Croft v National Trust of Australia (WA) - [2018] WASC 49

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: CROFT -v- NATIONAL TRUST OF AUSTRALIA (WA) [2018] WASC 49

CORAM: MASTER SANDERSON

HEARD: 16 JANUARY 2018

DELIVERED : 15 FEBRUARY 2018

FILE NO/S: CIV 2486 of 2017

BETWEEN: RODNEY KIM CROFT
Plaintiff
AND
NATIONAL TRUST OF AUSTRALIA (WA)
Defendant

Catchwords:

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

Legislation:

Rules of the Supreme Court 1971 (WA)

Result:

Security ordered

Category: B

Representation:

Counsel:

Plaintiff: In person
Defendant: Mr D A Lenhoff

Solicitors:

Plaintiff: In person
Defendant: Lenhoff & Associates

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

Croft v National Trust of Australia (WA) [2017] WASCA 95
Frigger v Professional Services of Australia Pty Ltd [2015] WASCA 3
Shire of Serpentine‑Jarrahdale v Croft (Unreported, Magistrates Court of Western Australia, 22 November 2017)
Westonia Earthmoving Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd [2013] WASC 57
Willoughby v Clayton Utz [2008] WASCA 93

MASTER SANDERSON: This is the defendant's application for security for costs. The application is brought under O 25 of the Rules of the Supreme Court 1971 (WA). That order reads as follows:
1.Factors that are not grounds for ordering security for costs
The Court may order security for costs to be given by a plaintiff, but no order shall be made merely on account of the poverty of the plaintiff or the likely inability of the plaintiff to pay any costs which may be awarded against him.
2.Grounds for ordering security for costs
Without limiting the generality of rule 1 the Court may order security for costs to be furnished where the plaintiff -
(a)is ordinarily resident out of the jurisdiction, notwithstanding that he may be temporarily within the jurisdiction;
(b)is about to depart from the jurisdiction;
(c)enjoys within the jurisdiction some privilege which renders him immune, wholly or partially, from the normal processes of execution;
(d)is an undischarged bankrupt or a person who has suspended, or given notice of suspension of, his debts;
(e)is a company in liquidation or under official management, or a company in respect of which a receiver of its property has been appointed;
(f)is a relator suing for the enforcement or declaration of some public right or to have some public trust carried out or some charitable scheme settled;
(g)is in default in respect of any costs ordered to be paid by him in any proceedings previously brought by him against the same defendant or another defendant for substantially the same cause of action or in relation to substantially the same subject matter;
(h)is a person who has in the past vexatiously brought litigation against the same defendant or against any other defendant;
(i)is suing the sheriff in respect of anything done or omitted to be done by the sheriff or his officers in the execution of any judgment of the Court.
3.Court has discretion
The granting of security shall be in the discretion of the Court, and in determining whether an order should be made the Court shall take into consideration -
(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.
4.Term used: plaintiff
In this Order the term plaintiff shall include a defendant counterclaiming in respect of a claim not arising out of the claim made against him.
5.Manner of giving security
In fixing security the Court shall direct the form and manner in which the security is to be given and may from time to time vary the amount and form of the security.
In Westonia Earthmoving Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd [2013] WASC 57, Justice Edelman considered the basis upon which the discretion to order security for costs ought be exercised. His Honour said:
The question, therefore, is whether this Court should exercise its discretion to award security for costs. The discretion has been described as 'unfettered', but it must be exercised 'judicially', by reference to established principles. The factors which have developed to guide the discretion broadly strike a balance between the interests of the plaintiff corporation in conducting litigation to protect or enforce its rights and the interests of a defendant in not being exposed to the prejudice of being unable to recover costs if it is successful.
Depending on the circumstances, various factors may have different strength and effect on the exercise of the discretion to award security for costs. The most commonly cited, non-exclusive, factors include the following, most of which I extrapolate from the cases footnoted:
(i)the strength and bona fides of the plaintiff's case;
(ii)the likelihood of the plaintiff being unable to pay the defendant's costs;
(iii)whether the plaintiff's impecuniosity was caused by the defendant's conduct which is the subject of the claim;
(iv)whether the application for security is oppressive;
(v)whether the award of security would deny an impecunious applicant a right to litigate;
(vi)whether there are persons standing behind the plaintiff who were likely to benefit from the litigation;
