action against Rand Mining, challenging a resolution of the directors of Rand Mining to prohibit registration of a transfer of shares held by the plaintiff until the dispute about the legal and beneficial ownership of the shares was resolved. On 7 April 2021, I ordered that the defendant be added as a party.
On 17 August 2021, I directed that the claim against Rand Mining be stayed subject to the determination of the claim between the plaintiff and the defendant.
The defendant's claim to beneficial ownership relies on the same oral agreement as in the 2017 Action. He pleads that the plaintiff agreed that the Rand Mining shares were also to be used as security for money advanced by the defendant.
Security for costs
The facts
The plaintiff is a citizen and resident of Croatia. He has no assets in Australia. Although the plaintiff has legal ownership of the shares in Rand Mining, which are within the jurisdiction, that property would not be available to satisfy a costs order if the court finds they were charged to the defendant as security.
Order 25 and the discretion to order security
The court has a general discretion whether to order a plaintiff to give security for costs. Order 25 r 2 of the Rules of the Supreme Court 1971 (WA) provides, relevantly, that the court may order security for costs to be given where the plaintiff is ordinarily resident out of the jurisdiction, and where the plaintiff is in default in respect of costs ordered to be paid by him against the same defendant or another defendant in relation to substantially the same subject matter.
Order 25 r 3 sets out three matters which the court shall take into consideration in determining whether an order should be made:
(a)the prima facie merits of the claim;
(b)what property within the jurisdiction may be available to satisfy any order for costs against the plaintiff;
(c)whether the normal processes of the Court would be available within the jurisdiction for enforcement of any order for costs made against the plaintiff.
Costs are awarded to indemnify the successful party, at least in part, against the expense to which he or she has been put by reason of the legal proceedings. The purpose of an order for security for costs against a plaintiff who is not resident in the jurisdiction is to ensure that a successful defendant will have a fund available within the jurisdiction against which it can enforce a judgment for costs, so that the defendant does not bear the risks attending enforcement in the foreign country.[2]
[2] Energy Drilling Inc v Petroz NL (1989) ATPR 50, 418.
The fact that the plaintiff lives in Croatia and has no assets in Australia is a circumstance of great weight.[3] But the court must still consider the overall question of how justice will best be served. The discretion is to be exercised considering all of the circumstances of the case. Essentially, the court must strike a balance between protecting the defendant from the possible consequences of being unable to recover his costs, and avoiding injustice to the plaintiff by unnecessarily prejudicing him in his conduct of the litigation.
[3] Mabrouk Minerals Pty Ltd v Mabrouk Holdings Ltd [2008] WASC 132 [58] to [59]; PS Chellaram & Co Ltd v China Ocean Shipping Co (1991) 102 ALR 321, 323.
The court must have regard to the strength and bona fides of the plaintiff's case in each action. It is difficult to make any meaningful assessment of the strengths and weakness of the parties' cases. I do, however, take into account that,
(1)in the 2017 Action, the plaintiff relies on conduct in March 2010, when the claim was commenced in 2017, and the defendant pleads defences based on delay;
(2)in the 2017 Action, the defendant admits he transferred the shares held by the plaintiff to Ms Wichaikul and does not deny that the transfer form purported to be in the plaintiff's name and signed by him; the defendant contends that 'in accordance with the pledge' the shares were transferred to Ms Wichaikul with the consent and authority of the plaintiff;
(3)the 2018 Action relates to shares which are held in the plaintiff's name;
(4)the defence in each action is based on an oral agreement alleged to have been made in 2005; the defendant has given different accounts in his pleadings and in an affidavit sworn in the 2018 Action of his dealings with the plaintiff at that time.
It is not entirely clear what the defendant intends by his plea of a 'pledge' of the shares as security in each case. In neither case does the defence plead a pledge in its historical sense, that is, a bailment of personal property as security for a loan.[4] He does not plead that there was a transfer of possession of the shares.
