Cwalina v Rose

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S EAPCI 2024 0120
S EAPCI 2025 0005

PIOTR MACIEJ CWALINA	First Applicant
ZOFIA BOZENA MAJAK	Second Applicant
v
ALAN WESLEY ROSE	First Respondent
REGISTRAR OF TITLES	Second Respondent

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JUDGES:	BEACH and KENNEDY JJA
WHERE HELD:	Melbourne
DATE OF HEARING:	1 April 2025
DATE OF JUDGMENT:	1 April 2025
MEDIUM NEUTRAL CITATION:	[2025] VSCA 53

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PRACTICE AND PROCEDURE – Application for extension of time in which to apply for leave to appeal from one set of orders – Application for leave to appeal from different set of orders – Applications relating to orders made in same proceeding – Consolidation – Whether applications should be consolidated – Applications ordered to heard and determined at same time.

PRACTICE AND PROCEDURE – Appeal – Application for security for costs – Whether unacceptable risk that respondent, if successful, will be unable to recover his costs of applicants’ applications – Unacceptable risk established – No discretionary factors militating against grant of security for costs – Security for costs granted.

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Counsel
Applicants:		In person
First Respondent:		Mr RC Byrnes
Second Respondent:	No appearance

Solicitors
Applicants:	In person
First Respondent:	Byrnes Legal
Second Respondent:	No appearance

BEACH JA
KENNEDY JA:

