Collins v Emacord Autos Pty Ltd

[1997] SASC 6418

COLLINS V EMACORD AUTOS PTY LTD

Full Court 
Coram: Doyle CJ, Lander & Bleby JJ
LANDER J
On 11 July 1996 the defendant sought an order that the plaintiff provide security for costs pursuant to r100 of the Supreme Court Rules.
The matter came on before a Master who on 30 August 1996 dismissed the application upon the grounds that there was a factual dispute as to whether "there is any liability to pay monies by the defendant".
The Master did not consider there were special circumstances in the matter which would justify him making an order for security for costs under r100.01(e)    .
From that decision the defendant appealed to a Judge of this Court, who allowed the appeal and ordered that the plaintiff provide security for costs.  He directed that the matter be returned to the Master to fix the amount of that security. He ordered that the plaintiff pay the defendant its costs of the appeal to be taxed.
The plaintiff appellant purports to appeal to this court against the order of the Judge at first instance upon a number of grounds.

The purported grounds of appeal are:

1. The learned Judge erred in holding that the Plaintiff was not the owner of the Loan funds.

1. The Learned Judge erred in not helping the Plaintiff in presenting his case as he was undefended and could afford representation.

1. The Learned Judge erred by not accepting that the Defendant has acted in an abuse of process in issuing these proceedings as the matter was to go to trial and being late with every process during the commencement of this matter.

1. The learned Judge erred in not recommending that all the matters raised by the Defendant should have been left up to the trial Judge.

1. The Learned Judge erred in allowing the Defendants Solicitor to handle this case in the Court as he has action for all parties in the past.

PARTICULARS

5.1    The Defendants Solicitor gave advice to the Plaintiff, his company and the Defendant that these loan funds belonged to the Plaintiffs company which were subsequently transferred to him.  The Plaintiff paid some $6,500.00 for this advice.

5.2    The Defendants Solicitor caused by way of instruction by the Plaintiff to obtain an opinion by Counsel to ascertain who owned the loan funds.

5.3    The Defendants Solicitor acted for all parties and in 1992 knew all the facts of this matter and advised that the loan funds belonged to the Plaintiff and now is advising the Court of different facts.

5.4    The learned Judge erred in holding that the Defendants Solicitor, say he did not or could not remember he handled any matter for the Plaintiff and/or his company.  The learned Judge would not allow the Plaintiff to supply any proof of this fact.

1. The learned Judge erred in not taking into account all the facts in this matter."

The jurisdiction to make an order for security of costs is given by r100.01.  That rule provides: 

"The Court may order security for costs to be furnished:

(a)     where the plaintiff is a mere nominal plaintiff and is in a condition of poverty or insolvency;

(b)     where the plaintiff is ordinarily resident out of the jurisdiction;

(c)     where the residence of the plaintiff is incorrectly stated in the summons with an intention to deceive;

(d)     in circumstances authorised by any statute;

(e)     where for special circumstances the justice of the case so requires."