[4] See, for example, Palgo Holdings Pty Ltd v Gowans [2005] HCA 28; (2005) 221 CLR 249.
There is no evidence before me that the application for security is oppressive, and in particular, whether the award of security would deny to the plaintiff the right to litigate.
The application in the 2017 Action was brought reasonably promptly after the mediation of the two claims. While the application for security in the 2018 Action was not brought immediately after the defendant was joined, it was reasonable for the defendant to await the outcome of mediation of the two actions. Security is only being sought prospectively.
Costs orders have been made in favour of the defendant, Ms Wichaikul, and Tribune Resources in the 2017 Action; and in favour of Rand Mining in the 2018 Action. The defendant says that at least some of those costs orders are outstanding to an amount of about $3,500. Other costs orders have been made against the defendant but have not yet been assessed.
The relevant factors strongly favour the making of a further order for security.
I am satisfied that the plaintiff has a genuine claim in each action. And there has been some inconsistency in the defendant's responses, both in pleadings and in his affidavit in the 2018 Action. But the merits of the claims are not so clear cut that they outweigh the facts that, first, the plaintiff does not live or have assets in the jurisdiction; second, he has existing costs orders against him that have not yet all been satisfied; and third, there is no evidence that an order for security would stifle the action so as to be oppressive.
I also take into account that, in the 2017 Action, the plaintiff alleges fraud by the defendant.
In the 2018 Action, all issues arise from the defendant's contention that he has a beneficial interest in shares held by the plaintiff. The plaintiff is, in substance, defending his title against the action taken by the defendant. I would not, however, expect the 2018 Action to add substantially to the combined costs of the proceedings against the defendant. I am not presently concerned with the action against Rand Mining.
The amount of security
The defendant relied on two draft estimates of his costs from the date of mediation until trial. The estimates are based on the 2017 Action requiring a five day trial, with the 2018 Action heard consecutively for a further two days.
The estimates fail to have regard to the nature of the claims and the degree of overlap between the two actions. The defendant does not dispute that he transferred the Tribune Resources shares to his wife. He does not dispute that the Rand Mining shares are registered to the plaintiff. The area of dispute in each case is identical, and turns on the defendant's claim that, in 2005, at a meeting in Croatia he made an oral agreement with the plaintiff by which the plaintiff in some way charged both the Rand Mining and Tribune Resources shares as security.
It is difficult to estimate the time required for trial and for the necessary preparation for trial. But the estimate of seven days is, at least on present information, unrealistic. The combined trial length should not be more than four days. Similarly, I do not believe that separately estimating time for trial preparation (so as, for example, to arrive at a total of 110 hours for preparation) is a proper guide. Making separate allowance for tasks which are common to both actions is not warranted.
In making an order for security, the court does not set out to give a complete indemnity to the defendant.[5] The best the court can do is to estimate the sum which it thinks just to order to be secured, having regard primarily to a reasonable estimate of the likely taxable costs of the defendant.[6]
[5] Brundza v Robbie & Co (No 2) [1952] HCA 49; (1952) 88 CLR 171, 175.
[6] See, for example, Global Finance Group Pty Ltd (in liq) v Marsden Partners [2004] WASC 52 [57].
The exercise is further complicated by the possibility, foreshadowed by the defendant, of further interlocutory applications, particularly with regard to discovery. Ultimately, I accept the submission of Mr Armeli for the defendant that the court should make an estimate it thinks just, with liberty to apply should there be any significant events, such as contested interlocutory applications, which would substantially affect the likely costs.
I will make a combined estimate for the two actions, given the identity of the issues and that they are to be heard together. I will, however, make separate orders in each. Security for costs in the two actions will be ordered in the amount of $100,000, with $50,000 allocated to each action. There will be liberty to apply.
I will hear the parties on how security should be provided, the time allowed, and further orders.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
KK
Associate to the Honourable Justice Allanson
5 SEPTEMBER 2022
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