(vii)whether the persons standing behind the plaintiff have offered any security or personal undertaking to be liable for the costs, and if so, the form of such an undertaking;
(viii)whether the applicant was in substance a plaintiff or the proceedings were defensive in the sense of directly resisting proceedings already brought or seeking to halt the defendant's self-help procedures;
(ix)whether the application for security had been brought promptly;
(x)whether the applicant has any rights which it can exercise against assets of the plaintiff to satisfy an order for costs in its favour; and
(xi)any factors relating to the public interest [5] ‑ [6]. (footnotes omitted)
In this case it was not alleged by the defendant that the plaintiff was impecunious. Rather, the defendant's application was put on two bases. First, it was said the plaintiff's case lacked bona fides and was bound to fail. Second, it was said that the plaintiff had failed to comply with an earlier costs order and that was a reason for ordering security. Counsel for the defendant referred to Willoughby v Clayton Utz [2008] WASCA 93 [26] and Frigger v Professional Services of Australia Pty Ltd [2015] WASCA 3 [52].
Turning then to the relevant facts. The plaintiff issued a writ on 6 September 2017. There appears on the writ what is said to be an 'indorsement of claim'. The precise nature of the plaintiff's claim is somewhat difficult to follow and it is best if I quote verbatim the relevant parts of the indorsement:
1.1By a letter from the Defendant to the Plaintiff dated 2nd May 2014, the Defendant outlined to the Plaintiff the Defendant's intention to establish the intent of both parties entering into a legally binding lease agreement for certain premises being part of lot 801 on deposit plan 100467 in Jarrahdale in the State of Western Australia.
Particulars.
2.The Defendant did not honour the Defendants intention for both parties to enter into a legally binding lease agreement for the above property.
3.The Defendant stated in the Letter of Intent under the heading (Legal Fees:) 'Lessee to meet the costs of establishing, distributing and executing the lease agreement. The cost of the legal fees to the Lessee is to be capped at $2,000.00.'
4.The Plaintiff honoured his intent to enter into a legally binding lease document. The Plaintiff paid rent to the Defendant based on the commitment made by the Defendant that the Defendant was preparing a legally binding lease between the parties to negotiate and sign once all terms were agreed to by both parties.
5.The Defendant mislead the Plaintiff by stating the Defendant was preparing a legally binding lease between the parties to lease the property to the Plaintiff for ten years with another ten year option.
6.The Defendant knew at all times during the parties negotiations regarding the lease of the property by the Defendant to the Plaintiff that; the Defendant was not in a position legally to lease the property to the Plaintiff to operate the businesses the Defendant knew the Plaintiff would not be able to run these businesses operations on the property; despite knowing the Plaintiff would be denied the use of the property, the Defendant continued to demand rent from the Plaintiff while promising the Plaintiff that a legally binding lease was being prepared by the Defendant for the parties to agree to the terms in the document and finally sign the lease.
7.The Defendant collected rent from the Plaintiff that he paid in good faith to the Defendant while the lease document was being prepared. The Defendant denied the Plaintiff the use of the land to operate his proposed businesses from and continued to demand rent payments from the Plaintiff. The Defendant never prepared the lease document and the Plaintiff alleges the Defendant never intended to prepare the binding lease document therefore deliberately causing loss and damage to the Plaintiff, while at the same time the Defendant continued to demand rent payments from the Plaintiff for the property the Defendant refused to allow the Plaintiff to use in line with the letter of intent signed by both parties.
The amount of the claim is said to be $4,472,546.71. There are no particulars as to how that claim is calculated. The plaintiff also seeks:
An injunction restraining the Defendant from taking any action to collect any so‑called rent payments for the site the Defendant was never entitled to collect in the first instance.
There have been earlier proceedings between the parties. In National Trust of Australia v Croft (CIV 2574 of 2015) the National Trust sued Mr Croft seeking a declaration it had validly terminated a lease between the parties - the same lease referred to in the present statement of claim - and unpaid rent. I gave judgment in favour of the National Trust. From that decision Mr Croft appealed. There were three grounds of appeal. They were:
1.The primary court's decision the subject of this appeal is against the evidence and the weight of the evidence, the decision is unreasonable and cannot be supported having regard to the evidence.