For many years, Piotr Cwalina and Alan Rose have been in dispute about land which they co-owned in Frankston South. The land was made up of two lots, referred to by the parties as the Geofrey Street Lot and the Helen Street Lot (collectively, ‘the Land’ or ‘the Lots’).
On 5 December 2023, after a three day trial in August 2023, a judge of the Trial Division (Tsalamandris J) gave judgment for Mr Rose, ordering the subdivision and partition of the Land. The critical issue at trial was whether a settlement agreement made between Mr Rose and Mr Cwalina in 2017 pertaining to the division of interests in relation to the Land remained in force, and whether it (the settlement agreement) should be specifically performed. Contrary to Mr Cwalina’s case, the judge found that Mr Rose had not repudiated the settlement agreement; that the settlement agreement had not been terminated; and that it should be specifically performed.[1]
[1]Rose v Cwalina [2023] VSC 721, [243]–[245] (‘Tsalamandris J Reasons’).
On 18 December 2023, in order to give effect to her judgment, her Honour ordered the subdivision and partition of the Land, and that Mr Cwalina pay out a bank loan and pay contributions to solicitors and valuers to enable the subdivision and partition to take place. Upon the subdivision and partition, Mr Rose was to take the Geofrey Street Lot, and Mr Cwalina was to take the Helen Street Lot. The judge further ordered that, in the event that Mr Cwalina did not comply with her orders, they should be vacated and, instead, the Lots should be sold subject to the supervision of the Court.
Additionally, her Honour made a costs order against Mr Cwalina, requiring him to pay Mr Rose’s costs of the proceeding on the standard basis up to and including 5 April 2022, and on the indemnity basis for the period from 6 April 2022 until 5 December 2023.
On 31 January 2024, upon proof that Mr Cwalina had failed to comply with the subdivision and partition orders, Tsalamandris J vacated those orders and made further orders providing for judicial sale of the Lots. The further orders included machinery orders that empowered Mr Rose to do things in Mr Cwalina’s name to effect those sales. The orders provided that the sales be carried out by public auction.
In April 2024, the Lots were offered for sale at public auction. The Geofrey Street Lot was sold for the reserve price and settlement of that sale occurred in June 2024. The Helen Street Lot was passed in, and subsequently sold by private treaty in July 2024 for its reserve price.
During August and September 2024, both Mr Cwalina and Mr Rose issued a number of summonses which were ultimately heard by Richards J sitting in the Trial Division.
On 23 September 2024, Richards J made orders dismissing applications made by Mr Cwalina, and varying some of the orders made on 31 January 2024 relating to the sale of the Helen Street Lot, so as to permit the earlier sale by private treaty.
In October 2024, settlement of the sale of the Helen Street Lot occurred.
On 11 December 2024, Richards J made further orders in relation to summonses that had been filed by the parties between August and December 2024, and additional costs orders against Mr Cwalina. On 19 December 2024, Richards J made further orders relating to the distribution of the proceeds of sale of the Lots. As a result of those orders, Mr Cwalina has received the total amount of $295,594.12 from the sale of the Lots; and a further sum of $400,000 that belongs to Mr Cwalina is currently retained in Mr Rose’s solicitor’s trust account for the purposes of meeting Mr Cwalina’s costs liabilities to Mr Rose arising from the proceeding. A further costs order was made against Mr Cwalina.[2]
[2]Although her Honour also ordered that there be no order as to the costs of the hearing on 19 December 2024.
On 18 October 2024, Mr Cwalina and Zofia Majak, who was the original plaintiff to the proceeding at first instance, but whose claim against Mr Cwalina was dismissed in August 2017 (with her claim against Mr Rose then being transferred to the Family Court),[3] filed, among other things, an application for an extension of time within which to seek leave to appeal against the orders of Tsalamandris J, an application for leave to appeal and a written case (‘the first appeal proceeding’). In the first appeal proceeding, Mr Cwalina and Ms Majak make complaint about the orders made by Tsalamandris J on 18 December 2023 and 31 January 2024.[4]
[3]Tsalamandris Reasons, [2].
[4]Mr Cwalina and Ms Majak also make complaint in the first appeal proceeding about orders made on 23 September 2023 granting interlocutory injunctions and orders extending those orders until final orders were made; as well as orders made on 31 January 2024 directing the Prothonotary to initiate a contempt proceeding against Ms Majak and for the issue of a warrant for her arrest. It is not, however, necessary to make further reference to those complaints in these reasons.
On 28 January 2025, Mr Cwalina and Ms Majak filed an application for leave to appeal against the orders of Richards J, together with a written case (‘the second appeal proceeding’). In the second appeal proceeding, Mr Cwalina and Ms Majak make complaint about the orders of Richards J made on 23 September and 11 and 19 December 2024.
On 25 February 2025, Mr Rose filed an application seeking an order that the first appeal proceeding and the second appeal proceeding be consolidated; and an order that Mr Cwalina give security for his costs of the first and second appeal proceedings in the sum of $77,000, or such other amount as is fixed by this Court.[5]
[5]Further details of the dispute between the parties, and the history of this proceeding, can be found in Tsalamandris J Reasons [1]–[102]; Cwalina v Rose [2024] HCASJ 16 (Edelman J) (‘Edelman Reasons’); Cwalina v Rose [2024] HCASL 153 (Gordon and Steward JJ); Cwalina v Rose [2024] VSCA 253 (Macaulay JA and J Forrest AJA); Cwalina v Rose [2024] VSC 349 (Gorton J); Cwalina v Rose [2024] VSC 478 (Gorton J); Rose v Cwalina (Contempt) [2024] VSC 719 (Harris J).

Consolidation application

The first appeal proceeding and the second appeal proceeding arise from the dispute which Mr Cwalina and Mr Rose have been engaged in over the Lots since at least 2016. Each appeal proceeding has been generated from the same primary proceeding, and the issues in the proceedings are inextricably linked.
In the circumstances, in order to facilitate ‘the just, efficient, timely and cost-effective resolution of the real issues in dispute’ between the parties,[6] both appeal proceedings should be managed, heard and determined together. It is not, however, necessary to formally consolidate them. Taking that formal step risks causing further delay and the incurring of additional costs — for example, in requiring the preparation and filing of a consolidated application for leave to appeal, in circumstance where two applications for leave to appeal have already been filed and served.
[6]See s 7(1) of the Civil Procedure Act 2010.
It follows that, rather than ordering consolidation, we will direct that the first appeal proceeding and the second appeal proceeding be managed together and, when ready for hearing, be fixed for hearing at the same time before the same bench of this Court.

