Cosenza v Gill - [2018] SASC 50

SUPREME COURT OF SOUTH AUSTRALIA
(Magistrates Appeals: Civil)
COSENZA & ANOR v GILL & ORS
[2018] SASC 50
Judgment of The Honourable Justice Lovell
30 April 2018
MAGISTRATES - APPEAL AND REVIEW - SOUTH AUSTRALIA - APPEAL TO SUPREME COURT - COSTS
PROCEDURE - COSTS - SECURITY FOR COSTS
PROCEDURE - COURTS AND JUDGES GENERALLY - JUDGES - DISQUALIFICATION FOR INTEREST OR BIAS - PARTICULAR RELATIONSHIPS OR CIRCUMSTANCES - OTHER MATTERS
The appellants are the plaintiffs in proceedings against the respondents in the Magistrates Court. The Magistrate ordered, pursuant to r 81 of the Magistrates Court (Civil) Rules 2013 that the plaintiffs provide security for costs to the value of $25,000 and that the action be stayed until security was provided.
Whether the Magistrate erred in making the order for security for costs - whether the Magistrate failed to take into account relevant considerations - whether the Magistrate erred in failing to recuse herself for apprehended bias.
Held:
The Magistrate did not err when exercising the discretion to order security for costs.
The Magistrate did not err in failing to recuse herself for apprehended bias.
Appeal dismissed.
Magistrates Court (Civil) Rules 2013 S 81, referred to.
Jeffery and Katauskas Pty Ltd v SST Consulting Pty Ltd (2009) 239 CLR 75; Bennie v The Public Trustee [2018] SASC 175, applied.
John Arnold’s Surf Shop Pty Ltd (In liquidation) v Heller Factors Pty Ltd (1979) 22 SASR 20; House v King (1936) 55 CLR 499; Markarian v The Queen (2005) 228 CLR 357, discussed.

COSENZA & ANOR v GILL & ORS
[2018] SASC 50
LOVELL J
Background

On 18 July 2012 the plaintiffs (the appellants) were the occupiers of the premises at 39 Glen Eira Street Woodville. On that day the first defendant acting on behalf of the second and third defendants (the respondents) entered the property for the purpose of speaking to the occupants regarding energy contracts. The appellants allege that the first respondent entered onto their property despite notices, clearly delineated, forbidding entry and revoking any implied license to enter.
On 19 March 2015 the appellants filed a claim seeking damages for anguish, distress and aggravation to pre-existing depression, anxiety and post-traumatic stress disorder as a result of the trespass on the land by the first respondent. The appellants claim that the second and third respondents are vicariously liable for the tort of the first respondent.
The third respondent applied to the Magistrates Court seeking an order that the appellants provide security for costs pursuant to rule 81 of the Magistrates Court (Civil) Rules 2013 (‘MCR’). The second defendant made an oral application to join in the application.
The Magistrate, after hearing argument, ordered:
1The plaintiffs are to provide security to the value of $25,000 over the first plaintiff’s property at 39 Glen Eira Street Woodville, South Australia by way of either caveat, mortgage, bank guarantee or charging order in favour of the third defendant over that property; and
2Copies of the security document(s) referred to in para 1 are to be provided to, and held by, the Registrar of this Court.
3This action is stayed until security is provided in accordance with orders 1 and 2.
4There is liberty to apply if further or consequential costs orders are sought.
The appellants seek to set aside the orders of the Magistrate.
Appeal Grounds
The appellant appeals the decision on the following grounds:
1The learned Magistrate erred in making an order for security for costs.
2The learned Magistrate erred in failing to take into account a relevant consideration, namely that the appellants are natural persons and impecuniosity of itself is not a reason for ordering security for costs against a natural person.
3The learned Magistrate erred in finding that the claims against the defendants were not strong ones. The learned Magistrate ought to have found that the claims against the defendants were strong ones such that, in combination with the fact that there are outstanding costs orders in favour of the plaintiffs, refusal of the application for security for costs was justified.
4The learned Magistrate erred in dealing with the application in the face of an application to transfer the proceedings to a higher Court.
5The learned Magistrate erred in failing to recuse herself for apprehended bias.
Ground 2
It is convenient to deal with ground 2 first. Ground 1 provides no particulars.
MCR 81 provides as follows:
(1)   The Court may order a party to pay a sum of money, or give other security, to the Registrar in respect of the whole or part of the costs of an action, or the claim itself, and such sum or security will be held by the Registrar to abide the event.
(2)   The Court may order a party to give a bond or undertaking.
(3)   The Court may require a party to obtain a guarantee or other surety in respect of the whole or part of the costs of an action of that party.
The Court has an unfettered discretion as to whether to order security for costs. MCR 81 provides the court with a wide discretion although the power must be exercised judicially. Further, it is expressed more widely than the equivalent Supreme Court rule,[1] which requires, in an ordinary case, that the order be “necessary in the interests of justice”.