During argument this morning, Mr Collins argued that the appeal from the Master to a single Judge of this Court was wrongly brought, and that in fact the appeal from the Master should have been brought directly to this Court.
He relied for that submission on r106.05. That rule however, in my opinion, does not govern this matter but relates to appeals from assessment of damages, and orders which finally determine the parties rights. In relation to interlocutory orders an appeal lies from a Master to a single Judge pursuant to s.50(4) of the Supreme Court Act.
An order for security of costs is undoubtedly interlocutory in nature in that it does not finally dispose of the rights of the parties. Therefore the appeal to the single Judge was properly brought. Moreover, because it was an interlocutory order, any appeal from that Judge to this Court requires leave to appeal [s50(3) of the Supreme Court Act].
No leave to appeal was sought from the learned Judge pursuant to r94.01, nor has any leave to appeal been sought from this Court pursuant to r94.01(1)(b)(ii)     .
In those circumstances, in my opinion the purported appeal is incompetent.
However, this Court has allowed Mr Collins to argue that leave to appeal should be granted, and has treated his application as such an application.  Leave would only be granted if there were questions of general principle or questions of importance to the parties.  This is not a matter which, in my opinion, gives rise to a question of general principle, nor, whilst the matter is important to the parties, is it a matter for which leave should be granted.
The purported grounds of appeal did not, on the face of them indicate, in my opinion, any errors in any matters relevant to the exercise of the discretion reposing in the learned trial Judge in relation to an application for security for costs.
The grounds of appeal do not suggest that the decision sought to be impugned is either wrong or attended with sufficient doubt to warrant a reconsideration on the appeal.  The grounds of appeal, in fact, do not address the order made. Any application for leave to appeal would inevitably be unsuccessful on that ground alone.
An application for leave to appeal requires some assessment of the strength of the plaintiff's case.
The plaintiff's case against the defendant is that he is the owner of loan funds which were transferred to him on 13 August 1992, and that the defendant acknowledged the plaintiff's ownership of those loan funds by commencing payments to the plaintiff on 1 September 1992.
The plaintiff in a more explicit statement of claim claimed that the loan funds were transferred to the plaintiff from Cabbform Pty Ltd of which the plaintiff was a shareholder. Presumably the plaintiff's claim, although it is not clearly articulated, is that prior to that time the defendant was indebted to Cabbform Pty Ltd in respect of those funds and there has been an assignment of the benefit of that debt to the plaintiff.
The defendant denies that it is so indebted.  In support of its application it filed an affidavit of Mr Lines, company director, who deposed that there are no loan funds at all and that the defendant has never borrowed money from Cabbform Pty Ltd or the plaintiff.  The defendant says that it borrowed money from various persons who took a mortgage as security for that loan over a property owned by Cabbform Pty Ltd.
In due course, a Judge of this Court declared that Cabbform Pty Ltd held the land and another asset, a Mercedes Benz motor vehicle, as constructive trustee for various parties and ordered those parties to be registered as proprietors of the land, and ordered delivery of the motor vehicle to them. He also ordered Cabbform Pty Ltd to give vacant possession of that property. Later the real estate was sold by the mortgagees to a third party.
If Cabbform Pty Ltd had a right of indemnity against the defendant it has suffered no loss.  The mortgage was discharged and Cabbform Pty Ltd was not called upon to meet any liability under the mortgage.
The plaintiff did not file any affidavits in opposition to the application.  However, in argument before the learned trial Judge he claimed that he was a beneficial owner of Cabbform as the major shareholder. He indicated in argument before His Honour the  circumstances in which he said the debt arose and the liability of the defendant to him.  He claimed in that argument that he had  documents to support his case.  He largely repeated all of  the submissions which he made to the Judge at first  instance to this Court. 
It is difficult on the papers and on the argument  presented to understand how the plaintiff can bring any claim at all in his own right.  It is very difficult to  understand how the defendant was ever indebted to Cabbform  Pty Ltd.  It is difficult to see how Cabbform Pty Ltd advanced monies to the defendant in circumstances where  Cabbform Pty Ltd was not the beneficial owner of the  property, but merely a trustee for other parties. 
All of these matters, of course, are not to be decided  on an application for security for costs, but all are relevant in an assessment of the strength of  the plaintiff's case. 
In his affidavit Mr Lines further deposed that on 18  January 1995 the plaintiff was convicted of thirteen counts of  fraudulent conversion, and sentenced to seven years  imprisonment. On 29 March 1996 the plaintiff was convicted  of one count of attempted false pretences and one count of  false pretences and was sentenced to two years and three  years imprisonment.  The defendant claims that the  plaintiff has no assets or income and could not pay any  costs ordered should he be unsuccessful in the action.  The  plaintiff has never sought to deny that last mentioned  proposition and indeed admitted to the learned trial Judge that he was impecunious.  
The defendant's application relied upon r100.01(e). An order for security for costs under that rule can only be made where special circumstances exist. The fact that the plaintiff is impecunious would not, of itself, give rise to the making of an order: Cowell v Taylor (1885) 31 ChD 34 at 38; Pearson v Naydler (1977) 1 WLR 899 at 902; Fletcher v Federal Commissioner Of Taxation (1992) 110 ALR 233, although of course, impecuniosity would be a highly relevant factor in determining whether an order should be made. There must, at the end, be special circumstances which will demonstrate that the justice of the case requires the making of the order.
In this case the plaintiff is and will remain  incarcerated for some time.  There is little or no prospect  that his financial circumstances will change for a very  long time.
He has not challenged, by any evidence, the defendant's claim, which has been supported by affidavits and documentary evidence that his claim was entirely  without merit.  He has not sought to demonstrate how, as a  shareholder of Cabbform Pty Ltd, he is entitled to maintain  any action against the defendant.  He has brought in no  evidence to suggest that his claim is in any way  sustainable. 
The learned trial Judge, after assessment of the  strength of the plaintiff's case and having regard to the  plaintiff's impecuniosity, determined that it was an  appropriate case for security for costs.  Such a conclusion  involves the exercise of a discretion on the part of the  learned Judge, which, of course, must be exercised  judicially. There is nothing in His Honour's short reasons  to suggest that His Honour took into account any matter  which was inappropriate, or failed to take into account  relevant matters.  There is nothing in the transcript  presented to this Court which suggests there was any error  in the exercise of the learned Judge's discretion. 
On the material before this Court any appeal from the  order requiring the plaintiff to give security for costs  would, even if competent, be dismissed. 
In my opinion it would be appropriate to simply dismiss  this appeal on the grounds that it is incompetent. 
DOYLE CJ:        I agree, and I would add just this:   This is a case where leave to appeal was required.   Although leave was not sought, the court allowed Mr Collins  to seek leave orally.  Having heard his submissions, I  would refuse leave to appeal. 
Mr Collins admits he has assets not exceeding $8,000,  so he would clearly be unable to meet the costs of the  case. In this case there is more than an admitted  inability to meet the costs of the case.  As best I can  tell, the claim made by Mr Collins is wholly lacking in  merit. 
The facts are somewhat confusing, but on the  information before the court I cannot see any basis upon  which Cabbform Pty Ltd could have a claim against the  defendant, so there is nothing which it could have assigned  to Mr Collins, or if there ever was any claim to indemnity  against Emacord, in my opinion now it lacks any content. 
It follows that in my opinion no arguable error by  Millhouse J has been identified, nor has any question of  principle been raised.  Accordingly, because the appeal  itself lacks any substantial prospect of success, in my  opinion leave to appeal should be refused and accordingly,  on those grounds I would dismiss the appeal itself.
BLEBY J:   I agree, for the reasons given by Lander  J, that the appeal is incompetent and should be dismissed.   I also agree, for the reasons given by both the Chief  Justice and Lander J, that leave to appeal should be  refused.
DOYLE CJ:        The orders of the court are as follows:    
1.Appeal dismissed.  
2.Order that the appellant, Robert Wayne Collins, pay the  costs of the appeal of the respondent, Emacord Autos Pty  Ltd.