Security for costs application

Mr Rose’s material and contentions

Relying upon an affidavit affirmed by his solicitor, Russell Byrnes, Mr Rose submits that there is an unacceptable risk that he will, if successful in this Court, be unable to recover his costs of the first and second appeal proceedings. In support of that submission, he makes the following points:
(1)Mr Cwalina is a resident of Poland. He has previously told the Court that he has no assets of any material value in Australia.
(2)There is no evidence that the funds paid to Mr Cwalina from the sale of the Lots ($295,594) remain in Australia.
(3)The sum of $400,000 currently retained in the trust account of Mr Byrnes will not be enough to meet the orders for costs already made against Mr Cwalina by the primary judges.
(4)Ms Majak is an undischarged bankrupt who was not, in any event, a party to the proceeding below at the time when the orders now sought to be impugned were made.
Addressing discretionary factors relevant to whether or not security for costs should be ordered, Mr Rose submitted that Mr Cwalina’s and Ms Majak’s prospects of success on the proposed appeals were poor; no conduct of his (Mr Rose’s) had contributed to the risk that Mr Cwalina might not be able to satisfy a costs order; the proposed appeals are not defensive in nature, nor is there any cross-appeal; he (Mr Rose) has not delayed in making his application for security for costs; and there are no other discretionary factors weighing against the making of such an order.

Mr Cwalina’s and Ms Majak’s material and contentions

Relying upon an affidavit affirmed by Mr Cwalina, he and Ms Majak oppose any order for security for costs being made against either of them. In a notice of opposition filed on behalf of both of them, Mr Cwalina and Ms Majak advance 18 reasons why security for costs should not be ordered. These include:
(1)There is nothing to suggest that Mr Cwalina cannot pay the costs of the appeal.
(2)Mr Cwalina and Ms Majak have ‘bona fide rights to seek a review of the orders which led to a wrongful deprivation of property and denial of basic rights to social functioning within the Australian society’.
(3)Ms Majak was ‘subjected to malicious prosecution in relation to the allegations of breach of the injunctions and arrested upon the warrant issued by Justice Tsalamandris without justification’.
(4)Mr Byrnes ‘is personally vested (scil, invested) in the proceedings which were determined on misleading submissions made by or under his instructions’.
(5)An order for security for costs ‘would prevent justice to be done (sic) between the parties’.
(6)Mr Rose ‘does not have any assets in Australia in his own name that could provide contingent security for the liabilities created by him’, and this Court ‘should therefore proceed on the basis that security for costs order could be sought against him on the same basis as the order sought against [Mr Cwalina]’.
(7)It was Mr Rose, ‘whose impecuniosity prevented partitioning of the properties according to the terms of the consent agreement, who is responsible for bringing hopeless application … which created wasteful litigation’.
In a 19-page document headed ‘Oral submissions of the first applicant’, emailed to the Court yesterday morning, Mr Cwalina made a wide-ranging attack on the conduct of various judicial officers (including Tsalamandris J and Richards J), as well as Mr Rose’s solicitor and counsel. A key submission appeared to be that no order for security for costs should be made against Mr Cwalina because he continued to hold assets in the jurisdiction, because the transfer of the Helen Street Lot to a third party ought to be ‘cancelled’.

Relevant principles

Mr Rose bears the onus of persuading the Court that it should exercise its discretion to order that security for costs be given.[7]
[7]Mikkelsen v Li [2022] VSCA 126, [10] (Kyrou and Walker JJA) (‘Mikkelsen’); Szwarcbord v Charbord Investments Pty Ltd [2024] VSCA 92, [27] (Beach and Orr JJA) (‘Szwarcbord’).
However, the general principle is that the discretion will ordinarily be exercised in favour of a respondent who applies for such an order if:
(1)there is an unacceptable risk that the applicant would not be able to meet a costs order in favour of the respondent made consequent upon the application or appeal being unsuccessful; and
(2)there are no discretionary or other considerations which require that security for costs not be ordered.[8]
[8]Mikkelsen, [9]; Szwarcbord, [28].
Various factors can inform the exercise of the Court’s discretion whether to order security for costs, including the following:
(1)the prospects of success of the appeal;
(2)the magnitude of risk that a costs order would not be satisfied;
(3)whether the giving of security would be oppressive in that it would stifle a reasonably arguable claim;
(4)whether the conduct of the respondent that is the subject of the appeal has contributed to the risk that the applicant would not be able to satisfy a costs order;
(5)whether the appeal is defensive in nature;
(6)whether the respondent has cross-appealed;
(7)whether the respondent has delayed in applying for security for costs;
(8)whether there are aspects of the public interest which ought to be taken into consideration in deciding whether security should be provided; and
(9)whether there are particular discretionary matters that are relevant in the case.[9]

Consideration

[9]Mikkelsen, [11]; Szwarcbord, [29].