[1] Supreme Court (Civil) Rules 2006, r 194.
In Jownal v Commonwealth Bank of Australia[2] Lander J considered the operation of MCR 81. He noted that the rule did not provide any indication as to how the court ought to exercise its discretion to make an order for security for costs. Lander J referred to the “four circumstances” recognised as being appropriate to give rise to an order for security for costs as described in August Investments Pty Ltd v Poseidon NL.[3] The four circumstances were set out in the Supreme Court Rules. Lander J observed that the Supreme Court rules, as they then stood, added a further category namely where for “special circumstances the justice of the case so requires”. The rule has now been amended to remove the reference to “special circumstances” and instead includes the expression “make it necessary in the interests of justice”.
[2] [1999] SASC 72.
[3] (1971) 2 SASR 65, 69.
The appellants submitted that MCR 81 does not contain an unfettered discretion. They submitted that it is a basic rule that no natural person is to be barred from litigation by their own impecuniosity unless that right is removed by law. The appellants relied on a number of English decisions.
The English decisions are based on the Rules of Court then applicable. As Megarry V-C stated in Pearson v Naydler: [4]
It is well settled that a natural person can sue without being required to give security for costs, unless he falls within one of the special categories set out in R.S.C., Ord. 23, r 1.
[4] [1977] 1 WLR 899.
Against that background the English authorities establish that insolvency or poverty of an individual plaintiff is no ground for requiring him to give security for costs. Megarry V-C also observed:
The basic rule that a natural person who sues will not be ordered to give security for costs, however poor he is, is ancient and well-established. As Bowen L.J. said in Cowell v Taylor (1885) 31 Ch D 34 at 38, both at law and in equity “The general rule is that poverty is no bar to a litigant…”. The power to require security for costs ought not to be used so as to bar even the poorest man from the courts.
I reject the appellants’ submission that the “basic rule” remains unless removed by law. The Australian position has always been that the question of security for costs is a discretionary one guided by the relevant Rules of Court.
As French CJ, Gummow, Hayne and Crennan JJ observed in Jeffery and Katauskas Pty Ltd v SST Consulting Pty Ltd: [5]
The difficulties presented for a defendant by a plaintiff’s impecuniosity have led to the identification of an inherent jurisdiction, and the development of rules of court and statutory powers, under which a plaintiff may be ordered to provide security for costs. In general, the bare fact of impecuniosity is not of itself reason to order a plaintiff who is a natural person to provide security for costs. But a corporate plaintiff may be ordered to provide security where it is shown that it will not be able to meet the defendant’s costs. It is neither necessary nor appropriate to consider the extent to which those two general propositions should be elaborated or qualified. Neither is intended as a comprehensive or definitive statement of the applicable principles.
[5] (2009) 239 CLR 75, 96 [38].
That appears to be a position consistent with the English authorities.
With respect I agree with the observations of Lander J that as MCR 81 provides no specific guidance the factors referred to in the Supreme Court rules are helpful in deciding how to judicially exercise the power. In Bennie v The Public Trustee[6] Judge Dart observed:
The starting point then is that there are no fixed rules fettering the exercise of discretion. It is not the correct approach to start with the proposition that, because the plaintiff is an impecunious natural person, the Court should not make an order for security for costs. To approach the matter in that way would be to improperly fetter the exercise of the discretion. The fact that it is an impecunious natural person bringing the action is a significant consideration. It goes into the mix with other considerations such as whether the impecuniosity was caused by any action of the defendant, whether the proceedings are likely to be stultified if an order is made and the strength of the plaintiff’s claim. Also relevant is any delay in bringing of the application.
When exercising a discretion to act in the interests of justice, it is also necessary to consider the position of the defendants….
… It seems probable that orders for security for costs against impecunious natural persons will become less infrequent now that the test is not special circumstances but the interests of justice. That said, it must be recognised that it is a grave thing to prevent a person, who is able to articulate a cogent cause of action, from being able to prosecute that action. That will always be a very significant factor in weighing what is in the interests of justice.[7]
[6] [2017] SASC 175.
[7] Ibid [16]-[18].
I agree with those observations. The discretion is unfettered but the starting point in the exercise of the discretion is that the bare fact of impecuniosity is not of itself a reason to order a plaintiff, who is a natural person, to provide security for costs. It is such a significant factor that, unless other factors are brought to account, no order for security for costs will be made.
The Magistrate in her reasons for Judgment cited John Arnold’s Surf Shop Pty Ltd (In liquidation) v Heller Factors Pty Ltd[8] where White J stated:
Proof of impecuniosity of the plaintiff company is merely the “jurisdictional” fact which gives rise to the occasion upon which the discretion is exerciseable. Once the section is attracted, the discretion is at large and the court must exercise it judicially, that is fairly, doing justice between the parties in all of the circumstances, bearing in mind the purpose for which the discretion exists.[9]
[8] (1979) 22 SASR 20.