2.The primary court's decision was made without a hearing on the full merits of the case and without allowing all the parties involved in the case to be represented and fully heard.
3.The primary court's decision was made irregularly, illegally and against good faith given the decision was made 'exparte'.
The Court of Appeal dismissed all of these grounds and described them as being without merit: see Croft v National Trust of Australia (WA) [2017] WASCA 95.
A number of matters were determined by my first instance decision and the appeal. First, that there was a lease between the plaintiff and the defendant. Second, the lease identified by its terms the rent payable by the present plaintiff to the defendant. Third, the lease had been validly terminated and the present plaintiff had no right to remain in possession of the property. It is difficult to see how given those necessary findings it is possible for the plaintiff to maintain his present action.
During the course of the hearing the plaintiff referred extensively to a decision of Magistrate Wilson in Shire of Serpentine‑Jarrahdale v Croft (Unreported, Magistrates Court of Western Australia, 22 November 2017). The decision was delivered on 22 November 2017 after a hearing which stretched over four days. It involved a prosecution by the Shire of Mr Croft. The charge read:
Between 3 September 2014 and 23 March 2015 ('the Charge Period') at Jarrahdale, on land within the Scheme Area of the Shire of Serpentine‑Jarrahdale Town Planning Scheme No 2 used land without planning consent required by the Scheme and hence contravened Clauses 5.1.1 and 8.3 of the Scheme, contrary to s. 218(a) of the Act.
Mr Croft was acquitted of the charge. I have carefully considered the case but it is of no real relevance to the present action. It is enough if I quote from the learned magistrate's conclusion to highlight the difference between the prosecution and this case:
It is for those reasons, whilst the Shire has satisfied me beyond reasonable doubt the accused during the Charge Period used land without planning consent under TPS2 the accused has, on the balance of probabilities, discharged the onus upon him to satisfy me that between the Charge Period he held a continuing, pre‑existing, lawful but Non‑Conforming Use Rights of the land upon which the Mill was located and did not require planning consent from the Shire.
As will be noted I identified the issues in the earlier proceedings and the issues in this action and none of them are picked up in the learned magistrate's decision. The prosecution was an altogether separate and different matter which has nothing to do with the present proceedings. Nothing in the findings of the magistrate can impact upon the outcome of the present action.
It is clear the defendant in this case has very strong grounds for resisting the plaintiff's claim. Of course this was not an application to strike out the plaintiff's claim nor an application for summary judgment. It is not necessary for me then to reach any concluded view as to what the outcome of the plaintiff's action may be. But it does seem to me that the defendant has a solid defence and that is a factor in favour of granting security for costs.
The additional factor in favour of granting security is the plaintiff's refusal to meet the costs order on the former proceedings. In support of this application the plaintiff relies on an affidavit of David Abraham Lenhoff sworn 27 October 2017. Appearing as attachment DAL 3 to that affidavit is a letter from the Sheriff's Office. It details the efforts of a Deputy Sheriff to seize property of the plaintiff to satisfy the outstanding costs order. Without going into detail it is sufficient to say the Deputy Sheriff's efforts have met with no success. Furthermore, the plaintiff has made it plain he has no intention of meeting the costs order. In the circumstances where the plaintiff is clearly recalcitrant, this factor favours the grant of an order for security for costs.
The defendant is seeking security in an amount of $50,000. Attached to Mr Lenhoff's affidavit is a draft bill of costs. This is clearly a case where an application for summary judgment by the defendant could be anticipated. That being so I am not satisfied security in an amount of $50,000 is warranted. But the plaintiff should provide $25,000 by way of security for costs. This action will remain stayed pending the provision of security. The security should be provided within 28 days.
Accordingly, the orders will be:
1.The plaintiff provide security for costs in an amount of $25,000, such security to be provided within 28 days.
2.The security is to be provided by payment into court of the amount of $25,000.
3.The action is stayed pending the provision of the security.
4.Liberty to apply.
5.The costs of this application, including reserved costs, be taxed and paid forthwith.
Subsequent to the hearing of this application the plaintiff addressed correspondence to my Associate. While I have considered the contents of the correspondence it does not in any way affect my conclusion in relation to the defendant's application. The correspondence will be retained on the file but will not form part of the court record.