Having reviewed the material filed by the parties, we are well satisfied that, in the event that Mr Rose is successful in this Court, there is an unacceptable risk that he would not be able to enforce any costs order made in his favour. Mr Cwalina resides in Poland. Ms Majak is an undischarged bankrupt, whose status as a party in this proceedings is at least uncertain. It is very doubtful that the sum of $400,000 held in Mr Rose’s solicitor’s trust account will be enough to cover the costs orders already made against Mr Cwalina in the Trial Division, and there is no evidence of any other assets within the jurisdiction against which Mr Rose could enforce any costs order made by this Court.
This is not the occasion to conduct any detailed assessment of the merits of the appeals which Mr Cwalina and Ms Majak seek to prosecute. It is sufficient for us to say on this application that the merits of those proposed appeals are not obvious. A difficulty for Mr Cwalina and Ms Majak is that the complaints they make in their documents are, to use the words of Edelman J when he refused Mr Cwalina’s application for a stay in April 2024, ‘prolix and unclear in some respects’.[10]
[10]Edelman Reasons, [7].
We stress, however, that we have not heard any real argument about the merits of the proposed appeals. It may be that, after hearing full argument, Mr Cwalina and Ms Majak make out a ground of appeal entitling them to relief in this Court. At present, we simply say that it is far from obvious that they will do so.
In any event, it is sufficient for us, in resolving the application for security for costs, to say that while there may be some ground or grounds of appeal that are reasonably arguable hidden within the prolix material filed by Mr Cwalina and Ms Majak, the proposed appeals are not of such a strength that we are persuaded that security should not be ordered in all the circumstances.
The first appeal proceeding was commenced in mid-October 2024, but the security for costs application was not filed until the end of February 2025. In some circumstances, that delay might be a disentitling factor to be taken into account in rejecting an application for security for costs. In the circumstances of this case, however, we do not regard it as a matter requiring the refusal of an order for security for costs.
While the first appeal proceeding was commenced in mid-October 2024, nothing was done to progress it beyond applying for the stay, which was rejected by this Court on 18 October 2024.[11] At that time, and during the period up to 19 December 2024 (when Richards J made the last of the orders the subject of the second appeal proceeding), the parties’ dispute was actively ongoing in the Trial Division. The second appeal proceeding, having been commenced at the end of January 2025, Mr Rose filed his application for security for costs within four weeks of when the second appeal proceeding commenced. In the circumstances, we think there was no relevant delay in the filing of that application.
[11]Cwalina v Rose [2024] VSCA 253 (Macaulay JA and J Forrest AJA).
There are no other discretionary or other considerations which require that security for costs not be ordered. To the contrary, having regard to all of the evidence and circumstances of these proceedings, Mr Rose has persuaded us that security should be ordered.
While Mr Rose provided evidence that the costs of both appeal proceedings would likely total $70,000 excluding GST, taking what he said was a conservative approach, he ultimately sought an order for security in the amount of $51,000 (inclusive of GST). Having reviewed the material, we are well satisfied that there ought to be an order for security for costs in that amount.

Orders

Subject to any further submissions, we propose to make the following orders:
(1)Subject to further order, proceeding S EAPCI 2024 0120 and proceeding S EAPCI 2025 0005 (collectively, ‘the proceeding’) be managed together in this Court and, when ready for hearing, be fixed to be heard and determined before the same Bench of this Court and at the same time.
(2)By 4:00 pm on 20 May 2025, the applicants provide to the Associate Judge who is the Senior Master, by payment into Court or in another form acceptable to the Associate Judge who is the Senior Master, security for the respondent’s costs of the proceeding, until the determination of the applications for leave to appeal and any appeal if leave is granted, in the sum of $51,000.
(3)If such security is not provided by 4:00 pm on 20 May 2025, the proceeding is stayed until further order.
(4)If such security is not provided by 4:00 pm on 1 July 2025, the applications for leave to appeal (including the extension of time application in proceeding S EAPCI 2024 0120) are refused with costs.
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[2025] VSCA 53

1 April 2025