[9] Ibid, 23.
White J was dealing with s 363 of the Companies Act, a section which contains no obvious fetter on the discretion regarding security for costs.
The appellants submitted, however, that the Magistrate erred in referring to this case which dealt with a company. They submitted that a distinction needed to be drawn between security for costs applications against a company and those applications involving natural persons. It was submitted that the Magistrate had erred in not acknowledging that distinction.
While I accept the appellant’s submission that there is a difference between a security for costs application as against a company as compared with a natural person, namely the need for a jurisdictional fact, I do not accept that the Magistrate was unaware of that distinction. Indeed the Magistrate’s reasons indicate that she was aware when she stated:
there is clear authority that the impecuniosity of the plaintiffs is not of itself sufficient for an order to be made without other factors.
The Magistrate’s reference to John Arnold’s Surf Shop Pty Ltd (In liquidation) v Heller Factors Pty Ltd was simply an observation of the unfettered nature of the discretion once the jurisdictional fact in relation to a company was satisfied.
In any event little turns on the argument of the appellants as the Magistrate started from the proposition that the impecuniosity of a plaintiff is not of itself sufficient for an order to be made without other factors. This is the very approach urged on me, correctly, on appeal.
The Magistrate did not err in her approach.
I dismiss ground 2.
Ground 3
It was common ground that both appellants are impecunious. The second plaintiff/appellant has no personal assets or income other than Centrelink and a small income from Internet-based sales. The first plaintiff/appellant is aged in her early nineties, does not have any savings of significance and no income. The second plaintiff owns her property at Woodville.
The evidence of the plaintiffs was that if there was an adverse order for security for costs they would not, without the sale or refinance of the first plaintiff’s property, be in a position to discharge that order. The plaintiffs submitted that any order for the provision of security for costs would stultify the proceedings.
The Magistrate made it clear in her reasons that the impecuniosity of the plaintiffs was not of itself sufficient for an order to be made without other factors being involved. The Magistrate then had regard to a number of factors when exercising her discretion. The Magistrate had regard to the fact that the plaintiffs had commenced several other, almost identical, actions against a variety of defendants. She noted that the success or otherwise of those actions would have an impact on the defendant’s ability to recover its costs. Whilst accepting that the strength of the plaintiffs’ case was not a determinative factor it was a matter she could have regard to. The Magistrate considered that there was a risk that the plaintiffs’ claim in this action would not be successful.
Contrary to the appellants’ submission the Magistrate did not find that the claim was not a “strong one”. She simply found that there was a “risk” that it would not succeed. The Magistrate was simply acknowledging the reality of litigation. Litigation is not a predictable process. It is a process which is unyielding to certainty and simplicity.[10] The Magistrate was entitled to take that into account.
[10] Viscariello v Macks [2017] SASCFC 172,[503].
The Magistrate further took into account the fact that the second plaintiff had been declared bankrupt twice before. She noted that the second plaintiff’s second bankruptcy was relevant as it followed the failure or refusal to pay costs orders in the Federal Court. The Magistrate acknowledged that in 2014 the second plaintiff made arrangements with his creditors such that that bankruptcy was annulled but the subject of the creditor’s petition was by that time, five years old.
These were proper factors for the Magistrate to take into account.
The Magistrate also took into account that the plaintiff already had an unquantified costs order against the defendants which may be able to be set off against any subsequent liability for future costs. This costs order arose from a finding by Stanley J, in a decision of 28 September 2016, that the defendants pay the plaintiff’s costs of an appeal to be agreed or taxed.[11]
[11] Cosenza v Gill [2016] SASC 154.
The Magistrate weighed the factors referred to earlier and came to the conclusion that it was the appropriate exercise of the court’s discretion to order security in favour of the third defendant for its costs. The appellants submitted that the Magistrate erred in failing to give sufficient weight to their outstanding costs order against the defendants and that this factor, taken in conjunction with the fact that their claim is a strong one, should have led the Magistrate to reject the application for a security for costs order.
The Magistrate was clearly exercising a discretion. The principles enunciated in House v The King[12] are therefore relevant. It is not enough that an appellate court would have come to a different decision. What must be evident is that some error has been made in the exercise of the discretion or that the final decision was unreasonable or plainly unjust.[13]
[12] (1936) 55 CLR 499, 504-5
[13] Minister for Immigration and Citizenship v Li (2013) 249 CLR 332, 367 [76].
The exercise of a judicial discretion is not vitiated by giving a relevant matter less or more weight than the judge before whom the decision is impugned would have given it. As Gleeson CJ, Gummow, Hayne and Callinan JJ said in Markarian v The Queen:[14]
As with other discretionary judgments, the inquiry on an appeal against sentence is identified in the well-known passage in the joint reasons of Dixon, Evatt and McTiernan JJ in House v The King, itself an appeal against sentence. Thus is specific error shown? (Has there been some error of principle? Has the sentencer allowed extraneous or irrelevant matters to guide or affect the decision? Have the facts been mistaken? Has the sentencer not taken some material consideration into account?) Or if specific error is not shown, is the result embodied in the order unreasonable or plainly unjust? It is this last kind of error that is usually described, in an offender's appeal, as "manifest excess", or in a prosecution appeal, as "manifest inadequacy".
[14] (2005) 228 CLR 357, 370-71 [25].
The Magistrate properly took into account the various factors mentioned earlier. No error of principle has been established. The Magistrate has not taken into account extraneous matters. The complaint here is that Magistrate failed to give proper weight to various factors. As mentioned in Markarian the judicial discretion is not vitiated simply on that ground.
The order here is not plainly unjust or unreasonable. The order was within the discretion of the Magistrate. Indeed the Magistrate constructed the order in manner such that the action of the appellants is not stultified.
It appears that the Magistrate, when making the order, only made it in favour of the third defendant. The second defendant orally made the same application. The first defendant’s whereabouts are unknown. It appears that the Magistrate may have overlooked making the order in favour of the second defendant as well. There was no basis for distinguishing between the two defendants. In the circumstances, given the second defendant has the protection of the third defendant’s order I see no need to change the order.
The appellant submitted that when exercising her discretion, the Magistrate took into account a number of personal factors relating to the second plaintiff/appellant when ordering security for costs against both appellants. In my view, given the interrelationship between the two appellants in the cause of action (the familial relationship is also relevant) the Magistrate was entitled to do so.
I would dismiss ground 3.
Ground 4
The application for security for costs was heard on 19 September 2017. The Magistrate noted that the appellants had at that time taken out an application to transfer the action to the District Court. The second plaintiff requested time to file an affidavit in support of his application. The Magistrate delivered her reasons on the application for security on 30 October 2017 and observed that no affidavit had at that time been filed.

The appellants submitted that once an intention to transfer the proceedings to a different court had been communicated to the Magistrate she should not have continued to hear the matter until that application was resolved. No authority was cited to support that assertion. The Magistrate observed that the court remained seized of this application and it was obliged to determine it. I agree with the Magistrate’s observations.
I reject this ground of appeal.
Ground 5
After the delivery of the reasons by the Magistrate the appellants submit that they became aware that the Magistrate had a potential conflict of interest. The appellants relied on an affidavit of the second plaintiff sworn on 13 November 2017. In a similar but unrelated action in the Magistrates Court, the appellant Dean Cosenza had filed an affidavit on an application to join further defendants to that action. One of the existing defendants was Appco Group Australia Pty Ltd. This company has acted as agent for or on behalf of the Starlight Children’s Foundation. The appellants assert that the Magistrate had been managing this particular action and they had advised the Magistrate that he intended to bring legal proceedings against Starlight Foundation for trespass to land.
The appellants allege that the Magistrate was a board member of the Starlight Foundation. This, it was submitted, led to a reasonable apprehension of bias and that the Magistrate ought to have recused herself from hearing the security for costs application. During the course of the appeal I indicated that there was insufficient evidence regarding the Magistrate’s alleged position with the Starlight Foundation. I gave leave to the appellants to obtain and provide further information. Mr Dean Cosenza filed a further affidavit dated 20 February 2018. Exhibited to the affidavit was a letter from the Starlight Children’s Foundation dated 19 February 2018 setting out the Magistrate’s involvement with the foundation. The Magistrate was a member of a Starlight committee in South Australia for a period of just over 12 months in 2008. The committee had an advisory role but no governance role. The Magistrate was not a member of the national board. The foundation had had no contact with the Magistrate since mid-2009. The affidavit of Mr Cosenza contained other information of a hearsay nature and I am not prepared to rely upon it.
The apprehension of bias principle involves a two-step process. The first requirement is the identification of what it is said that might lead a judge to decide a case other than on its legal and factual merits. Secondly there must be an articulation of the logical connection between the matter and the feared deviation from the course of deciding the case on its merits.[15]
[15] Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337, 345 [8]; Smits v Roach (2006) 227 CLR 423, 443-4 [53].
I have identified earlier the relationship of the Magistrate to the foundation. There has been none since 2009. The appellants in my view have been unable to articulate a logical connection between that relationship identified and any feared deviation from the course of deciding this matter on its merits. In my view there is little in this point and I reject ground five.
Ground 1
No error has been shown in the approach of the Magistrate and I dismiss this ground of appeal.
Order
Appeal is dismissed.